Every so often, we do a different type of analysis. Instead of looking at the state of mobile marketing or the current strategies of pay-per-click arbitragers, we look at a completely different market. With the second quarter over (April through June) and earnings reports from the public companies pretty much complete, now is a convenient time for a summary. Doing so certainly makes us appreciate, and reminds us, why we should stick to our day job of creating and running offers. Our potential lack of aptitude in analyzing the public markets aside, there is something interesting about viewing our industry through eyes of those not in it every day. Those of us sending offers, managing bids, playing the affiliate game, and so on, possess a unique perspective. And I suspect that we often find ourselves mired in the day to day profitability of our own businesses that we don’t have the time or even interest to view the performance of those companies that in many ways power our own businesses. Here, we’ll look at a few of the companies that we can’t live without as well a few that we might shed some light in terms of the future. But, before we begin, as we are dealing with stocks, we must give our own form of disclosure. We do pictures much better than proper analysis of stocks.
Let’s start with one of our personal favorites. We’ve never used it and can’t decide if the company is a bad-ass or simply a jack-ass for wanting to compete with Google. While they are apparently losing their edge in porn (is that a good or a bad thing?), we still like them, because their stock rarely has a dull moment. We’re talking about none other than the current leader in search market share for the Chinese market, Bidu (BIDU on the Nasdaq). And, if ever you need a reason to wonder whether we might be in another bubble, they might provide the answer. I know I got so excited seeing the stock fall from 210 to 190 that I bought in. Turns out, patience would have been a good virtue. As you can see below, the past several trading days have wiped out almost one billion in market cap.
Bidu (recent)
Despite the last several days, Bidu has made some people some incredible amounts of money. In what feels all too like 1999, Bidu’s stock charged more than 110% in the past three months, with the bulk of that gain coming in the last four weeks, before the recent pull back. Will it recoup? I hope so obviously, or will it do what one analyst feels it should and retreat back to around $100 per share – where it started at the beginning of Q2. The company hasn’t reported its earnings yet, and like anything as tightly wound, it will either propel the stock forward, or we’ll see an epic sell off. They still have more than double the market share that Google does, and the Chinese market will continue to grow, but can its stock? And, are they the anomaly of the market or an indication of what is to come.
Bidu (whole)
In a break from the volatile and frustrating Bidu, we turn to two stocks whose performance has proved equally frustrating to some investors, not for its unpredictability, but for its lack of doing anything. We present two wonderful companies (debatable according to some employees and customers) with some of the longest and most storied histories online – Yahoo and eBay. Ebay is still the leader, and it’s unlikely they will be dethroned, but their never improving interface and rare drop in listings have investors concerned despite solid numbers. As for Yahoo, we watched them outpace Google from a percentage gain perspective earlier in the year only to give back almost 30%. As a sideline observer, we have the luxury of half joking that both companies should merge in order to recapture some of their previous stature. Truth is that, in the case of Yahoo, we have some thoughts on what they need, we couldn’t imagine trying to navigate organizations of that size.
Yahoo
eBay
As opposed to Yahoo and eBay, who can’t seem to get momentum, these next two have, over the past two years, had no problems with it. As we learned the hard-way, you take a risk buying a stock the day before earnings get announced, but their recent bitch slap from the investment community aside, Google and Apple have done an impressive job in printing money and suggesting that, at some point in time, they will become one company. First Google. They now make almost $500 per second, add two new employees per hour, and will make more in a quarter than MSN will in an entire year. The rising revenues aside, the company’s stock did very little in the first portion of the year. Since April though, it crept up quite nicely – nowhere near Bidu’s insanity – until the most recent earnings report. Google has not acted like a typical public company, and the market seems to have begrudgingly accepted this, but likes to take passive aggressive swipes at its market caps when given the opportunity. One such opening just happened as Google announced they made some accounting changes. Core business solid, international growing, stock down a little more than 6% in one day.
Google
I remember a buddy of mine talking about how he bought Apple stock at $20 and sold it at $40. It closed yesterday around $135. This is down slightly from its recent high above $140 as iPhone sales didn’t meet expectations. This setback aside, Apple’s shares have marched up steadily as the company continues to stay on the innovating edge and finding ways to show its relevance in both hard dollars and buzz. From roughly March until now, their stock has gone up more than 40%. Travel back a year, and it is up a remarkable 1.5 times since that time. The real shocker though comes when we compare Apple’s stock to Google over the lifetime of Google being public – since late 2004. A dollar in Google would have returned 3.75. A dollar in Apple – almost 8 dollars.
Apple
Last, and certainly not least, comes a company that most of us use in our lives quite a bit, whether the site research portal Alexa.com or the flagship which bears the company’s name, Amazon.com. For a stock that for so long did so little it, in the past two quarters, would make the languid Yahoo and eBay’s most envious. And, in another sign of why stocks make for a much more confusing business than CPA arbitrage, look no further than their stock. After posting a better than expected Q1, Amazon’s stock has increased an almost Bidu like 80+% since mid-March. Already hovering near its 52-week high, the stock took off once again upon their announcing strong Q2 numbers. The company earned in revenue 70% of what Google did, but in a show of just how much more profitable a virtual business is, Amazon had a net income almost one-tenth of Google’s. Their stock though has now more than doubled for the year. Given that they’ve had less than three years of profitability, we still wonder if it has hit break-even. With its third 20% day in less than a year, do we have over exuberance or a sign that online retail is starting to hit mainstream?
Amazon
Unlike 1999, much of the staggering growth comes from real money being made – be it Apple, Amazon, or Google. We will continue to lose money on our personal investments, we’re sure, but that won’t change our concern about the size of some of the percentage increases and decreases. It’s all about perspective in the end. We think these numbers look good because we compare them to 1999 and 2000. But, we simply don’t know if that alone makes it reasonable. It’s just money, right? Either way, it makes for a good story.
Network
