money management – Page 3

SoFi Stock is Down 17% Over the Last Month. Am I Buying More Shares?

SoFi is the biggest position in my investment portfolio that is not a fund. With that in mind, one can see that how SoFi performs in the market is a very big deal to how I, myself, perform in the market. Luckily, SoFi has done very well this year. Over the last month, however, it has fallen by more than 17% at time of writing.

I like SoFi. I use their products. I invest in their funds. I own shares in the company. I’m obviously very bullish on this stock. That said, I have actually not been buying as many shares this year as I did last year. I bought a lot of shares last year. SoFi then increased in value dramatically this year. I didn’t buy as much SoFi stock because the value of the company increased, and I didn’t want to buy as much at the higher prices. Now, however, the stock is looking a lot more appealing at these new prices. I like buying businesses when they are on sale.

Not everyone shares my love of SoFi. Wedbush analyst David Chiaverini is not a fan of the stock at all. He believes that SoFi will lose more than half of its value over the next 12 months. A big reason for this is loans.

SoFi is a big provider of loans. When SoFi loans out money, they don’t simply wait to collect the money back with interest. They try to sell the loan. That way they can make a profit much faster. This has worked well as SoFi has been able to create loans, sell them, and make a profit very quickly.

David Chiaverini points out that this is not all there is to it though. If the person who received the loan from SoFi doesn’t pay, it will still hurt SoFi. SoFi will have to face part of the losses if the one who received the loan refuses to pay. These losses are capped, but SoFi hasn’t stated what that cap is.

Obviously, that is a risk to SoFi’s bottom line. Is it a risk that should send SoFi to $3 a share? Obviously, I don’t think so. I wouldn’t be a shareholder if I did. David Chiaverini, however, disagrees with me.

All that being said, I’m very bullish on SoFi. I see SoFi as a company that is growing very quickly. I see SoFi as a company that is reaching profitability. I see SoFi as a company that is producing revenue through many financial products and services, loans simply being one of them.

Time will tell if I am right, but I am very bullish on this company.

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Bumble Is Down 80% Since IPO. Is It a Buy?

Bumble’s founder and CEO Whitney Wolfe Hurd is stepping down from her role as the stock has fallen dramatically since its IPO. Bumble was a pretty interesting IPO to me. Pretty much every dating app in existence is owned by the company Match Group, except for Bumble. The fact that Bumble was able to get big enough to IPO in the first place while being up against a huge monopoly is impressive to begin with. However, the stock is down 80% since then, so the real question is, is the stock a buy at these lower prices?

At time of writing, Bumble now trades at $13.81 a share. This gives them a market cap of $2.52 billion. Looking at the company’s previous numbers, in 2022, the company brought in $903.5 million in revenue but actually lost $114.12 million. The year before, they brought in $760.91 million in revenue and profited $281.74 million. I like that the company is increasing their revenue year-over-year. One probably noticed that they went from turning a profit one year to losing money the next, but I am not too concerned about that as they are growing pretty quickly.

The company currently has a price/sales ratio of 1.77. I would personally consider that to be on the higher side of a good p/s ratio. The company has a price/book (price divided by book value of the company) ratio of 1.07 which is actually a lot better than what I was expecting. Bumble does have debt. They have $621.93 million in total debt. The company does have a current ratio (how able a company is to pay off short-term loans due within a year) of 2.97. In most cases, people look for a current ratio to be between 1.5-3 which Bumble has.

I didn’t expect to like this stock, but it’s numbers, to me, seem pretty good. The company is definitely a little overvalued, but the numbers imply that this stock could be a buy.

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Meta’s Earning Call Today Was Amazing!

Last year, Meta’s stock absolutely crashed. The stock was doing terribly. I felt like Meta’s price drop was a HUGE overreaction, so I invested in the company. The stock then fell more, so I bought more. This caused Meta to become a really large part of my investment portfolio. That, of course, ended up working out for me very well considering that I am currently up over 100% on my shares.

With the stock becoming so profitable for me, I considered selling my shares and realizing my gains, but I didn’t. I just love the overall business of Meta too much, and I like owning part of it. Meta had an earnings call today that I was really excited for, and I am happy to say that they absolutely crushed it. Here’s some numbers.

Meta brought in $34.15 billion in revenue compared to $33.51 billion expected.

Meta also earned $4.39 a share compared to $3.60 a share expected.

Meta also revealed that Facebook now has 2.09 billion daily active users compared to 2.07 billion expected daily active users.

One thing people will point out is that Meta is still losing a ton of money on vr/ar projects through its reality labs division. This was actually a big reason for the stock falling so much last year. While this is true, it’s a very small part of the actual business. The core part of the business (its family of apps) is still growing and producing more revenue. The business itself is doing well.

I was also pleased to see an update on its twitter like social media app Threads which launched about three months ago. I’ve seen many people make the claim that threads is not doing well. It exploded in growth early on and did experience a pullback after which, in my opinion, got way overblown by the media. Anything that grows as fast as threads did is obviously going to experience a pullback. Meta announced that threads currently has just under 100 million monthly active users. That is absolutely incredible for an app that is 3 months old.

Overall, I am very happy with this earnings call as a shareholder.

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Analysis of Klaviyo Inc. Stock

Klaviyo recently went public for the first time. 2022 did not have many IPOs (initial public offering) as the market was down, so I have been very happy to see companies having more faith this year and going public. That said, I normally do not invest in IPOs as a general rule as I want to wait and see where the stock ends up. Klaviyo, however, does interest me as a company. Is the stock a buy?

Klaviyo is a marketing automation platform that mostly works with SMS and email. That is what piqued my interest in this company. That is obviously a very valuable service, and a company built around this is one I like the idea of owning if I can buy it at a good price.

Klaviyo is currently trading at around an $8 billion valuation. At this valuation, one is buying this company at a price/sales ratio of 13.57. With this in mind, I believe that the company is very very overvalued. That is, of course, to be expected though as its a high growth company.

One thing that I keep seeing brought up as a negative for Klaviyo is how dependent they are on Shopify. Shopify is responsible for a lot of the company’s revenue. Investors must understand that if Shopify ever stopped working with Klaviyo that it would be a huge hit on their revenue. I’m not really worried about that though. Shopify is one of Klaviyo’s biggest investors so hurting Klaviyo would hurt them.

I personally would not buy Klaviyo at its current valuation. I think the stock will fall in the short term, and if it falls enough, I will then buy shares in the company. I hope that it does happen as I do want to buy this stock.

I created a list of finance tools that I personally use to build wealth. Check it out – https://mez.ink/cwtfinance

Buying More Shares of Ally Financials Inc.

Ally is one of my favorite stocks, and it is one that I definitely plan on buying more of. They are a digital financial-services company most known as a digital bank. Here’s why I’m buying more shares:

I like buying digital banks because they don’t have to deal with the cost of brick and mortar locations and are becoming more and more popular. There’s huge demand for banks like this, and they are cheaper to run. This equation, I believe, is good to invest in.

Ally Financials, specifically, interests me because I believe that the stock is very cheap. I bought shares of this company earlier this year because I believed the stock was cheap, and I believe that that is still true now. The company currently has a p/e ratio of 7.16. While it is true that banks usually have lower p/e ratios compared to other industries, I don’t believe that Ally should. The reason for this is because Ally has, in my opinion, a lot of potential for growth.

The reason for this low valuation, I believe, is because of short term problems. Investors worry about Ally in regards to rising interest rates, declining car values, and inflation. I agree that this is reason for concern in the short term, but the keyword in that sentence is short term. I think it’s a short term hurdle for a strong business, and I’m really just concerned with the long term of this company. These problems are letting me buy this stock that I plan to hold for awhile at a very good valuation which is, of course, great for me.

Ally also has a 4.54% dividend. I like a good dividend because it gives me cash flow, but I also do wish that they were investing that money back into the business instead of giving it to me. That said, it’s a strong dividend for dividend investors.

All in all, Ally offers strong products that I believe will continue to be in high demand, and I think it is insanely cheap because of short term issues that I don’t believe will impact long term growth. Because of this, I believe that it’s a great investment for me. I plan to buy more shares of the company.

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Holding Companies for the Long-Term

I think investing is very fun, but my actual strategy is very boring. At least, it could easily be perceived as boring. Every stock I buy, for the most part, is one that I plan to hold for many years. I really don’t ever plan to sell stocks, but I will if they start trading much higher than I think they should be. The goal, however, is to never sell.

Many people claim that this is not a good strategy because without selling, the gains from a company’s increase in value is never realized. While true, I look for companies that are going to pay me cash flow. I treat investing in stocks like one would invest in farmland. If one buys a farm, they probably aren’t checking quotes for that land every day. They are running a farm to get cash flow on that land. Maybe eventually they will sell the land, but they are owning it for the cash flow. I buy businesses for cash flow. I then use that cash flow to buy more companies so that I can get even more cash flow from them.

When I look at a stock, I am not looking for something that I can flip for a higher value in a few months. I am looking for a company that I can own for decades that will steadily increase the amount of cash flow that it is paying me. Obviously, I want the company to increase in value as well over those decades, but it is not something I have any plans at all to sell.

This is my personal strategy. If I find a company trading at a good valuation that is steadily increasing their earnings per share year-over-year, I will buy that stock. I’m not saying it is the best strategy, but it is my strategy.

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Thoughts on Bitcoin for Q4 2023

At time of writing, Bitcoin currently is trading at $26.5k.

If one would have invested in Bitcoin at the beginning of the year, they would currently be up 59.4%. This is obviously a nice year to date return, but Bitcoin is still very far from its all-time high of around $69k a coin. Now that we are in Q4 of this year, here are my current thoughts on Bitcoin.

Right now, there is some positive developments in the space. There are many companies competing to bring a spot Bitcoin ETF to market. This would be a fund that moves directly with the price of Bitcoin. There are already Bitcoin future ETFs that bet on the future price of Bitcoin, but future ETFs do not move directly with the asset. Grayscale has been trying to become a spot Bitcoin ETF for a while now, but the asset management company Blackrock, along with others, have recently also tried to get a spot Bitcoin ETF created. I think that this is very bullish.

The reason I believe this is bullish is because a spot Bitcoin ETF opens up a lot of possibilities. First, it makes it easier for the average person to store Bitcoin. I have had many people tell me that they want to buy Bitcoin. When they do, I try to explain to them how storing Bitcoin works. Right now, one can store their Bitcoin on their own digital wallet. When one creates that wallet, they get a seed phrase that is essentially the password to that wallet (a very very long password). It’s a password one can’t lose. If one loses that password, they cannot get into their wallet ever again. This is how a lot of people buy Bitcoin and then lose access to it forever. With a spot ETF, one can invest into it like a stock which is much easier.

Secondly, it lets people hold Bitcoin in their Roth IRAs. There are companies already one can use to put Bitcoin in their Roths, but a Bitcoin ETF would make this much easier. I believe that Bitcoin being an option for retirement accounts would greatly increase demand.

I believe that a spot Bitcoin ETF will eventually get approved. Grayscale recently won an appeal with the SEC that I think is very good news. I see this as very beneficial to Bitcoin long-term.

Will this help Bitcoin’s price movement in Q4 2023? I believe that it should, but even if it doesn’t, I believe that this will help the price of Bitcoin long-term. I also hope that it doesn’t yet, as I would like to keep buying Bitcoin at as low prices as I can. If the positive news doesn’t help Bitcoin’s price for a bit, that is very much good news for me.

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4 ETFs That I Like

I constantly see people giving advice to invest in ETFs (exchange traded funds) and not individual stocks. While I think the sentiment of this advice is good, there are a lot of ETFs out there. Some are great ones; some are terrible ones. Telling someone to “just invest in ETFs” alone is not good advice. That said, here are some ETFs that I do like.

SFY – SoFi Select 500 ETF

SFY is a S&P 500 ETF from SoFi. The reason I really like this ETF compared to other S&P 500 ETFs (although I do also like VOO) is because it has an expense ratio of 0. The expense ratio is the management fee that a fund’s creator takes. SFY’s is 0.

2. SCHD Schwab U.S. Dividend ETF

I believe that SCHD is likely the best dividend ETF out there. Since its creation in 2011, it has outperformed the S&P 500. Now, past performance does not necessarily equal future performance, but the fund has performed pretty amazingly.

3. VUG – Vanguard Growth ETF

This fund by Vanguard invests into growth stocks. Most of these stocks are very large cap U.S. companies. I’m a pretty optimistic investor which is a big reason that I really like this fund.

4. VFH Financials ETF

This ETF invests in the financial sector. I like this ETF because I want exposure to this sector without having to pick individual companies in it.

These are some of the ETFs I am a fan of.

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AMC Entertainment Holdings, Inc. Stock is Down 42.79% Over the Last 5 Days

AMC Entertainment is down 42.79% over the last 5 days. This is largely due to them announcing that they would be selling up to 40 million new shares to raise money. This is a big deal to shareholders as it dilutes their ownership level of the company. When a company issues more shares to raise money, the amount of shares that an investor holds remains the same. This means that the shareholders now own less of the company than they did before.

Shareholders now have a decision to make. They have to decide if they want to sell their shares or hold their shares and watch their ownership level of the company shrink. Obviously, a lot of shareholders are choosing the first option. This is, however, not the first time that this has happened. AMC has already sold millions of shares in recent years. They have, unfortunately, used up that cash and are now selling more.

It is not uncommon for companies to issue new shares to raise money. It is also not always a bad thing either. Many high growth companies operate at a loss as they are reinvesting all their revenue into the business to keep growing. This can be a good thing as the company can now reinvest that new cash back into the business to grow even faster. The investor’s shares will then become more valuable as they now own a higher revenue producing company.

AMC now trades at a market cap of $1.14 billion at time of writing.

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Warner Brothers Discovery Says the Strikes Could Cost Them Up To $500 Million!

Last year, I started buying shares of Warner Brothers Discovery (Ticker: WBD). Why? Because I believed that the company was undervalued relative to its assets and intellectual properties (and still do). That decision, however, has not exactly paid off. Warner Brothers Discovery has seen multiple box office failures since I invested. While they do have very valuable IP, I did not account for them mishandling that IP as much as they have. This has, of course, made being a shareholder very frustrating so far.

WBD recently lowered their 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to $10.5 billion to $11 billion. This would be a hit of around $300 million to $500 million. They claim that this is largely due to the actors’ and writers’ strike.

While I am sure that the strikes are hurting them and is a big part of that number, I personally believe that a big reason for their losses is streaming. While streaming services can be profitable, a lot of the big studios are spending so much money on making content for their services that they are losing obscene amounts of money. Disney is having this same problem as they are spending hundreds of millions on several of their shows which is just not profitable.

The strikes were originally thought to be over by early September, and Warner Brothers Discovery CEO David Zaslav has been very into the negotiation process with the unions. It looks like the strikes are going to go on for a while more.

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