The number of public companies that are extremely overvalued and hyped is huge, but, it’s very rare to see a public company that hasn’t sold anything yet (and may never will) with a stock that’s up 450% (yes, that’s 4.5 folds) in one year. That company is Tesla Motors (NASDAQ:TSLA).

In case you don’t know, Tesla Motors is a company that wants to sell, in 2015, electric cars that may or may not work, and may or may not sell to the public well. Let me explain…

When Tesla Motors was first coined as a concept, there was no real competitor, now nearly every car manufacturer has at least one electric car, and guess what, these cars are not selling well. I live in Canada and the Nissan leaf is available to the Canadian public, but I have yet to see one being driven here in Montreal (or at least parked) myself. It’s either that all these Nissan Leaf owners think of their cars as Maybachs and only want to drive them in “exclusive” areas, or it’s that the Nissan leaf isn’t selling very well.

Maybe Tesla will be more lucky in North America, and it’ll sell well, but considering it currently has a market cap of about 50% of that of General Motors’ (or Ford’s, for that matter), I’d say it’s a pretty hard task to meet those stockholders’ expectations.

Tesla is a very new car, and the car manufacturing realm is a very competitive one – only time will tell whether this crazy venture will work or not. I personally think that it won’t, unless, of course, the reviews came out great and every other person in North America bought a Tesla and threw his old car.

I guess we’ll have to wait and see, but if you’re buying those TSLA stocks as if you are on a shopping spree, then I suggest to cover yourself with some put options, just in case this mad adventure doesn’t work.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

I am noticing 2 trends lately:

- Many companies are closing more and more of their retail stores and focusing more and more on online sales.
- Me (myself, and I) and all the other people I know are spending more money on online purchases than on offline purchases.

This can only mean one thing for the shipping business: a very bright future. You see, every single time you order something online, shipping companies make money, even if the shipping is free (free shipping doesn’t mean that nobody pays for the shipping, it just means that you won’t pay for the shipping, but the seller will – they should probably rename “free shipping” to “seller pays shipping”, because it’s technically not free).

This is not a theory – it is practical and it is reflecting in the stock price of each and every public shipping company. For example, FedEx (NYSE:FDX) is up 158% over the past 5 years, UPS (NYSE:UPS) is up 116% over the same period. DHL is private, but I’m sure they are experiencing the same growth.

So how come semi-governmental courier companies such as Canada Post are losing money?

I think the answer is obvious – mismanagement. The problem with these companies is that they always think, and rightly so, that they have a safety net (which is the government and the public) that won’t let them fall, so they keep on spending on things that they don’t need (technologies, etc…), promising wages they cannot pay, committing to perks they cannot afford, and hiring people that they don’t need. The government will always back them in case something happens to them. I don’t think there’s a silver bullet to fix the issues, so, I guess we all have to live with it! Either that or we sell them to the private sector, and then, a simple lettermail from Montreal to Toronto will cost in the near of $5 to send!

Going back to the main topic, I think the online business will need a decade or so to mature and to experience low growth, which means that for the next 10 years, business will be great as usual for all those courier companies! It’s a great idea to pick one right now and invest some serious money in it! But hey, don’t take my word, do your research first!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

February 11, 2014 | In: Technology

Bye Bye, Sony Vaio!

Sony has declared last week that it is selling its PC business (which consists of its Vaio line). Many out there (including myself) are only used to working with Vaio products (which are very reliable), so now we’re all left stranded. It seems that Sony is shrinking its business by the day – the next thing we’ll probably hear about is Sony selling its TV division to another company, and focusing only on transistor radios. I don’t know – but with this bad management, it can happen.

Sony claims that the Vaio division is generating extensive losses and that’s why they’re selling it. Maybe it is, but here are 3 reasons that I can think of why Vaio is making Sony lose money:

  1. Sony is trying to compete with low-cost (and low-quality) computer manufacturers such as Dell, HP, and Lenovo. Sony can do much better if they focus on just creating an excellent product that everyone would be happy to pay thousands of dollars for. But no, they had to produce these cheap $400 laptops just so that they can get a bigger footprint in the market. That’s the result of this strategy.

  2. Sony’s customer support is one of the worst customer support on this planet – if not the worst! Try calling Sony and you’ll most likely get someone from a remote country who can or cannot speak good English and who will probably blame you for the problem that you’re having. If you ever had to call Sony at any point in the past few years, you’ll know exactly what I mean. On the other hand, I don’t think that Sony should or can stand behind a $500 laptop – but the thing is, people expect quality service from Sony because they’re buying a Sony, regardless of the amount of money they paid. This is a huge issue for Sony and another reason of why they shouldn’t compete in the low-end market.

  3. Sony’s stores are another example of bad service. If you want to buy something then you are treated as a king. If you have a problem with one of your products, then you are treated like a beggar. For some reason, not a single person working for Sony (at least here in Canada) understands the concept of “repeat business”.

For these reasons, Sony lost the Vaio line. The Vaio line was doing great when a Vaio laptop would sell for $4,000 and cost only $1,500 to make – not anymore. The profit margin is much lower than before and Sony got stuck with insane customers who think that they have paid a fortune for their $500 laptop. Sony should have kept making exclusive laptops (like the Vaio Z series, which was canceled back in 2012) and should have stayed clear from the low end market.

By the way, Sony’s stock (SNE) is up nearly 6% since the announcement – of course, the market reacts positively when a company sells a division, but the thing is, Sony is worth less now, and not more.

In any case, the Sony Vaio will be no more as of this spring (I don’t know when exactly, but sometime during spring). I don’t know which brand I’m going to buy now for laptops.

Bye Bye Sony Vaio – it was really good while it lasted, and it did last!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

For the past few years (since 2007), Canadians have enjoyed low inflation because of the Canadian Dollar’s strength. This has caused a greater purchasing power for Canadians and ensured that the economy doesn’t fall into recession during the harsh years of 2008-2010. At the moment, you can purchase a Playstation 4 in Canada for $399 Canadian and for $399 US in the States. At the current rate of 1.11 (USD/CAD), Sony is selling the PS4 in Canada for 89% of its price in the US – this means that Canada is, by far, the cheapest country in the world to buy this item (in Australia it costs $549 AUD). Of course, the PS4 is just an example, but the same applies to many technology items.

Clearly, merchants will take notice of this issue sooner or later, and will raise their prices in Canada, especially if the Canadian dollar continues to drop (and I expect it to drop, the Canadian economy is based on commodities, especially oil and gold; both are dropping in price).

Now, the million (or billion) dollar question is, will this mean that the Bank of Canada is going to increase the base interest rate?

I think it does, but raising the interest rate will not help stem the fall of the Canadian dollar, and most likely, in a couple of years, the Canadian dollar will go back to the 1.5 ratio (e.g. each 1 USD = 1.5 CAD) – it would take some time for Canadians to adjust to this sudden inflation though (everything, with the exception of real estate, will cost more for Canadians).

The Canadian GDP per capita right now is at $57,000 CAD, which is more or less $52,000 USD at the current exchange rate. If the Canadian dollar goes back to the 1.5 ratio in a couple of years, then the average GDP will be something like $38,000 USD. This means that Canadians, generally, will not be as rich as they were for the past 5 years or so.

The parity days are almost over, and Canada should be prepared for that!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

I buy from Amazon (mostly from the Canadian site) frequently – and I noticed that they have this interesting practice when you add items to your shopping cart and you don’t buy. The next time (which can be the very next day) you check your cart, you will see a message telling you that same items have changed prices, some are up, others are down. For the ones that are up, you feel bad you didn’t buy them, for the ones that are down, you’re grateful that you waited a bit. But then, if you wait a few days, the ones that went up will go down again, and the ones that went down will go up again. This will make you think, OK, the ones that went up were correctly priced the second time and I won’t get a better deal elsewhere, and the ones that went down are now a bargain, and so you hit that Buy Now button and you make the purchase. If you don’t buy, then this whole up/down thing will continue like a yoyo with an unstoppable momentum.

I know only one thing about the marketing team in Amazon, they are geniuses. They exploit every human feeling of greed and frugality, and will turn it into a purchasing decision. But, regardless of how great Amazon’s marketing team is, Amazon’s stock is extremely overvalued at the moment, trading at a P/E of about 1,370. While this P/E is somehow acceptable for a new company, it is definitely not acceptable for a mature company with a more or less predictable earnings and sales. Unless the Amazon team has discovered another planet where people would buy (and read) anything (just like it is here on planet Earth), then that stock will soon experience a huge correction.

At the moment of me writing this post, AMZN is trading at $386.79, up 36% from a year ago.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Sometimes I search Twitter to find up-to-date information about something. Just right now, I was searching for a stock, and as usual, I was bombarded with spam in the search results. Spam was about 80% of my search results – literally.

I started wondering on what basis a company that doesn’t even have a mechanism to filter the most basic spam can become public. I understand that some spam is very hard to detect with generic algorithms, but 80%? Come on Twitter, you can do better than that.

So, how does this spam look like?

Well, the spam is a meaningless tweet that ends with a random hash. This tweet is always made from someone with zero followers. The meaningless hash is most likely used to trick Twitter into thinking that the tweet is unique, and it’s working, because Twitter’s spam filtering is by far the worst.

In any case, I don’t want to go very technical in this blog (I’m a programmer by the way), but the fact of the matter is, how can the market put value, any value, on a company that doesn’t do what it should do well.

Twitter, in my opinion, is a reactive (but very useful) company that should focus on its technology and how to generate money before begging asking for money from investors. But hey, I don’t run the NYSE, and there are many suckers out there with lots of money willing to buy TWTR at $50+, regardless of whether the search results work or not, and regardless whether the company generates money or not.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

December 13, 2013 | In: Trivia

Is Just for Laughs Fake?

I love watching just for laughs – it really makes me laugh and it makes me proud, since it’s made right here in Montreal. But, unfortunately, it’s fake! If you don’t believe me, let me give you a few proofs:

  • I’ve been living in Montreal for over 8 years now, and I have never, ever seen someone sitting on a bench when someone else is sitting on it. Quite a few pranks take place when two people (one of them is the prankster) are sitting on the same bench. Hmmm!
  • If you watch Just for Laughs often, then you will notice that there are familiar faces – and I’m not talking about the faces of the pranksters, I’m talking about the faces of the victims. I mean, the possibility of someone being the victim of a “Just for laughs” prank 3 times in his lifetime is one in a trillion, but hey, some people are very, very unlucky.

  • The pranksters are known by nearly everyone on this planet, yet the victims act as if they have never seen them in their lives.

  • The reactions appear to be fake quite often.

So yes, Just for Laughs is fake, it’s still funny, very funny, but fake! There are no victims, but there are suckers: those thinking that Just for Laughs is real! Now, if you still believe that Just for Laughs is not fake, then you might as well believe in Santa Claus and the Tooth Fairy.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

It seems that Apple has withered the pre-January effect that I predicted earlier; we are now nearing the end of November (still 3 trading days in this month other than today) and yet the stock is still resilient. I think the only reason why this is happening is because people have high hopes about the iPad 3, and because Icahn is pushing Apple to buy back 1/3 of its stock. In any case, the pre-January effect, where losing stocks throughout the year usually decline further, ends around December 15, which means that AAPL has still 13 trading days to substantially decline, but, again, it seems that this is no longer the case. In fact, I think right now the question is whether AAPL will close the year on a positive note.

Now, AAPL has started the year trading at $549, which means that, at the current price of $533, it still has $16 to catch up, or exactly 3% of its value. This means that Apple has a great chance of reaching the January 2nd, 2013 price and most likely beating it. If anything bad is going to happen to the stock it is going to happen between now and December 15th. After December 15th, the stock can only go up. Will it go up by 3%, I’m sure it will. In fact, I think it will close this year up 10% from last year.

You heard it here first!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

The XBox One was released last Friday, and according to reports, it has sold a million units in just one day, which huge backlog demand. Now, the big question is, what did that do MSFT on Monday? The answer is short: Nothing, zilch, nada, zero! The stock has closed at $37.64, just 0.2% more than last Friday.

Now, of course, you might be wondering, why did the stock just go up 0.2% when the XBox represents about 20% of Microsoft’s revenue, why not 20%? Well, there are several answers to this question:

  • Microsoft is losing money on the XBox One. In fact, Microsoft has never made any money on XBox hardware. It only made money on the games and on online services.

  • The XBox One, like the PS4 is still to prove its performance. First day, even first quarter sales are meaningless, because these are usually reserved for die hard fans. What really matters is the sales after the first quarter. In short, investors are waiting for the second quarter to judge Microsoft’s new console.

  • Investors don’t think highly of Microsoft’s entertainment division. While that division is making 20% of Microsoft’s revenue, most of that revenue is diluted by high hardware costs (again, Microsoft has never, ever made a penny on an XBox console). The Windows division constitutes about the same revenue, but the margin on Windows is much, much higher. Windows’ profits are about 90% of the division’s revenue.

  • With the exception of Windows, investors have learned not to be bullish on any Microsoft product.

  • Microsoft has made some terrible mistakes prior to the XBox One release – mainly when they told their clients that they will need to “authenticate” their console periodically and that they can’t trade-in games and rent games. This angered many clients which ultimately forced Microsoft to step back from that decision. The harm was done, however, and many converted to the PS4.

Well, these are the reasons I can think – if anyone wishes to add something, feel free to comment. Only time will tell whether the XBox One will be Microsoft’s next big hit – but for some reason, I really doubt that it’ll happen.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

The Playstation 4 has been released last week (well, technically, 2 weeks ago, if you think of Sunday as the beginning of a new week), and all retailers have now zero PS4′s in stock. One would think that retailers have made a fortune off selling PS4′s, but this couldn’t be far from the truth.

I know management people working at FutureShop, BestBuy, and Target here in Montreal and all of them confirmed that they’re only making just $5 on each PS4 sold – so, if you’re taking into account all the marketing that they are doing and the logistics to handle the PS4′s, they are technically losing money. But still, the raw profit on each PS4 is $5. Now, since each PS4 is selling for $400 here in Canada, then this means that Sony is selling the PS4 to retailers at the very reasonable price of $395 (by the way, have you seen the PS4? It is a very beautiful piece of hardware and it is definitely underpriced). And I’m talking Canadian Dollars here…

Now, according to a report on AllThingsDigital, the PS4 costs $381 to make (or $402 CAD), and that is just the hardware’s costs, we’re not taking into consideration marketing and logistics, which means, that Sony is losing money on the PS4, not much, but I think it’s something about $50 a piece – which is reflecting on Sony’s stock price (NYSE:SNE), which has lost nearly 2% since the PS4′s launch.

By the way, I think we Canadians are lucky at the moment, large companies are treating the US Dollar as equivalent to the Canadian Dollar, which is no longer the case. Our luck will run out once the CAD falls below the 90 cents level, which might be sometime next year. Until then, let’s just enjoy this favorable exchange rate.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Page 1 of 4312345678910203040...Last »