The Motley Fool in recent weeks has been ramping up their teaser pitches on the weekend over the past few weeks, sending quite a few questions our way — most of these have been pitches for their higher-end portfolio services like the various Extreme Opportunities services, and that’s also what has caught our eye this week.
The pitch doesn’t have a person’s name attached this time, and I’m not sure who runs this portfolio at the Fool, but what they’re advertising is a new service called Extreme Opportunities: Future of Entertainment ($1,300/yr, no refunds), and they say that they’re launching this with a focus on their top entertainment-related ideas, including both established “foundation” leaders (they say there are seven of those) and what they say are 13 exciting growth ideas…
“We’ve pinpointed 13 stocks that are pure plays into some of the most exciting growth areas across all of entertainment. These stocks include streaming plays, online video, advanced technology plays, and much more!”
And while they don’t talk about the seven “foundation” names much (I would guess that list would very likely include names like Disney (DIS), Netflix (NFLX), Roku (ROKU), Alphabet (GOOG), Activision Blizzard (ATVI) and Tencent (TCEHY)), they do hint at two of those smaller “pure play” ideas in the teaser pitch — the headliner is a gambling stock, here’s how they hint at it in the email ad I received over the weekend:
“RECENT IPO TARGETS 827X POTENTIAL GROWTH….
“Whether it’s daytrading or gambling, a LOT of people are looking for ways to make a quick buck online.
“That’s fueling some pretty impressive growth in the online gambling industry.
“(In fact, some experts are predicting that the online gambling market could be worth $127 billion in just a few years!)
“Well, the team at Extreme Opportunities: Future of Entertainment have uncovered a stock that I see as a pretty exciting ‘pure play in this rapid-growth market that IPO’d just last year.”
What clues do we get about this one?
“… it’s tiny. $907 million market cap, to be precise….
“… targeting 827x potential business growth. Management estimates that this stock’s total addressable market could grow to $30.6 billion. By contrast, this stock brought in just $37 million in revenue in the last year. A potential total addressable market that’s estimated at 827x the size of the current business? …
“Never recommended at The Motley Fool before.”
And this is still technically not “recommended,” I guess — they pitch it as hugely exciting with that 827X potential growth, but also say that it is just a “radar stock,” something they’re watching but haven’t formally recommended yet (and might never). And they do imply that this is risky, because “this is an early-stage, aggressive company.”
So what’s the story? Well, you’d have go back all the way to last Wednesday morning to find it at a $907 million market cap, but the Thinkolator confirms this is our old favorite GAN ltd. (GAN), the gambling technology company. And yes, as further confirmation, GAN’s investor presentation does estimate their “Total addressable market at maturity” as being $30.6 billion (roughly 40% B2B iGaming, their most profitable business, and 60% B2B Sports Gambling, fueled largely by their acquisition of Coolbet).
That’s Gross Operator Revenue, NOT GAN’s forecasted potential revenue or the size of their potential market — you can think of Gross Operator Revenue as being the total amount of betting that’s happening through the platforms run by GAN’s customers, touching GAN’s account management system or their sports betting platform or whatever other parts of the technology stack that client uses (kind of like Gross Merchandise Volume for Shopify’s customers/vendors, for example). The total revenue that actually comes onto GAN’s income statement is far smaller than the Gross Operator Revenue of its clients — so for the first three quarters of 2020 GAN’s clients had Gross Operator Revenue of $413 million, very strong growth from $195 million in the same period of 2019… but GAN’s actual revenue, if you exclude a 2019 patent payment they received, was up about 65% from $15.3 million a year ago to $26.3 million in 2020. Still good, but the total addressable market for a gaming technology company like this is not “all the money people are going to gamble” — it’s the fraction of that amount that casinos who want to outsource player account management, online games, or sports book management will spend on technology.
The business is scalable to a large degree, they do get the most meaningful portion of their revenue from a revenue share on real money iGaming and a smaller portion from a sports gambling revenue share with some clients, but there’s also some real lumpiness — both revenue from and costs associated with ramping up technical support for new clients and rolling out new services can bounce around a bit… this year the big event so far is the Michigan launch, the latest big state addition to full online internet gambling and sports betting, with the first legal bets taken about two weeks ago with three different GAN clients as operators.
It’s still a small company, and losing or gaining a client or a state still has a meaningful impact on the revenues in any given year, but it’s important to be aware that the potential market for GAN is a fractional revenue share of the potential market for online gambling in general.
So get that idea of 827X growth out of your head right now, please.
It’s OK, we can wait a minute.
Adjusted yet? OK, we can proceed…
I really like GAN, and have added to my holdings a couple times since I first bought shares a little while after it was teased as a gambling “hidden SaaS” name by one of the Stansberry newsletters, a tease which started about a year ago (and has been updated and revised and relaunched, they were teasing it again in mid-January and I posted an update look at those stocks here). Shares surged when they shifted their listing from London to New York (that’s the “IPO last year” bit), then surged further when Dave Portnoy fell in love with them and they got some day trader excitement flowing over the summer, in the wake of bigger name-brand gambling stocks like DraftKings (DKNG) and Penn National (PENN), and then crashed back down a bit when everyone freaked out about losing part of FanDuel’s business (though that was neither a surprise nor a real crisis), so it’s been a wild year… and GAN has now grown to become a meaningful position for me, so I do watch it pretty closely. This is part of what I wrote to the Irregulars a couple weeks ago, when Michigan was just about to (finally) go live:
"reveal" emails? If not,
just click here...
“I’ve mentioned several times that Michigan is going to be the next big indicator for the growth of sports betting and the impact on revenues for GAN ltd. (GAN), our gambling technology provider, and they did post a press release today highlighting the official launch, finally, of online gambling in the State today. That’s not really a big news item, this has been expected for a while, but GAN did include some estimates for the market that will be interesting to track:
‘According to Regulus Partners and Macquarie Research, the state of Michigan is expected to generate $439 million in Gross Operator Revenue during the balance of 2021, increasing to $724 million in 2022 and $969 million in 2023.’
“Again, the projected scale should come as no surprise because we know Michigan has an established gambling economy, and they instituted relatively low state taxes on par with New Jersey’s to spur growth, and because there are nine online casinos ready to launch on day one, most with strong brand names and plenty of marketing capital (and three of them using GAN systems). That data is also in GAN’s presentation to the Needham Growth Conference, the slides for which are now available.
“We don’t know what the market share will look like among all the competitors in that market, but those are big numbers — not quite on par with New Jersey, which is likely to remain the largest online gambling market in the US for years, and may close in on a billion dollars in gross operator revenue, but certainly dramatic. GAN’s customers had a total of $315 million in gross operator revenue in 2019, almost entirely from Pennsylvania and New Jersey (and dominated by FanDuel, the early leader in both of those states)… and that turned into $30 million in revenue for GAN for that year, which gives you some idea of the general share of gambling revenue that GAN earns as a technology provider.
“GAN will likely end 2020 with pro forma revenue of roughly $60 million (if you pretend that they owned Coolbet for the full year), so if Michigan online casinos do hit that $439 million in gross operator revenue this year, and GAN’s partners/customers take a third of that ($146 million), then perhaps GAN’s revenue in 2021 could see growth of about $12-15 million from their operations in the state — which would mean more than 20% growth in revenue for GAN just from the addition of Michigan. Other states are also opening up, and their biggest markets in New Jersey and Pennsylvania are still also growing year over year (and transitioning TwinSpires’ business to GAN in those markets), so I expect the overall growth number to be higher than that, but it’s a pretty easy foundation on which to build your guesses — analysts are at $86 million on average, for GAN 2021 revenue estimates, and while I think that’s probably a little conservative that would mean roughly 40% revenue growth for a profitable company that trades at roughly 10X expected 2021 revenues and probably about 100X 2021 earnings. That’s not cheap in any objective way, for sure, but compared to a lot of other high-growth software providers it is very reasonable… and the market grows every year as more states legalize online gambling and sports betting.”
I guess everyone agreed that was a bit conservative, because the revenue estimate has bumped up again now — forecasts are for $99 million in revenue for 2021 at this point, and after a little pop yesterday the stock at $30 or so now has a valuation of just over $1 billion. GAN is not as cheap as it has sometimes been, and it is not, of course, the only technology solution for casinos that are looking to build online gambling businesses… but it growing strongly and steadily, it is profitable and scalable, and it is among a relatively small number of technology providers that have the technology, experience and regulatory approvals to pretty quickly launch an online gaming business, especially for the local or regional casino brands who do not have a large technology business or partnership yet, and I expect that we’re all underestimating just how quickly gambling legalization is going to spread as social acceptance accelerates and states begin to realize how much of a budget hole they’re trying to fill post-COVID.
And the second stock they tease in this ad is an advertising name…
“… one of our favorite recommendations is a tiny company with a MASSIVE opportunity in front of it…but is still small enough to slip underneath Wall Street’s radar!
“For some perspective, it’s about 1/50th the size of Netflix…
“And specializes in connected television advertising. Now, as we noted earlier, a past Motley Fool recommendation in this space was The Trade Desk, and after being recommended in early 2017, that stock has already soared 2,393%! ….
“However, this stock we’ve identified as one of our 13 pure plays is significantly smaller than The Trade Desk now is today. What’s most impressive is that its most important business line has been growing at over 100% rates!”
Netflix has a market cap of about $240 billion, so if you’re “1/50th” of that you’re looking at a market cap somewhere in the sub-$5 billion range. And that means this one is very likely a stock that had a massive pop on Friday, Magnite (MGNI).
Magnite is indeed often hinted at as a “next Trade Desk” kind of idea, and has been pitched by a few newsletters over the past year or two, particularly after it merged with Telaria to really focus more on providing a sell-side advertising platform for “connected TV” (ads in streaming services, mostly, like you might see on Peacock, Roku or Hulu). And on Friday, they went further down this path by agreeing to buy SpotX, another video ad platform, for $1.2 billion, which sent Magnite soaring another 20%. They’ve also been a Motley Fool recommendation for a while, so unlike GAN this is not a “new to the Fool” idea.
Magnite is still smaller than The Trade Desk (TTD), by a lot, but has become much more substantial… MGNI now has a market cap of about $6.5 billion, it’s not quite profitable but is expected to pass that “break even” point this year with about 270 million in revenue (without SpotX), so it’s trading at a pretty familiar valuation to anyone who has been looking at growth stocks lately — roughly 25X sales, a now kind of “normal” valuation that everyone would have laughed off as absurd five years ago. The SpotX acquisition is being made with half cash, half stock, and they report that SpotX revenue in 2020 was $116 million, so the acquisition goes through at roughly 10X trailing sales.
They also pre-announced some of their preliminary 2020 results, which showed very strong growth and emphasized how the SpotX deal will increase their overall exposure to connected TV advertising (Magnite is a broader ad platform, with roughly 20% of revenues coming from connected TV, SpotX gets more than half of their revenue from connected TV).
What’s the future for Magnite? It’s certainly in a sweet spot as far as the investor story goes, they’re in the hot digital advertising market, and they’re a platform with meaningful exposure to the very fast-growing business of ad-supported streaming. They are not really a Trade Desk competitor directly, The Trade Desk’s customers are primarily ad agencies and large ad buyers, while Magnite sees its customers more as ad sellers degree (TTD is on the buy side, and sells software and data about ads, close to half of their revenue comes from the big three ad agencies… Magnite is on the sell side, and sells the ads on its platform of publisher and partner inventory). Software and data sales are a better business because the margins are a little higher, but there’s also a lot of overlap and still a lot of evolution happening in this business.
And The Trade Desk is also, though it’s a great company and has been a tremendous growth story for a long time, a little more ludicrous in the valuation department — it has a market cap of $40 billion, and trades at more than 50X trailing sales (almost 40X expected 2021 sales). I’ve owned The Trade Desk since 2017 (I started buying it around the time the Motley Fool began teasing the stock), and I really like the company and their potential, and their consistent profitability, but I can’t tell you that it’s easy to swallow a valuation of 150X earnings, even with steady 25%+ growth (and I’ve taken profits on about a third of my position over the past year).
So although I don’t own Magnite, and I think the valuation is pretty nutty, I should admit that I still own TTD, which has an even nuttier valuation… and the connected TV advertising business is growing so fast, and taking so much of the advertising market away from traditional network TV advertising, that it might still work out for most of the players involved. A huge and fast-growing business, combined with a very fast-growing company trying to take market share, can work out even if you overpay for the company — it’s just that you have to be ready to accept that you’ll have to be patient, and it will probably be volatile, and sometimes these high-growth companies just plain fail so you have to diversify. If you’re a growth investor, most of your gains will come from the 20-30% of your investments that do outlandishly well, making up for the fact that most of your investments will probably disappoint (except for last year, of course, when it seemed almost every growth or tech “story stock” was a huge winner).
That’s part of the reason I haven’t delved further into this sector, though I do like the strong underlying growth — I already have large stakes in Roku, The Trade Desk and Alphabet, and all of them are significantly driven by video advertising, so adding Magnite or AcuityAds (AT.TO, ACUIF), both of which have some “what’s next” appeal, haven’t fit with my needs (AcuityAds has been pitched by some other Motley Fool folks as a kind of “baby Trade Desk”).
Maybe they’ll fit with your needs and your portfolio, though with nosebleed valuations everywhere we look in the market these days it can certainly be tough to place big bets on stocks that have just had 20% pops higher in a day or two like MGNI (or AcuityAds, for that matter)… so while a big surge like that might be a vote of confidence from other investors in the future for these stocks, and popular stocks tend to stay popular, I certainly don’t have any idea whether the next 20% move will be up or down (“average up” would be one of the key strategies of the Motley Fool’s growth guru David Gardner, putting more money into the stocks that are telling you they’re the best, but he’s got a stronger stomach than many of us).
I know there are plenty of folks out there in Gumshoedom who own all of these stocks I’ve mentioned today, so if you’ve got an opinion to share I’m sure we’d all be delighted to hear it — just leave your thoughts in the happy little comment box below. Thanks for reading!
Disclosure: Of the companies mentioned above, I own shares of and/or call options on The Trade Desk, Netflix, Activision Blizzard, NVIDIA, Unity Software, Alphabet, Twitter, GAN and Roku. I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.
Thank you, Travis. I too hold large positions in TTD and ROKU. While my instinct is to run out and buy MGNI, I think I am set there also. I didn’t quite realize that until I read your statement “They don’t fit with my needs.” Nicely said.
P.S. GAN ltd, did, however.
GAN is an interesting little story too, it was on the verge of being sold for parts a few years ago… and then rejuvenated by the need to rapidly launch online gambling in New Jersey, particularly with FanDuel, when the Supreme Court decision legalizing sports betting outside of Nevada came through and NJ wanted to build the business overnight.
It gets sold by some folks as the “one toll road” for anyone who wants to create online gambling systems, and that’s obviously not true (there are plenty of competitors, of course, otherwise they would be providing the backbone for all ten of the sports books that launched in Michigan a couple weeks ago, not just three of them), but I do think they’re in a good spot.
Thank you Travis for GAN, if it wasn’t for you I wouldn’t be in it.
how much did you pay for your GAN if you don’t mind ask ?
Im new to stocks so not sure if that is a proper to ask
thanks in advance.
Hi Travis, do you know when was this originally recommended by MF? Thanks,
fortunate/lucky to have picked up several thousand shares of mgni at $6. On multiple occasions I have come very close to cashing out, but it continues on a ridiculous trajectory. I took half my TDD based on your input, but can’t seem to let go of the other half, so struggling with when to do the same with mgni. Obviously there are worse problems to have but hate the “what if”… When did Motley first recommend… I missed that? Others that have mgni, what’s your plan…
Excellent work. I got mine at $7.85 a share but not having the strongest of convictions of the time did not get nearly as many as you. Without a doubt this is the best I’ve ever done on any one stock.
Selling a great stock with huge gains is really hard, it’s true. I always try to go fairly slow in both buying and selling, putting a little bit of a brake on decisions that I know will not be perfectly timed.
David Gardner at the Fool would probably say to hold a great company that has continuing fundamental growth, and try to hold it forever… as long as your exposure is below your “sleep at night” level (ie, it is a large enough percentage of your portfolio that you are constantly anxious about it). Having huge gains is not a great reason to sell, but having a very volatile stock become 10% or 20% of your portfolio may well be a reason to sell for a lot of people. I don’t think David picked MGNI, but I have seen indications that Tom Gardner has recommended it (they both picked TTD, I believe)… I don’t know when, and it’s so small that it probably hasn’t made it into their big Stock Advisor portfolio so it’s probably in some of their other high-end portfolio services… but I’m pretty sure this is the first time I’ve seen them actively tease the stock.
Travis, I fit into the situation you described. MGNI has become approximately 25% of my portfolio due to its massive gains, and I’m not sure what to do here, especially now that MF is teasing 10x… from HERE.
I bought in prior to the merger with Telaria (as RUBI—at $5.42). It has by far been the best-performing stock I have owned at over 1,000%, and I have no idea what to do with it. I sold 5% (at ~$25), then 10% (~$35) following price surges. I figured the bull run would end eventually and I’d sell off… But it’s been the gift that keeps on giving. I do have actual faith in the company, but I’m not sure if I’m being unwise [or greedy] by not selling more.
I’m still holding the remaining 85% of my original position, as I watch in awe as it rapidly takes over my portfolio. I’m holding about 15 different stocks, and MGNI is quickly approaching 30% of my position ratio.
Any tips? I’m a relatively recent trader, I started trading the week after the pandemic dip, so I’ve been spoiled with easy plays. Happy to hear tips from any other seasoned traders as well.
You have good timing!
Nobody can tell you what to do with an emotional rollercoaster like that, it’s very personal — particularly if you’re not a short-term trader who just follows rules and never looks back.
Personally, with most of the positions where I do hold them and originally bought them with long-term intent, I try to look 5-10 years ahead with some guess as to what the future might hold, and see if I can imagine a feasible future that can justify the current valuation — if so, I hold at least some of it, but with momentum stocks I am also very likely to take partial profits when they hit stop loss levels, since in the short term the reason they’re going up is that they’re going up (so if they go down, the reason they’re going down further will be that they’re going down). And I have not let a stock other than Berkshire Hathaway be much more than 10% of my portfolio for a very, very long time, but when I was younger and was just beginning to invest there were certainly times when I held just a dozen stocks and one of them was 20% of my portfolio.
It is all very, very personal though, especially in this moment of extreme uncertainty about the future of the markets — it’s really easy to imagine Magnite losing 70% of its value in a crash this year, or rising another 500% in the next five or ten years if these three companies turn into something that their customers love and they take market share in a growing market. The trick is judging which is more likely, accepting that you can’t be right very often in that judgement, and remembering that if you hold a diversified portfolio of companies that are growing their real business very well, there’s a decent chance that a couple 1,000% gains will make up for a bunch of 90% losses if you choose some bad apples.
And while all of that is true, I am also quite sensitive to the fact that saying those words right now feels a lot like talking about the incredible growth of Cisco in 1999, or the fact that house prices never go down in 2006. That doesn’t mean it can’t work out, or that my uneasy feeling is anything more than nerves — maybe the party keeps going with the Fed and more stimulus and a continued ceiling on interest rates, maybe the best of these companies grow their revenues so fast that they can eventually grow into these valuations.
Maybe it’s not like Cisco in 1999, maybe it’s still Cisco in 1997, predicting the future turns in the broad market is an impossible task — everybody can say the market is wildly overvalued by any historical measure, and that some niche sectors of the market are dramatically and absurdly more overvalued than the overall market, probably including both TTD and MGNI… but nobody gets to know where the peak is until it’s pretty far in the rear view mirror.
I really appreciate the insight. Lots to chew on.
Well said, Travis. Appreciate all your hard works and advises. Thank you!
Jean, I like your self-assessment.
“…been spoiled with easy plays” is likely to be the hardest lesson for an entire generation!
Thanks Tim. Just trying to brace myself for the impending, swift kick of reality…
It’s your money so ultimately you have to make the decision. I do know that Motley Fool recommends not allowing any one position to be more than 20% of your portfolio and also holding at least 30 positions.
It’s up to your risk tolerance. The more you have in one position the more you can lose if things go south.
Correct, it’s a highest conviction stock in their ‘Rising stars’ portfolio…
I was fortunate to watch a Motley Fool “discussion” back in the middle of August. The subject: potential 10X companies. There were about 5 or 6 Motley Fool analysts that tossed out potential companies. One individual indicated MGNI. I had never heard of it. Another of the analysts indicated that he wasn’t certain it had the capability of 10X but didn’t react as negatively as I thought he could. At that point, I took a shot at $7.51. It has worked out quite nicely. And unfortunately I didn’t buy several thousand, but only a couple thousand shares. Still can’t complain. I’m going to ride out the storm and see what happens. I’ve been foolish in the past and sold too early on companies like FSLY and APPN to name a couple (although the money was used to purchase SE at $41)…
As the Motley Fool has indicated in recent 10X discussions, it’s one thing to find a capable company… It’s another thing to lack the intestinal fortitude to believe in your company and hang on to achieve 10X+.
One last comment:
if you don’t have a better company to purchase if you sell today, then maybe it makes sense to keep the stock and let it ride.
I cannot close without extending a big thank you to Gumshoe for GAN. I had looked at this company in the past and referred to gumshoe comments before purchasing. THANKS FOR THE REINFORCEMENT! I do own more than a couple thousand shares of it… And don’t see a need to sell it anytime soon.
I listened to this same Motley Fool discussion when it was released as a podcast probably 1-2 days after their live event. I figured… what they heck… I’ll try a little in all these potential 10x companies. My starting spot for longshots is 1/4 – 1/2% of my portfolio… so only around $1,000 – $2,000. Maybe I need to bump up my initial investment size, because now I’m looking to add to a bunch of these winners… NNOX, MGNI, GAN, etc. So with my long term outlook, some of you may be taking profits, and I’m looking to add more.
Dear Travis,
The best thing happen to me as you mentioned ACUIF couple months ago as mini-TTD, I bought 5000 shares for less $5.00 a share in my grand kids accounts, now it becomes one the the best performers in their portfolios as of today.
Thank you.
PS,
MSTR is going to the moon. The trend is my friend , I really enjoy this moment in time.
Some services advice strong sell how does one balance the price sky rocketing with stock advice?
Travis appreciate your take Thanks
Congrats! may I ask how did you hear about MSTR ? and AcuityAds, you heard it first from Travis?
Travis thank you for all you do
In the past, I knew Travis mentioned ACUIF couple times but I never got the signal not until Travis said its business model about the same or the the way around as
TTD, I missed the opportunity to buy TTD, so I bought mini-TTD or ACUIF.
I found MSTR by myself. I always like to buy Bitcoin since 9 years ago but too much BS to buy it directly from the dealer, all of a sudden this MIT
guy, Mr. Saylor,( I admire him, he has a lot of guts what he did and still does) of MSTR bought a lot of Bitcoins so I piggyback with him. I also own TSLA for about 3 years now, this Elon MUSK guy now is buying Bitcoin too, what a small world indeed. Travis said that I have a different perspective of investing compare to him, but Travis is a young dude, me, I am no spring chicken anymore , a retired MD, 70 years of age, you see.
thank you! you do have more guts than me
Same here. 3000 Acuif has made quite an addition to my portfolio. As always with winners, wish I had bought more. Found it here from Travis, along with others. Even little DFH is doing well. Passed on Gan for moral reasons. Oh well. No complaints for only starting in Aug ‘20. 6 months have more gains than my “managed”portfolio did in 6 years. Still being very cautious though. Been through all the past big ones and survived.
Thanks for the honest advice Travis
your Grandkids are going to be loaded
Travis, and also the many supporters of this Website! I bought (RIOT) 2 days before Thanksgiving and I am thrilled with the Results of this Bitcoin Miner since then. My gains on this NADAC traded stock have exceeded 100% during that time window! Typical daily % returns are approximately 2X the recent BITCOIN Price returns. Do you expect this to continue following the recent 1500 added Mining Digital Computers that are now installed for BITCOIN Mining purposes?
Thanks for any comments related to this post.
I have no idea what’s going to happen with that, but with cryptocurrencies I’d be more comfortable just buying the token instead of trying to buy a leveraged miner — bitcoin itself has such a wild risk profile that buying leverage on that would make me extra nervous with anything but a very small position. I don’t often write about my small cryptocurrency speculations, which are mostly in Bitcoin and Ethereum, but that little slice of my portfolio has risen by almost 2,000% since bitcoin’s March low, and that’s more than enough volatility for me.
Just for a little context, here’s Riot Blockchain charted vs. Bitcoin prices over the past three years… bitcoin in orange, RIOT in blue…
And then over the past year, including this last parabolic move higher for both…
Leverage usually works both ways, so if bitcoin keeps going up it may well be phenomenal. I would expect that if Bitcoin falls by 50%, RIOT will probably drop 80%, just looking at what happened in early 2018, but I don’t know anything about the fundamentals at RIOT or what else they might be doing.
In my seventy years of investing, I can think of a number of times I could kick myself for not holding fast. But in retrospect, I’ve never cried over any taken gains. The question now is, are we not in a precarious bubble?
I think we probably are in a bubble. But we were also, relatively speaking, in a similarly bubble-like environment in 1995, 1996, 1997, 1998 and 1999 before the real blowoff top hit and things imploded in 2000 and 2001.
Remember Alan Greenspan’s famous “Irrational Exuberance” comment? He was talking about unsustainable market valuations as the dot com bubble was inflating, partly because of low inflation expectations. This is what he said (I didn’t remember the words, so this is from Wikipedia):
That was December of 1996, here’s what the hottest part of the market, the Nasdaq 100, did in the five years after that speech:
Not trying to talk you into buying or selling, I just like to remind myself that trying to identify a bubble from inside the bubble is really hard, even if the market’s valuation seems obviously unsustainable (as it did to a lot of smart people in 1996, not just Alan Greenspan)… and trying to figure out when it might reach its largest point or pop is pretty well impossible.
I fear, today’s variables are greatly magnified by the questionable fallout from the ongoing pandemic. The future of the dollar by big time speculation in Bitcoin. Added, the responses we’ll see from this new administration.
There are a lot more variables theee days, and everything moves faster, but human nature when it comes to FOMO, herd-following and the interplay between greed and fear doesn’t seem to change all that much.
Travis,
Do you have a view on the Thunder Bridge SPAC acquisition of indie semiconductor? Due to close this quarter I think?
The Viant IPO (DSP) should add some fresh perspective to the topic this week if it finally happens. To the best of my knowledge tomorrow 2/10? Viant had disappointing results in Q3 2020 compared to TTD, MGNI et al… but seems determined to increase sales and it is the era of IPO’s in a lucrative market after all.
I sure have had a nice ride with Acuity Ads so far and as for GAN we are enjoying a good run with Score Media TSCRF so this market is definitely growing.
Had a great ride with AcuityAds as well…but learned a valuable lesson. A few weeks ago it had several days of lower highs and lower lows (to me a trend lower) so I sold for a 220% gain. Pretty damn good, right? Right?!! Since then it’s doubled:( Yup. I’m an idiot. Still can’t figure out why I didn’t just sell enough to cover the initial outlay.
You’re an idiot, cabaoke???!!!
I sold Tesla @ $144 at a loss!!!
Thanks Travis for another excellent analysis.
Great to read the comments of everyone who is still in MGNI and enjoying the run. I got in at a little under $6 and stopped out around $8. Learned a painful lesson to set trailing stops wider for more volatile stocks that I want to keep.
Still liked the CDN space so I started digging and found Perion Networks (PERI). Much better valuation than MGNI, but so far has lagged MGNI’s share price. Hindsight says I would have done better buying back into MGNI, but if you’re looking to buy now PERI is worth considering. Lots of good articles on it in Seeking Alpha. New management is on board to either accelerate growth or possibly sell according to rumors. Great Q4 earnings were announced today, so if you’re interested you might want to see if it drops a little.
Good tip, but wow PERI is up 60% in 5 days. The market is starting to make me want to put my seat belt on.
This is the comment I also wanted to make. PERI is in fact a much healthier bet vs MGNI and starts to get noticed by many as well. I own both
hi guys, im jim, im new here. im a special education teacher. ive been investing since may 2020, and overloaded on a terrible stock, i broke the golden rule on a pump and dump, lost half of my investment money, and have fought since august to get back to even as everyone gets rich in this market, lol. i was wondering if some wiser inverstors here could give me some advice.
i currently have a lot of jeff brown stocks
infinneon
O semiconductors
spero
bio sciences
micron technology
kaleido
pot stocks
village farms
cresco
yolo etf
thc etf
axim
leap therapeutics
inaq
ive got about 5k more to put in, any suggestions? and thank you!
I can’t give personal advice, but starting off by getting sucked into a pump-and-dump penny stock is a great way to begin — learning that lesson early, when your portfolio is small and the pain is minimized, should serve you well. I dabbled in a couple of those in the 90s and still don’t like to think about how foolish I was … but I do leave the charred stub of one of them in my brokerage account as a reminder.
If that’s your whole portfolio you listed, that’s a lot of speculating in just two or three sectors — if it’s just your “play money”, that’s another thing entirely.
If you give some context about what you’re looking for and how you think, folks who are allowed to opine might be able to help (trading for a pop in six months? Trying to build a portfolio of companies you’ll hold for 20 years? Want dividend compounding and stability? Gambling for a new car, or hoping to retire in ten years? Betting on products you know and study, or chasing technical patterns or momentum?
Knowing yourself as an investor is much more important then picking the right stocks in year one… but for most of us, it takes time and mistakes to get there.
Would it be a too personal piece of advice for you to give us a “Rule of Thumb” for setting a “Stop Loss” price?
The most widely followed “rule of thumb” for stop losses is a trailing stop of 20%, I would say.
With a momentum stock that I want to hold long term, I’m inclined to use a wider stop to incorporate the higher volatility.
With a stock I’m looking to take some profit on, I might either sell today or set a tight stop loss of 10% or so.
In most cases, I don’t go fully into or out of a position all at once. When a stop loss hits for a company that I still think has strong prospects, I’m likely to listen to that market signal and sell a portion, particularly if it’s a very richly valued momentum stock and a meaningful part of the portfolio… but I’m not likely to sell it all.
For me, investing is mostly about building a long-term portfolio and trying to control my risk a bit through diversification and a little bit of hedging, stop losses are just one of the risk mitigation tools. You have to know your pain level for the portfolio as a whole, and how much patience or conviction you have for individual positions.
Didn’t he just add ON to that?
I believe you are correct, Sir “outsider”. If you are correct, that stock has jumped significantly from about $8 to $41 and currently $16B market capital.
Perhaps this might make an initial investor feel more comfortable moving forward after losing half their money…
When I 1st got started investing, I thought I had some extra money and decided to take a risky move on a Canadian gold mining company.
I won’t mention names, but I will tell you I had a choice: Canada or a company called BRK.A (just one share)
unfortunately, I defected momentarily to Canada and have a tax loss as a result.
I’ll let people look up what BRK.A . Is worth today!
As painful as it was, I have learned in the 30+ years… Focus on a portfolio that is full of solid, worthy, full of potential, creating a product that everyone needs/wants and has a moat.
Don’t lose faith and move forward. I am doing perfectly fine now. Even though it is painful to reflect on that one trade.
I never heard of MGNI. I did get into ACUIF from the Shoe (thanks) Some how I missed it. Is it too late?
You heard it now!
All these gains are great. I was wondering if the gamestop situation was signaling the top of the market or the ramp phase of the bubble. I think it’s the latter as a new generation of traders is entering the market thinking stocks call only go up and that they can make 100% in days not years.
I own both GAN and MGNI (and have since the stock was as low as $14), although I must admit I am now kicking myself I sold a good portion of my position in the latter for substantial profits, when the 20% “popped” last week. The stock is now over $62.Recently due to the Super Bowl , I’v e been adding to my GAN position, which even at around $30 has been taking off lately!
I think I found my new source of education. . . Thanks Travis for the valuable insights
you bet. Best stock discussions. Great tips, and great discussions. I hope pump and dumpers don’t start getting too active on here…
Didn’t one of the fool guys recommend IZEA? Looks like it has not done very well.
I wonder if anyone has an opinion on SFOR. They supposedly have developed a video conferencing service that has better security features than Zoom ZM.
SFOR has about 800 million outstanding shares so market cap is just below 200 million.
I bought ACUIF a few months ago following this newsletter n@ $4.98 currently $24. 35 so thanks Travis
Anyone know when Archer Aviation will be traded ?
Salient to the gaming stocks discussion, I bought SGMS around August of ’19, on the recommendation of John Del Vecchio. It has more than doubled, and I harvested some profit from it to buy other stocks. I think John had good info that they were poised for one or more new markets for online sports gaming. John’s publisher folded into Banyan last year, and I’ve been floundering for awhile. I get a lot of teasers, so I’m trying Stock Gumshoe starting today. Found you by way of the JR Butts teaser review. Thanks!
thank you very much, this was helpful!