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BB -- Blackberry AWS -- Amazon Web Services IVY -- Intelligent Vehicles Yo. I don't actually know if this stands for anything QNX -- Quick-Unix perhaps? It's a Unix-like embedded microkernel RTOS (real-time operating system) EOY -- end of year PT -- price target SP -- stock price EV -- electric vehicle SoC -- System on a Chip IoT -- Internet of Things TL;DR: Blackberry ($BB) is almost daily announcing new partnerships and new clients for their software, including new deals with companies that are just now or just this year launching autonomous vehicles that run on QNX software. The big kahuna of all these deals is BB's recent partnership with Amazon to go 50/50 into BB's software IVY, a scalable cloud-connected software platform designed for intelligent vehicle data gathering and data sharing. With Amazon's Jeff Bezos stepping down, and Andy Jassy filling his shoes, who was the CEO of AWS, BB will have some very firm support behind Amazon's new CEO. BB and Amazon are having a webinar Feb. 23rd about their partnership and IVY, which should be a strong catalyst moving forward. IVY beta earnings are projected to begin impacting BB's Q3 or Q4 earnings beginning in November this year, with IVY fully being integrated around the 2023 timeframe. Through a lot of reading and analysis, I believe BB has a four-tiered business model dating back as far as 2013 when BB's CEO John Chen was hired to begin the massive BB turnaround process. Tier 1 was development of QNX and IVY, lasting from 2013 to today and onward, however, Tier 2 overlaps Tier 1. Tier 2 was customer acquisition, primarily distributing their secure software in QNX, SecuSuite, Spark, and AtHoc. They secured 37 automakers during this time, including 9 of the top 10 automakers, over 106 governments from around the world, including all of G7 governments and 18 of G20 governments, as well as 77% of Fortune 100 companies, including partnerships with Amazon, Microsoft, Google, Sony, XPENG, XPEV, NVIDIA, Intel, Qualcomm, Baidu, IBM, LG, Samsung, and others. Well if they have such an incredible market share, why are they so undervalued? The answer is that QNX was not the end-all-be-all product. It was the base that the rest would be built on. Particularly IVY, which is the real money-maker. Tier 3 is IVY beta, and Tier 4 is IVY distribution and subscription revenue streams. So why is IVY the big deal and not QNX? They are both big deals, but QNX was never designed to be the money-maker. They are charging a one-time fee per vehicle use. There is a bigger goal here, to secure their clients as their customers for the bigger product in IVY. They also need QNX is to be a secure system in order for IVY to be trustworthy and reliable. And it certainly is secure. QNX has ISO26262 certification, as well as US government clearance, NSA clearance, and CIA clearance. The US government uses QNX and Blackberry products. Just let that sink in. That should tell you something about its security. Anyways, IVY will be used in autonomous vehicle level 4 and level 5 communication (note that QNX is level 5 certified... it has a business moat just in its security level and clearance), as well as EV and gas vehicle data collecting and AI-powered data synthesis. See below for more details on IVY. Wrapping up this TL;DR, BB is going to do well this year as IVY unfolds, but will do even better in the next 2-5 years. I have a PT of 25 by EOY and a PT of 80 by 2023 EOY, and a PT of 160+ by 2025 EOY TL;DR: TL;DR: BB go up, but go slow for now because IVY revenue not here yet, but big fast later. Make big monies, BB is the future tech that Amazon, Microsoft, Google, etc will be building upon in the EV and IoT market
FAQs:
1) Why is Blackberry stock price going down? A: A few possible reasons. One, as of today the whole market is down. BB is connected to overall market swings as most companies are. Two, there may be some market manipulation by bearish financial institutions as there are a lot of calls expiring on 2/19. I would expect that BB SP to be volatile between $11 and $14 between now and then, and to move upwards after 2/19 and especially after 2/23 (Amazon + BB webinar). Three, there are bearish investors who still think BB is a phone company and don't understand the underworkings of BB's business strategy, their software, their patents, or their partners. Their revenue has been affected by coronavirus and has not been particularly phenomenal so far this year. 2) Should I invest now or later? A: First off, I'm not a financial advisor, these are just my opinions. Invest at your own risk. In my opinion, BB will see a large SP growth by EOY, anywhere from 50% to 150% growth by EOY. While revenue will likely not increase much this year, the partnership with Amazon and news regarding IVY will likely create new floors for their SP much higher than the current SP right now, at around the $12 SP 3) What's stopping competitors from building a similar product and hurting BB's business? A: There's a lot of reasons why BB has a huge moat right now. One, notice the partners that BB has with QNX. They've got all the big boys working them, aside from Apple and Tesla. Seeing as SpaceX runs on QNX, and seeing that Apple was trying to make a deal with Hyundai that did not go through, I think it is still possible that either Tesla or Apple or both companies could also make a deal with BB to use QNX as their OS system. BB worked to develop their QNX embedded microkernel OS for the last eight years or so. Anyone trying to step into the game now is far too late. Apple has the best chance of all companies, as it has its own OS and Apple knows security very well, but this still requires an entirely new system in order to work in the EV sector. Also, Apple announced recently that they would be developing their own EV, although they did not give much details beyond that statement. The likelihood that they are both working on the hardware and software side of this thing is slim given the large number of difficulties that come with certification as it relates to the cybersecurity software space. Regardless, I would suspect that either Apple or Tesla is the most likely to be competitors in this space, but neither company has successfully completed a certified OS system, particularly for the emerging sector of autonomous EVs. Tesla is currently building a Linux-based system that is having a lot of difficulty in passing certifications such as ISO26262, a struggle that has been ongoing for years now. They may achieve a product that passes these safety regulations and certifications, but the question remains whether this will be in time as the EV and autonomous market picks up speed, and whether competing companies would even be interested in using their product. In fact, any car company is unlikely to develop their own OS software because none of their competitors would be likely to use it. BB is the perfect business to license since it is not competing in the hardware sector for the EV market. This argument can also be used for Apple if they are also building an EV. 4) Why is BB's revenue so low if they have so many customers and partners? A: QNX has been licensed so far as a one-time purchase, per vehicle or IoT using their software. IVY will be a subscription-based software that also includes a one-time purchase. Thus, BB's revenue streams are somewhat unimpressive currently, but they are playing the long game. If my hypothesis is correct, it is John Chen's goal to lay low as software is developed and customer relationships are built. It's the same with the book market. It's the sequel that makes all the money, not the first book. QNX is just the first book of a series looking to hook in its customers with low costs before hitting 'em with the strong follow up in IVY. Additionally, in order to build a competitive business moat, it was to their advantage to not forewarn any competitors of their involvement and plans. Consider John Chen's work as a CEO in his last business Sybase. Chen worked as the CEO of Sybase for 10 years. For the first 7 years, the SP remained at around $10 a share. Three years later, the SP was at $100 a share. I suspect he is implementing a similar model with Blackberry. Chen joined Blackberry in 2013. BB stock actually dropped for most of the last 7 years, resting at a stock price of around $5. Now BB is at $12 a share. I would not be surprised if BB reaches $50 two years from now.
Blackberry Clients and Partners Automakers: Honda, Audi, Jeep, Mitsubishi, Ford, Hyundai, Volkswagen, Bentley, Lamboghini, Byton, Mini (cooper), Toyota, Subaru, Fiat Chrysler, Mazda, Nio, BMW, Porsche, Lexus, Kia, Land-Rover, Mercedes-Benz, Buick, Jaguar, Visteon, Skoda, Chevrolet, Nissan, Acura, Continental, General Motors, Baidu, Motional Other: Denso, Aptiv, Bosch, Panasonic, Harman, Bugatti, LG, Vodafone, Bell, Carahsoft, CACI, Telus, iSec, KPMG, Tableau, Qlik Major: Amazon, Google, Sony, XPENG, XPEV, Li Auto, NVIDIA, Canoo, Microsoft, Intel, Verizon, Qualcomm, IBM, LG, Samsung Major Investors: PRIMECAP, Hamblin Watsa, Ontario Teachers’ Pension, Vanguard, Harris Associates, ETF Managers Group, Wells Capital, Arrowstreet Capital, Kahn Brothers Advisors, Norges Bank Investment Governments: Albania, Andorra, Angola, Argentina, Australia, Austria, Bahrain, Belarus, Belgium, Benin, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Burkina Faso, Cameroon, Canada, Congo, Croatia, Czech Republic, DR Congo, Denmark, Egypt, Estonia, Finland, France, Gabon, Germany, Ghana, Gibraltar, Greece, Guadeloupe, Hong Kong, Hungary, Indonesia, Ireland, Italy, Japan, Kenya, Kuwait, Latvia, Lesotho, Liechtenstein, Lithuania, Luxembourg, Macau, Macedonia, Malawi, Malaysia, Mali, Malta, Marthinique, Mauritania, Mauritus, Mayotte, Mexico, Moldova, Monaco, Montenegro, Morocco, Mozambique, Namibia, Netherlands, Netherlands Antilles, New Zealand, Nigeria, Norway, Oman, Philippines, Poland, Portugal, Qatar, Romania, Russia, Réunion, Saint Barthélemy, Saint Martin, San Marino, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Swaziland, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Togo, Turkey, USA, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Vatican City, Western Sahara, Zambia, Zimbabwe
Blackberry Current Revenues:
BlackBerry Revenues: How Does BlackBerry Make Money? -- Trefis This display the biggest bearish argument to BB. Until IVY begins producing new revenue streams, BB is likely to not exponentially increase revenue streams, but only sustain moderate YoY growth
Blackberry Analysis Regarding Infotainment and Google and Ford Deal:
see "Blackberry (BB) Stock News Analysis | What I need to say..." by Financial Live by LEYA on the forbidden video website The media recently picked out a story that left out a lot of pertinent information, making it seems that BB lost Ford as a client. This is not true. QNX is designed to be a SoC. This means that other operating systems, such as Linux or Android, can be easily added to QNX. It is in fact encouraged. The Ford and Google deal was simply announcing the Ford would be using Android as their infotainment system. I believe that BB was never intended to try and be the predominant entity for all software systems in EVs or IoTs, but the backbone that connects all together, and to protect all components in a secure system. Autonomous EVs and even regular EVs in general would not be possible without a secure system protecting the product, as is true with IoTs. This is also why things like US Fighter Jets run on... you guess it, QNX. Ford is still using QNX. It is simply also now using Android that is running on top of QNX more commentary on this: Analyzing Blackberry Bear Argument - Case No. 1: Ford Deal
Image This is an interesting one to be sure. Facebook was being evil, like the do, and were caught using a number of BB patents. They settled in February, and the day that the settlement was finalized, John Chen (BB CEO) tweeted reminding everyone that BB is used on the ISS https://twitter.com/JohnChen/status/1358853064153784321?s=20 Well, the connection and speculation here is that Blackberry is going to the moon, and that the settlement is rather significant. Someone else also dug out some information in Facebook's most recent 10-K, specifically a portion for a 'non-cancelable contractual commitment' of an amount of $7500 million dollars. That's 7.5 billion btw. We don't know how big the settlement is, but it is worth noting that BB's entire market cap is 7.5B. I highly doubt that a settlement would reach such lofty numbers, but it could be possible that FB settled for some initial amount of $1B or so, as well as $1B in reoccurring payments over several years. We won't know until March 15th actually, so stay tuned.
Blackberry New Partnerships
Within the last few weeks, Blackberry has announced a stronger partnership with Baidu (China's Google), as well as their involvement with Baidu choosing to use QNX for their autonomous vehicles that will be hitting the road, as early as this year and next. BB has also announced their involvement with Motional, a joint venture between Hyundai and Aptiv, which will use QNX for their autonomous vehicles. Motional will be partnering with Lyft to use autonomous vehicles to begin serving customers and will be deploying their vehicles in 2023. It was also announced that QNX will be working with AOSP (Android Open Source Project), as well as announcing yesterday that QNX Hypervisor 2.2 is now released, which is what allows Android and Linux to run on top of QNX. A sum-up of all the recent news on $BB
Rumor: Blackberry Buyout? Here's why that's not happening:
Just read this post. It's quite revealing: Great Day for BB despite stick dipping. TL;DR: Amazon could have easily bought BB. Why didn't they? Well, all the big players are interested in this EV and IoT emerging sector. This is the new wave of technology that will dominate the market. First we had the dot.com boom, then the cell-phone and smart-phone market, and now we have the autonomous EV and IoT market. If Amazon were to buy BB, they would have to submit a tender offer. This would be a red flag to all the big players that Amazon were trying to buy up the best security out there. It would be a bidding war that could result in a double-digit multi-billion dollar buyout. It was much more to their advantage to create a secret alliance with BB and establish a 50/50 partnership, whose contract includes exclusivity for their use of IVY. Ouch! That's gotta hurt. This is where the importance of QNX lies. BB will be able to pull the rug out from any company that chooses to use something other than IVY. No IVY, no QNX, no EV. It will be a package deal where IVY is the big money maker. All other companies will have to build from the ground up or be forced to license QNX and make their money off of other sectors, such as the infotainment sector, as Google has already begun to do with the Ford deal. When this deal happened, the other big boys wet their pants realizing they needed to get into this space, and fast. Microsoft partnered with Cruise/GM. Apple tried to partner with Hyundai, who was so flattered, they may have initially said yes or indicated so, before realizing that they were already partnered with BB, so it was a no-go. Not sure if that is fact or fiction, but it is an interesting proposal.
Blackberry IVY + AWS Partnership:
Alright, so what's the deal with IVY? Why is it going to be so profitable? Why is IVY the real money-maker, while QNX has been used as the customer-acquisition software tool? Check out this picture: Image For one, IVY is designed for real-time communication between EVs or other IoTs. Autonomous driving level 5 requires vehicles to communicate with one another. This is where IVY comes in. IVY connects the different software components of an EV (which presumably are running on QNX), as well as harvesting data on those systems. The data used can be distributed for a wide-variety of uses, including, but not limited to, automakers and suppliers, app developers, consumer services, smart cities, EV charging providers, insurance companies, and vehicle maintenance providers. All of these different sectors will be willing to pay subscriptions for these data services, as well as the automakers and IoT makers who will also be willing to pay subscriptions for IVY. For instance, IVY can help share information between vehicles that will allow for a car detecting ice roads in one area so that other cars using IVY can take a different route. This results in less crashes, which helps the automakers. Insurance companies can use data from all these different data points as well, allowing them an inside-view of their clients. The list of what is possible here is inexhaustible. As for price points, the subscription models for multiple outside companies wanting to use the data will be create huge revenue streams for BB. With Amazon as a 50/50 partner, and with their resources and strategic management, BB will be poised to be the foundation in security and data sharing for the entire EV, and somewhat of the IoT market (the IoT market has more competitors for sure) see "Is BlackBerry Stock Undervalued?" by Wealthy Mindset on the forbidden video website see "Roadmap to $180 a share (BlackBerry Stock)" by Wealthy Mindset on the forbidden video website
Revenue, revenue, revenue...
Blackberry is poised to be an industry leader in EV, government, and IoT security and data sharing with products such as QNX, IVY, Spark, and their other software products. Stock price will likely stay somewhat stunted until IVY revenue begins picking up. It is possible that more announcements and marketing related to IVY will make this growth more rapid. In my opinion, either way BB over the next 5 years will 10x. The question is whether you want to get in now at $12 / share or two years from now at $40 a share or something similar, assuming that either way this stock is going to push for that 100B market cap (it's currently at 7B). There will be bearish analysts that will continue to say that Blackberry is a worthless company until those IVY revenue streams begin to come in. It is also possible that a realistic competitor may emerge within the next three years, such as Tesla or Apple. But if Apple is seeking to create its own EV product, then both companies will have a hard time finding any way to license their software to any other company. It remains possible that Apple and/or Tesla may strikes deals with BB as well in order to be able to produce autonomous vehicles and get a bite of that market share
Really, no competitors?
Well it's called a business moat for a reason. As we have recently seen, QNX is working with AOSP, and so clearly, they are not to be worried about. Tesla is not a true competitor as their OS product is not certified yet, and has demonstrated difficulty in doing so, and additionally, other automakers will not want to benefit their competitors by using their product. A third-party non-auto-maker will be much more desirable. Other companies such as VxWorks, have a lot of to prove both in security and certifications, as well as producing an OS product that is compatible with an emerging autonomous level 5 EV market. QNX's embedded microkernel RTOS is very much unique in this regard. This type of system allows for real-time processing and power distribution, while protecting the system from attacks. In an embedded microkernel system, if one part of the system is attacked, the whole system will not shut down, in layman's terms. This is essential for the security of any high-risk product that is built upon an underlying software that controls that different components of the system.
Conclusion:
All eyes are turned towards Blackberry right now. People want to know what this deal with Amazon will look like, how it will work, what they will focus on, (will Amazon also use this system for a fleet of delivery drones? hmmm), what the revenue streams will look like, what are their projections, what markets and sectors are they targeting, what are their future goals, what will Amazon be doing on their end, etc, etc. The Amazon + BB webinar may answer some of those questions, or maybe they won't. Time will tell (Feb. 23rd, specifically -- here's a link to sign up and watch: Next-Gen Vehicle Architectures Unlock Unprecedented Opportunities for Automakers). Also look out for that FB settlement numbers on March 15th, and Q4 earnings March 31st. I don't expect Q4 earnings to be particularly interesting unless they include the FB settlement numbers. Could those numbers instead be put into Q1 earnings for 2021? Possibly. Initially IVY beta is expected to begin being released late this year. I will also be looking forward to see how Apple and Tesla respond in the coming months. Ultimately, BB is a long-term play, but is poised to dominate this emerging industry with the partnerships and security focused software they have secretly been building. Now if only the could do something about their logo, some rebranding would be nice... This is not financial advice, just my own opinions. I am not a financial advisor nor a professional. I own 14k shares in Blackberry, as well as options (10x 8/17/21 20c BB). Do your own DD and fact check me as well
Rocket Companies (RKT) - DD on an Undervalued Gem!
This is my first DD post on any company, be gentle. Disclaimer: I am long RKT. This is not financial advice, and I am not receiving any compensation whatsoever from anyone for this post. I’m not a professional, I’m not even an amateur, this is a Wendy’s. Sources used: RKT investor relations website and company website, RKT earnings transcripts, SEC fillings, the SEC EDGAR database, sea king al pha, whalewisdom, finbox, yahoo finance, stockcharts, openinsider, Zacks, google sheets. Summary Rocket Companies (RKT) is a fintech company that operates several brands including the flagship Rocket Mortgage. I think RKT presents an opportunity to buy serious value at a cheap price, because the market has not priced in the underlying fact that RKT is a tech company akin to Square, Paypal, etc.
RKT has disrupted the lending industry and has embraced a fully digital ecosystem, which will continue to drive customer acquisition and retention in the future
RKT spends considerable money and resources on UX/UI development, client experience, and marketing. This will also help drive their continued expansion into the lending market.
The RKT “ecosystem” provides a “full cycle” solution for everything related to real estate transactions and insurance. They serve real estate professionals looking to generate leads, develop those leads, better serve their clients, and make every stage of real estate transactions smoother. From the client side, they similarly just make everything easier - it’s an app, it’s online, it’s doable from home and it’s not complicated. There’s an inherent advantage in what they’re doing here because closing on real estate transactions has always been something that’s complex, unpleasant, expensive, and not well understood. You need lawyers, you need agents, there’s a ton of paperwork, it sucks. RKT is changing all of that.
RKTs balance sheet, income, and liabilities support a stock price several times higher than the current one in my opinion.
RKT is currently stagnant in price, and the market appears to be pricing it like a traditional mortgage company, not a rapidly growing tech company (which they are).
RKT has been around for decades (skips the startup costs that will provide barrier to entry for newer companies looking to do what they’re doing), but somehow seems to still be leading the tech charge in the industry. That’s a unique and potent combination in my opinion.
RKT needs a catalyst to get the market to value it as a tech company instead of a lending company. Once that happens, and I expect it to sometime within the next year, RKT should approach an appropriate valuation such as 20x earnings. That’s an estimate I pulled out of nowhere, but is commensurate with the low end of P/E ratios for companies I see as similar to RKT.
Key Point - RKT is Priced Like a Legacy Mortgage Company The average estimate for 2020 year end revenue is $15 billion, and the yearly earnings estimate average is $3.85 per share. This estimate gives a ttm P/E ratio of just over 5.5. The sector median is something like 8-12, which makes RKT cheaply valued relative to the earnings it produces, even compared to the financial/mortgage sector. What’s key here is, I don’t think that’s really an appropriate comparison. I would place them more in line with companies like Square (ttm P/E ratio of 325x lol), PayPal (ttm P/E ratio of 69x, nice), or Fiserv (ttm P/E ratio of 24x). I used Zacks for all of these P/E ratio lookups. Let’s assume RKT is conservatively worth 15x earnings, and that it hits the estimate of $3.85 eps. That would put its fair valueright nowat $57.75 per share. I think it’s worth more than that but, we all should do well to remember that it’s really only worth whatever the market will pay for it. Key Point - Catalysts This thing needs a catalyst. Right now I am loading up. I’m buying shares, I’m selling SHORT TERM covered calls to reduce basis on those shares, but I will be stopping the sale of those covered calls within a couple weeks most likely. The Q4 earnings announcement will be on 2/25. I am not sure that the actual earnings numbers will be enough to wake this thing up, although I expect them to be good. But if that announcement comes with discussion of their focus for 2021 and beyond, and gets the market thinking about them as a tech company first and mortgage lending company second, things will start to heat up. I don’t know when the real catalyst will hit that triggers the run-up, but I think it could start with the Q4 earnings call. I am looking at $21 as the floor for this stock, and I expect the price to double within a year. I will be acquiring OTM LEAPs, expiring next spring. Supporting information and background follows. The Business RKT is in the business of providing solutions to financial transactions, including mortgage origination and refinancing, auto lending, and more. Specific subsidiaries and my simplistic view of how they interact: Home Financing
Rocket Mortgage - The mortgage company. This is a prominent “public facing” part of the Rocket ecosystem.
Amrock - Amrock provides title insurance, property valuations, and other solutions. I see this as “supporting infrastructure” to keep clients within the rocket ecosystem where they would otherwise need to go elsewhere and is part of what makes RKT a one-stop-shop.
Amrock Title Insurance (ATI) Company - basically does underwriting for Amrock. The “business end” in my simple understanding of the world.
Nexsys - provides a streamlined approach to the closing process with their Clear Sign and Clear HOI technologies - taking care of closing day authentications and sharing of homeowners insurance information.
Lendesk - Lendesk specifically provides solutions for the mortgage market in Canada
Edison Financial - Basically the “front end” of Lendesk that Canadian clients would interact with.
Home Sale and Search
Rocket Homes - Rocket Homes is a proprietary home search platform and real estate agent referral network. Basically this matches buyers, sellers, and agents, and is a key aspect of keeping clients completely working within RKT for all aspects of real estate buying/selling/financing.
For Sale By Owner - A digital marketplace designed to let clients buy and sell real estate on their own. I think it’s absolutely brilliant that RKT owns this, but more on that later.
Auto & Personal Financing
Rocket Auto - Supports rental and online car purchasing platforms.
Rocket Loans - online personal loan solutions for clients.
Media
Core Digital Media - a major advertiser in the mortgage, financial, insurance, and education sectors.
Lower My Bills - this company is basically a “portal” business model that connects people with providers of various loan and insurance products.
Services & Technology Development
Rock Connections - Basically a sales and support platform that handles appointments, prequalifications, generating leads, and data analysis among other things.
Rock Central - I will generalize this as “business support”. HR, administration, etc.
Rocket Innovation Studio - A tech incubator to gather and engage top talent and ideas.
Recent Acquisitions RKT, through Lendesk, acquired Finmo back in October of 2020 (https://finance.yahoo.com/news/rocket-companies-subsidiary-acquires-fast-182042594.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALnvnNBoglSnmMP0O61AqgXBJokNS53LjJYuG3NvYKhayp4I6ZH2RpfmFUbSsCAU4xmnBNGMTwiEG-Ly29EabVy1-OjPIGfkYoQ3389gn3Edebs9sIwWOy1tPzqjRwOwwGA_PWg0cNzEFCe7HBTilMwADUT_y0QxWw8vizWecGcv) Finmo is a rapidly growing Canadian digital mortgage platform and this acquisition I think was perfect - it shows RKTs dedication to embracing a fully digital experience, and making sure they’re the ones leading that charge. Management I do not have much to say here, aside from this. The RKT team is not the new kids on the block, they have decades of industry experience. Also, I value leaders that make people feel valued. And on that note, under CEO Jay Farner Quicken Loans has been in the top 30 of Fortune’s “100 Best Companies to Work For” list for 17 consecutive years. Financials and Growth When it comes to the numbers, RKT is killing it. I don’t want to just spout a bunch of numbers that anyone can easily go look up so here’s a couple that stood out to me from the Q3 earnings announcement and related data: $4.63 billion in revenue, which is 163% YoY growth. From that revenue, they beat EPS estimates with $1.21 for the quarter vs $1.09 expected. Net income was $2.4 billion which represents a YoY growth of 365%. Closed loan volume YoY growth was 122% to $89B. Net rate lock volume was $94.7 Billion (101% growth). RKT has brought in $13.1 billion in revenue in the first 3 quarters and seems to be on track to close out Q4 with yearly revs above $15 billion. That’s awesome but what I really like is that they pair this amazing growth with $3.5B cash on hand. That’s great because I want them to be able to scale as they grow, and make acquisitions as needed (see Finmo) to ensure they can keep that growth going without getting overextended and failing to capitalize. RKTs ability to recapture clients is one of the keys to their future success in my uneducated opinion. Their recapture rate is 4.6x the industry average. The Q3 earnings transcript includes a statement by the CEO on how when interest rates fall, retention rate falls, refinance activity is larger. The high recapture rate RKT has serves as a natural hedge to their retention of existing clients because their recapture is so much higher than average in the industry. Quick aside - RKT announced a $1 billion share buyback program. They’ll be able to repurchase shares from time to time starting Nov10 2020, ending in two years. I don’t love the idea of share buybacks because I think this can be detrimental to actual business growth for the sake of shareholder value. However, with the large cash position RKT has (and it doubled from December 2019 to September 2020) I think this is a reasonable way to deploy some of that cash for now. Ok so what about valuation using DCF, free cash flow analysis, something like that? Honestly I’m not convinced this is as useful as some people make it out to be. It’s nice to know what the numbers indicate, but I don’t spend a lot of time worrying about an exact price target based on anything like this. That said, you can crunch the numbers yourself or check out something like the Finbox resources: https://finbox.com/NYSE:RKT/models/dcf-growth-exit-5yr I don’t believe that fair value estimate for an instant, but it's a part of the puzzle to consider. Finbox has various models you can check out, but it’s also just a nice place to view aggregate data other than directly from the SEC filings. Product Channels RKTs direct-to-consumer channel is their main source of revenue right now, but I think they will be successful in their efforts to grow their partner channels as well. Why do I say that? Numbers don’t lie:
Adjusted Revenue for Partner Network is up 502% YTD vs 2019 ( see Q3 earnings transcript)
The partner network volume is a little over half of the direct-to-consumer volume but the growth rate is just so damn juicy. That revenue growth is hellathicc. Current Market and outlook Right now, rates are low. The average 30-yr mortgage fixed rate is 2.92% (https://www.cnbc.com/2021/02/03/mortgage-refinancing-surges-but-high-home-prices-stop-buyers.html) I cannot say how long interest rates will remain low but I believe RKT is positioned to continue to grow regardless of what rates do moving forward. They just cover so much of the space, and they do it with a focus on applied technology. Here’s some blatant speculation. I think as we move into 2021 and the vaccine becomes more prevalent, millennials will buy, sell, and borrow against real estate with renewed intensity. I think RKT is uniquely positioned to capture that market. Positions: RKT shares. Cost basis of $21.14.
Disclaimer: I am long RKT. This is not financial advice, and I am not receiving any compensation whatsoever from anyone for this post. I’m not a professional, I’m not even an amateur, this is a Wendy’s. Sources used: RKT investor relations website and company website, RKT earnings transcripts, SEC fillings, the SEC EDGAR database, sea king al pha, whalewisdom, finbox, yahoo finance, stockcharts, openinsider, Zacks, google sheets. Summary Rocket Companies (RKT) is a fintech company that operates several brands including the flagship Rocket Mortgage. I think RKT presents an opportunity to buy serious value at a cheap price, because the market has not priced in the underlying fact that RKT is a tech company akin to Square, Paypal, etc.
RKT has disrupted the lending industry and has embraced a fully digital ecosystem, which will continue to drive customer acquisition and retention in the future
RKT spends considerable money and resources on UX/UI development, client experience, and marketing. This will also help drive their continued expansion into the lending market.
The RKT “ecosystem” provides a “full cycle” solution for everything related to real estate transactions and insurance. They serve real estate professionals looking to generate leads, develop those leads, better serve their clients, and make every stage of real estate transactions smoother. From the client side, they similarly just make everything easier - it’s an app, it’s online, it’s doable from home and it’s not complicated. There’s an inherent advantage in what they’re doing here because closing on real estate transactions has always been something that’s complex, unpleasant, expensive, and not well understood. You need lawyers, you need agents, there’s a ton of paperwork, it sucks. RKT is changing all of that.
RKTs balance sheet, income, and liabilities support a stock price several times higher than the current one in my opinion.
RKT is currently stagnant in price, and the market appears to be pricing it like a traditional mortgage company, not a rapidly growing tech company (which they are).
RKT has been around for decades (skips the startup costs that will provide barrier to entry for newer companies looking to do what they’re doing), but somehow seems to still be leading the tech charge in the industry. That’s a unique and potent combination in my opinion.
RKT needs a catalyst to get the market to value it as a tech company instead of a lending company. Once that happens, and I expect it to sometime within the next year, RKT should approach an appropriate valuation such as 20x earnings. That’s an estimate I pulled out of nowhere, but is commensurate with the low end of P/E ratios for companies I see as similar to RKT.
Key Point - RKT is Priced Like a Legacy Mortgage Company The average estimate for 2020 year end revenue is $15 billion, and the yearly earnings estimate average is $3.85 per share. This estimate gives a forward-looking P/E ratio of just over 5.5. The sector median is something like 8-12, which makes RKT cheaply valued relative to the earnings it produces, even compared to the financial/mortgage sector. What’s key here is, I don’t think that’s really an appropriate comparison. I would place them more in line with companies like Square (ttm P/E ratio of 325x lol), PayPal (ttm P/E ratio of 69x, nice), or Fiserv (ttm P/E ratio of 24x). I used Zacks for all of these P/E ratio lookups. Let’s assume RKT is conservatively worth 15x earnings, and that it hits the estimate of $3.85 eps. That would put its fair valueright nowat $57.75 per share. I think it’s worth more than that but, we all should do well to remember that it’s really only worth whatever the market will pay for it. Key Point - Catalysts This thing needs a catalyst. Right now I am loading up. I’m buying shares, I’m selling SHORT TERM covered calls to reduce basis on those shares, but I will be stopping the sale of those covered calls within a couple weeks most likely. The Q4 earnings announcement will be on 2/25. I am not sure that the actual earnings numbers will be enough to wake this thing up, although I expect them to be good. But if that announcement comes with discussion of their focus for 2021 and beyond, and gets the market thinking about them as a tech company first and mortgage lending company second, things will start to heat up. I don’t know when the real catalyst will hit that triggers the run-up, but I think it could start with the Q4 earnings call. I am looking at $21 as the floor for this stock, and I expect the price to double within a year. I will be acquiring OTM LEAPs, expiring next spring. Supporting information and background follows. The Business RKT is in the business of providing solutions to financial transactions, including mortgage origination and refinancing, auto lending, and more. Specific subsidiaries and my simplistic view of how they interact: Home Financing
Rocket Mortgage - The mortgage company. This is a prominent “public facing” part of the Rocket ecosystem.
Amrock - Amrock provides title insurance, property valuations, and other solutions. I see this as “supporting infrastructure” to keep clients within the rocket ecosystem where they would otherwise need to go elsewhere and is part of what makes RKT a one-stop-shop.
Amrock Title Insurance (ATI) Company - basically does underwriting for Amrock. The “business end” in my simple understanding of the world.
Nexsys - provides a streamlined approach to the closing process with their Clear Sign and Clear HOI technologies - taking care of closing day authentications and sharing of homeowners insurance information.
Lendesk - Lendesk specifically provides solutions for the mortgage market in Canada
Edison Financial - Basically the “front end” of Lendesk that Canadian clients would interact with.
Home Sale and Search
Rocket Homes - Rocket Homes is a proprietary home search platform and real estate agent referral network. Basically this matches buyers, sellers, and agents, and is a key aspect of keeping clients completely working within RKT for all aspects of real estate buying/selling/financing.
For Sale By Owner - A digital marketplace designed to let clients buy and sell real estate on their own. I think it’s absolutely brilliant that RKT owns this, but more on that later.
Auto & Personal Financing
Rocket Auto - Supports rental and online car purchasing platforms.
Rocket Loans - online personal loan solutions for clients.
Media
Core Digital Media - a major advertiser in the mortgage, financial, insurance, and education sectors.
Lower My Bills - this company is basically a “portal” business model that connects people with providers of various loan and insurance products.
Services & Technology Development
Rock Connections - Basically a sales and support platform that handles appointments, prequalifications, generating leads, and data analysis among other things.
Rock Central - I will generalize this as “business support”. HR, administration, etc.
Rocket Innovation Studio - A tech incubator to gather and engage top talent and ideas.
Recent Acquisitions RKT, through Lendesk, acquired Finmo back in October of 2020 (https://finance.yahoo.com/news/rocket-companies-subsidiary-acquires-fast-182042594.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALnvnNBoglSnmMP0O61AqgXBJokNS53LjJYuG3NvYKhayp4I6ZH2RpfmFUbSsCAU4xmnBNGMTwiEG-Ly29EabVy1-OjPIGfkYoQ3389gn3Edebs9sIwWOy1tPzqjRwOwwGA_PWg0cNzEFCe7HBTilMwADUT_y0QxWw8vizWecGcv) Finmo is a rapidly growing Canadian digital mortgage platform and this acquisition I think was perfect - it shows RKTs dedication to embracing a fully digital experience, and making sure they’re the ones leading that charge. Management I do not have much to say here, aside from this. The RKT team is not the new kids on the block, they have decades of industry experience. Also, I value leaders that make people feel valued. And on that note, under CEO Jay Farner Quicken Loans has been in the top 30 of Fortune’s “100 Best Companies to Work For” list for 17 consecutive years. Financials and Growth When it comes to the numbers, RKT is killing it. I don’t want to just spout a bunch of numbers that anyone can easily go look up so here’s a couple that stood out to me from the Q3 earnings announcement and related data: $4.63 billion in revenue, which is 163% YoY growth. From that revenue, they beat EPS estimates with $1.21 for the quarter vs $1.09 expected. Net income was $2.4 billion which represents a YoY growth of 365%. Closed loan volume YoY growth was 122% to $89B. Net rate lock volume was $94.7 Billion (101% growth). RKT has brought in $13.1 billion in revenue in the first 3 quarters and seems to be on track to close out Q4 with yearly revs above $15 billion. That’s awesome but what I really like is that they pair this amazing growth with $3.5B cash on hand. That’s great because I want them to be able to scale as they grow, and make acquisitions as needed (see Finmo) to ensure they can keep that growth going without getting overextended and failing to capitalize. RKTs ability to recapture clients is one of the keys to their future success in my uneducated opinion. Their recapture rate is 4.6x the industry average. The Q3 earnings transcript includes a statement by the CEO on how when interest rates fall, retention rate falls, refinance activity is larger. The high recapture rate RKT has serves as a natural hedge to their retention of existing clients because their recapture is so much higher than average in the industry. Quick aside - RKT announced a $1 billion share buyback program. They’ll be able to repurchase shares from time to time starting Nov10 2020, ending in two years. I don’t love the idea of share buybacks because I think this can be detrimental to actual business growth for the sake of shareholder value. However, with the large cash position RKT has (and it doubled from December 2019 to September 2020) I think this is a reasonable way to deploy some of that cash for now. Ok so what about valuation using DCF, free cash flow analysis, something like that? Honestly I’m not convinced this is as useful as some people make it out to be. It’s nice to know what the numbers indicate, but I don’t spend a lot of time worrying about an exact price target based on anything like this. That said, you can crunch the numbers yourself or check out something like the Finbox resources: https://finbox.com/NYSE:RKT/models/dcf-growth-exit-5yr I don’t believe that fair value estimate for an instant, but it's a part of the puzzle to consider. Finbox has various models you can check out, but it’s also just a nice place to view aggregate data other than directly from the SEC filings. Product Channels RKTs direct-to-consumer channel is their main source of revenue right now, but I think they will be successful in their efforts to grow their partner channels as well. Why do I say that? Numbers don’t lie:
Adjusted Revenue for Partner Network is up 502% YTD vs 2019 ( see Q3 earnings transcript)
The partner network volume is a little over half of the direct-to-consumer volume but the growth rate is just so damn juicy. That revenue growth is hellathicc. Current Market and outlook Right now, rates are low. The average 30-yr mortgage fixed rate is 2.92% (https://www.cnbc.com/2021/02/03/mortgage-refinancing-surges-but-high-home-prices-stop-buyers.html) I cannot say how long interest rates will remain low but I believe RKT is positioned to continue to grow regardless of what rates do moving forward. They just cover so much of the space, and they do it with a focus on applied technology. Here’s some blatant speculation. I think as we move into 2021 and the vaccine becomes more prevalent, millennials will buy, sell, and borrow against real estate with renewed intensity. I think RKT is uniquely positioned to capture that market. Positions: RKT shares. Cost basis of $21.14.
By petriefly42 This is my first DD post on any company, be gentle. Disclaimer: I am long RKT. This is not financial advice, and I am not receiving any compensation whatsoever from anyone for this post. I’m not a professional, I’m not even an amateur, this is a Wendy’s. Sources used: RKT investor relations website and company website, RKT earnings transcripts, SEC fillings, the SEC EDGAR database, sea king al pha, whalewisdom, finbox, yahoo finance, stockcharts, openinsider, Zacks, google sheets. Summary Rocket Companies (RKT) is a fintech company that operates several brands including the flagship Rocket Mortgage. I think RKT presents an opportunity to buy serious value at a cheap price, because the market has not priced in the underlying fact that RKT is a tech company akin to Square, Paypal, etc. RKT has disrupted the lending industry and has embraced a fully digital ecosystem, which will continue to drive customer acquisition and retention in the future RKT spends considerable money and resources on UX/UI development, client experience, and marketing. This will also help drive their continued expansion into the lending market. The RKT “ecosystem” provides a “full cycle” solution for everything related to real estate transactions and insurance. They serve real estate professionals looking to generate leads, develop those leads, better serve their clients, and make every stage of real estate transactions smoother. From the client side, they similarly just make everything easier - it’s an app, it’s online, it’s doable from home and it’s not complicated. There’s an inherent advantage in what they’re doing here because closing on real estate transactions has always been something that’s complex, unpleasant, expensive, and not well understood. You need lawyers, you need agents, there’s a ton of paperwork, it sucks. RKT is changing all of that. RKTs balance sheet, income, and liabilities support a stock price several times higher than the current one in my opinion. RKT is currently stagnant in price, and the market appears to be pricing it like a traditional mortgage company, not a rapidly growing tech company (which they are). RKT has been around for decades (skips the startup costs that will provide barrier to entry for newer companies looking to do what they’re doing), but somehow seems to still be leading the tech charge in the industry. That’s a unique and potent combination in my opinion. RKT needs a catalyst to get the market to value it as a tech company instead of a lending company. Once that happens, and I expect it to sometime within the next year, RKT should approach an appropriate valuation such as 20x earnings. That’s an estimate I pulled out of nowhere, but is commensurate with the low end of P/E ratios for companies I see as similar to RKT. Key Point - RKT is Priced Like a Legacy Mortgage Company The average estimate for 2020 year end revenue is $15 billion, and the yearly earnings estimate average is $3.85 per share. This estimate gives a ttm P/E ratio of just over 5.5. The sector median is something like 8-12, which makes RKT cheaply valued relative to the earnings it produces, even compared to the financial/mortgage sector. What’s key here is, I don’t think that’s really an appropriate comparison. I would place them more in line with companies like Square (ttm P/E ratio of 325x lol), PayPal (ttm P/E ratio of 69x, nice), or Fiserv (ttm P/E ratio of 24x). I used Zacks for all of these P/E ratio lookups. Let’s assume RKT is conservatively worth 15x earnings, and that it hits the estimate of $3.85 eps. That would put its fair value right now at $57.75 per share. I think it’s worth more than that but, we all should do well to remember that it’s really only worth whatever the market will pay for it. Key Point - Catalysts This thing needs a catalyst. Right now I am loading up. I’m buying shares, I’m selling SHORT TERM covered calls to reduce basis on those shares, but I will be stopping the sale of those covered calls within a couple weeks most likely. The Q4 earnings announcement will be on 2/25. I am not sure that the actual earnings numbers will be enough to wake this thing up, although I expect them to be good. But if that announcement comes with discussion of their focus for 2021 and beyond, and gets the market thinking about them as a tech company first and mortgage lending company second, things will start to heat up. I don’t know when the real catalyst will hit that triggers the run-up, but I think it could start with the Q4 earnings call. I am looking at $21 as the floor for this stock, and I expect the price to double within a year. I will be acquiring OTM LEAPs, expiring next spring. Supporting information and background follows. The Business RKT is in the business of providing solutions to financial transactions, including mortgage origination and refinancing, auto lending, and more. Specific subsidiaries and my simplistic view of how they interact: Home Financing Rocket Mortgage - The mortgage company. This is a prominent “public facing” part of the Rocket ecosystem. Amrock - Amrock provides title insurance, property valuations, and other solutions. I see this as “supporting infrastructure” to keep clients within the rocket ecosystem where they would otherwise need to go elsewhere and is part of what makes RKT a one-stop-shop. Amrock Title Insurance (ATI) Company - basically does underwriting for Amrock. The “business end” in my simple understanding of the world. Nexsys - provides a streamlined approach to the closing process with their Clear Sign and Clear HOI technologies - taking care of closing day authentications and sharing of homeowners insurance information. Lendesk - Lendesk specifically provides solutions for the mortgage market in Canada Edison Financial - Basically the “front end” of Lendesk that Canadian clients would interact with. Home Sale and Search Rocket Homes - Rocket Homes is a proprietary home search platform and real estate agent referral network. Basically this matches buyers, sellers, and agents, and is a key aspect of keeping clients completely working within RKT for all aspects of real estate buying/selling/financing. For Sale By Owner - A digital marketplace designed to let clients buy and sell real estate on their own. I think it’s absolutely brilliant that RKT owns this, but more on that later. Auto & Personal Financing Rocket Auto - Supports rental and online car purchasing platforms. Rocket Loans - online personal loan solutions for clients. Media Core Digital Media - a major advertiser in the mortgage, financial, insurance, and education sectors. Lower My Bills - this company is basically a “portal” business model that connects people with providers of various loan and insurance products. Services & Technology Development Rock Connections - Basically a sales and support platform that handles appointments, prequalifications, generating leads, and data analysis among other things. Rock Central - I will generalize this as “business support”. HR, administration, etc. Rocket Innovation Studio - A tech incubator to gather and engage top talent and ideas. Recent Acquisitions RKT, through Lendesk, acquired Finmo back in October of 2020 (https://finance.yahoo.com/news/rocket-companies-subsidiary-acquires-fast-182042594.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALnvnNBoglSnmMP0O61AqgXBJokNS53LjJYuG3NvYKhayp4I6ZH2RpfmFUbSsCAU4xmnBNGMTwiEG-Ly29EabVy1-OjPIGfkYoQ3389gn3Edebs9sIwWOy1tPzqjRwOwwGA_PWg0cNzEFCe7HBTilMwADUT_y0QxWw8vizWecGcv) Finmo is a rapidly growing Canadian digital mortgage platform and this acquisition I think was perfect - it shows RKTs dedication to embracing a fully digital experience, and making sure they’re the ones leading that charge. Management I do not have much to say here, aside from this. The RKT team is not the new kids on the block, they have decades of industry experience. Also, I value leaders that make people feel valued. And on that note, under CEO Jay Farner Quicken Loans has been in the top 30 of Fortune’s “100 Best Companies to Work For” list for 17 consecutive years. Financials and Growth When it comes to the numbers, RKT is killing it. I don’t want to just spout a bunch of numbers that anyone can easily go look up so here’s a couple that stood out to me from the Q3 earnings announcement and related data: $4.63 billion in revenue, which is 163% YoY growth. From that revenue, they beat EPS estimates with $1.21 for the quarter vs $1.09 expected. Net income was $2.4 billion which represents a YoY growth of 365%. Closed loan volume YoY growth was 122% to $89B. Net rate lock volume was $94.7 Billion (101% growth). RKT has brought in $13.1 billion in revenue in the first 3 quarters and seems to be on track to close out Q4 with yearly revs above $15 billion. That’s awesome but what I really like is that they pair this amazing growth with $3.5B cash on hand. That’s great because I want them to be able to scale as they grow, and make acquisitions as needed (see Finmo) to ensure they can keep that growth going without getting overextended and failing to capitalize. RKTs ability to recapture clients is one of the keys to their future success in my uneducated opinion. Their recapture rate is 4.6x the industry average. The Q3 earnings transcript includes a statement by the CEO on how when interest rates fall, retention rate falls, refinance activity is larger. The high recapture rate RKT has serves as a natural hedge to their retention of existing clients because their recapture is so much higher than average in the industry. Quick aside - RKT announced a $1 billion share buyback program. They’ll be able to repurchase shares from time to time starting Nov10 2020, ending in two years. I don’t love the idea of share buybacks because I think this can be detrimental to actual business growth for the sake of shareholder value. However, with the large cash position RKT has (and it doubled from December 2019 to September 2020) I think this is a reasonable way to deploy some of that cash for now. Ok so what about valuation using DCF, free cash flow analysis, something like that? Honestly I’m not convinced this is as useful as some people make it out to be. It’s nice to know what the numbers indicate, but I don’t spend a lot of time worrying about an exact price target based on anything like this. That said, you can crunch the numbers yourself or check out something like the Finbox resources: https://finbox.com/NYSE:RKT/models/dcf-growth-exit-5yr I don’t believe that fair value estimate for an instant, but it's a part of the puzzle to consider. Finbox has various models you can check out, but it’s also just a nice place to view aggregate data other than directly from the SEC filings. Product Channels RKTs direct-to-consumer channel is their main source of revenue right now, but I think they will be successful in their efforts to grow their partner channels as well. Why do I say that? Numbers don’t lie: Direct-to-consumer Q3 growth: 131% YoY ($53.5B closed loan volume) Partner Network growth 127% YoY ($29.6B closed volume) Adjusted Revenue for Partner Network is up 502% YTD vs 2019 ( see Q3 earnings transcript) The partner network volume is a little over half of the direct-to-consumer volume but the growth rate is just so damn juicy. That revenue growth is hellathicc. Current Market and outlook Right now, rates are low. The average 30-yr mortgage fixed rate is 2.92% (https://www.cnbc.com/2021/02/03/mortgage-refinancing-surges-but-high-home-prices-stop-buyers.html) I cannot say how long interest rates will remain low but I believe RKT is positioned to continue to grow regardless of what rates do moving forward. They just cover so much of the space, and they do it with a focus on applied technology. Here’s some blatant speculation. I think as we move into 2021 and the vaccine becomes more prevalent, millennials will buy, sell, and borrow against real estate with renewed intensity. I think RKT is uniquely positioned to capture that market. Positions: RKT shares. Cost basis of $21.14.
BB -- Blackberry AWS -- Amazon Web Services IVY -- Intelligent Vehicles Yo. I don't actually know if this stands for anything QNX -- Quick-Unix perhaps? It's a Unix-like embedded microkernel RTOS (real-time operating system) EOY -- end of year PT -- price target SP -- stock price EV -- electric vehicle SoC -- System on a Chip IoT -- Internet of Things TL;DR: Blackberry ($BB) is almost daily announcing new partnerships and new clients for their software, including new deals with companies that are just now or just this year launching autonomous vehicles that run on QNX software. The big kahuna of all these deals is BB's recent partnership with Amazon to go 50/50 into BB's software IVY, a scalable cloud-connected software platform designed for intelligent vehicle data gathering and data sharing. With Amazon's Jeff Bezos stepping down, and Andy Jassy filling his shoes, who was the CEO of AWS, BB will have some very firm support behind Amazon's new CEO. BB and Amazon are having a webinar Feb. 23rd about their partnership and IVY, which should be a strong catalyst moving forward. IVY beta earnings are projected to begin impacting BB's Q3 or Q4 earnings beginning in November this year, with IVY fully being integrated around the 2023 timeframe. Through a lot of reading and analysis, I believe BB has a four-tiered business model dating back as far as 2013 when BB's CEO John Chen was hired to begin the massive BB turnaround process. Tier 1 was development of QNX and IVY, lasting from 2013 to today and onward, however, Tier 2 overlaps Tier 1. Tier 2 was customer acquisition, primarily distributing their secure software in QNX, SecuSuite, Spark, and AtHoc. They secured 37 automakers during this time, including 9 of the top 10 automakers, over 106 governments from around the world, including all of G7 governments and 18 of G20 governments, as well as 77% of Fortune 100 companies, including partnerships with Amazon, Microsoft, Google, Sony, XPENG, XPEV, NVIDIA, Intel, Qualcomm, Baidu, IBM, LG, Samsung, and others. Well if they have such an incredible market share, why are they so undervalued? The answer is that QNX was not the end-all-be-all product. It was the base that the rest would be built on. Particularly IVY, which is the real money-maker. Tier 3 is IVY beta, and Tier 4 is IVY distribution and subscription revenue streams. So why is IVY the big deal and not QNX? They are both big deals, but QNX was never designed to be the money-maker. They are charging a one-time fee per vehicle use. There is a bigger goal here, to secure their clients as their customers for the bigger product in IVY. They also need QNX is to be a secure system in order for IVY to be trustworthy and reliable. And it certainly is secure. QNX has ISO26262 certification, as well as US government clearance, NSA clearance, and CIA clearance. The US government uses QNX and Blackberry products. Just let that sink in. That should tell you something about its security. Anyways, IVY will be used in autonomous vehicle level 4 and level 5 communication (note that QNX is level 5 certified... it has a business moat just in its security level and clearance), as well as EV and gas vehicle data collecting and AI-powered data synthesis. See below for more details on IVY. Wrapping up this TL;DR, BB is going to do well this year as IVY unfolds, but will do even better in the next 2-5 years. I have a PT of 25 by EOY and a PT of 80 by 2023 EOY, and a PT of 160+ by 2025 EOY TL;DR: TL;DR: BB go up, but go slow for now because IVY revenue not here yet, but big fast later. Make big monies, BB is the future tech that Amazon, Microsoft, Google, etc will be building upon in the EV and IoT market
FAQs:
1) Why is Blackberry stock price going down? A: A few possible reasons. One, as of today the whole market is down. BB is connected to overall market swings as most companies are. Two, there may be some market manipulation by bearish financial institutions as there are a lot of calls expiring on 2/19. I would expect that BB SP to be volatile between $11 and $14 between now and then, and to move upwards after 2/19 and especially after 2/23 (Amazon + BB webinar). Three, there are bearish investors who still think BB is a phone company and don't understand the underworkings of BB's business strategy, their software, their patents, or their partners. Their revenue has been affected by coronavirus and has not been particularly phenomenal so far this year. 2) Should I invest now or later? A: First off, I'm not a financial advisor, these are just my opinions. Invest at your own risk. In my opinion, BB will see a large SP growth by EOY, anywhere from 50% to 150% growth by EOY. While revenue will likely not increase much this year, the partnership with Amazon and news regarding IVY will likely create new floors for their SP much higher than the current SP right now, at around the $12 SP 3) What's stopping competitors from building a similar product and hurting BB's business? A: There's a lot of reasons why BB has a huge moat right now. One, notice the partners that BB has with QNX. They've got all the big boys working them, aside from Apple and Tesla. Seeing as SpaceX runs on QNX, and seeing that Apple was trying to make a deal with Hyundai that did not go through, I think it is still possible that either Tesla or Apple or both companies could also make a deal with BB to use QNX as their OS system. BB worked to develop their QNX embedded microkernel OS for the last eight years or so. Anyone trying to step into the game now is far too late. Apple has the best chance of all companies, as it has its own OS and Apple knows security very well, but this still requires an entirely new system in order to work in the EV sector. Also, Apple announced recently that they would be developing their own EV, although they did not give much details beyond that statement. The likelihood that they are both working on the hardware and software side of this thing is slim given the large number of difficulties that come with certification as it relates to the cybersecurity software space. Regardless, I would suspect that either Apple or Tesla is the most likely to be competitors in this space, but neither company has successfully completed a certified OS system, particularly for the emerging sector of autonomous EVs. Tesla is currently building a Linux-based system that is having a lot of difficulty in passing certifications such as ISO26262, a struggle that has been ongoing for years now. They may achieve a product that passes these safety regulations and certifications, but the question remains whether this will be in time as the EV and autonomous market picks up speed, and whether competing companies would even be interested in using their product. In fact, any car company is unlikely to develop their own OS software because none of their competitors would be likely to use it. BB is the perfect business to license since it is not competing in the hardware sector for the EV market. This argument can also be used for Apple if they are also building an EV. 4) Why is BB's revenue so low if they have so many customers and partners? A: QNX has been licensed so far as a one-time purchase, per vehicle or IoT using their software. IVY will be a subscription-based software that also includes a one-time purchase. Thus, BB's revenue streams are somewhat unimpressive currently, but they are playing the long game. If my hypothesis is correct, it is John Chen's goal to lay low as software is developed and customer relationships are built. It's the same with the book market. It's the sequel that makes all the money, not the first book. QNX is just the first book of a series looking to hook in its customers with low costs before hitting 'em with the strong follow up in IVY. Additionally, in order to build a competitive business moat, it was to their advantage to not forewarn any competitors of their involvement and plans. Consider John Chen's work as a CEO in his last business Sybase. Chen worked as the CEO of Sybase for 10 years. For the first 7 years, the SP remained at around $10 a share. Three years later, the SP was at $100 a share. I suspect he is implementing a similar model with Blackberry. Chen joined Blackberry in 2013. BB stock actually dropped for most of the last 7 years, resting at a stock price of around $5. Now BB is at $12 a share. I would not be surprised if BB reaches $50 two years from now.
Blackberry Clients and Partners Automakers: Honda, Audi, Jeep, Mitsubishi, Ford, Hyundai, Volkswagen, Bentley, Lamboghini, Byton, Mini (cooper), Toyota, Subaru, Fiat Chrysler, Mazda, Nio, BMW, Porsche, Lexus, Kia, Land-Rover, Mercedes-Benz, Buick, Jaguar, Visteon, Skoda, Chevrolet, Nissan, Acura, Continental, General Motors, Baidu, Motional Other: Denso, Aptiv, Bosch, Panasonic, Harman, Bugatti, LG, Vodafone, Bell, Carahsoft, CACI, Telus, iSec, KPMG, Tableau, Qlik Major: Amazon, Google, Sony, XPENG, XPEV, Li Auto, NVIDIA, Canoo, Microsoft, Intel, Verizon, Qualcomm, IBM, LG, Samsung Major Investors: PRIMECAP, Hamblin Watsa, Ontario Teachers’ Pension, Vanguard, Harris Associates, ETF Managers Group, Wells Capital, Arrowstreet Capital, Kahn Brothers Advisors, Norges Bank Investment Governments: Albania, Andorra, Angola, Argentina, Australia, Austria, Bahrain, Belarus, Belgium, Benin, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Burkina Faso, Cameroon, Canada, Congo, Croatia, Czech Republic, DR Congo, Denmark, Egypt, Estonia, Finland, France, Gabon, Germany, Ghana, Gibraltar, Greece, Guadeloupe, Hong Kong, Hungary, Indonesia, Ireland, Italy, Japan, Kenya, Kuwait, Latvia, Lesotho, Liechtenstein, Lithuania, Luxembourg, Macau, Macedonia, Malawi, Malaysia, Mali, Malta, Marthinique, Mauritania, Mauritus, Mayotte, Mexico, Moldova, Monaco, Montenegro, Morocco, Mozambique, Namibia, Netherlands, Netherlands Antilles, New Zealand, Nigeria, Norway, Oman, Philippines, Poland, Portugal, Qatar, Romania, Russia, Réunion, Saint Barthélemy, Saint Martin, San Marino, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Swaziland, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Togo, Turkey, USA, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Vatican City, Western Sahara, Zambia, Zimbabwe
Blackberry Current Revenues:
BlackBerry Revenues: How Does BlackBerry Make Money? -- Trefis This display the biggest bearish argument to BB. Until IVY begins producing new revenue streams, BB is likely to not exponentially increase revenue streams, but only sustain moderate YoY growth
Blackberry Analysis Regarding Infotainment and Google and Ford Deal:
https://www.youtube.com/watch?v=sIrjrNYR3Lw The media recently picked out a story that left out a lot of pertinent information, making it seems that BB lost Ford as a client. This is not true. QNX is designed to be a SoC. This means that other operating systems, such as Linux or Android, can be easily added to QNX. It is in fact encouraged. The Ford and Google deal was simply announcing the Ford would be using Android as their infotainment system. I believe that BB was never intended to try and be the predominant entity for all software systems in EVs or IoTs, but the backbone that connects all together, and to protect all components in a secure system. Autonomous EVs and even regular EVs in general would not be possible without a secure system protecting the product, as is true with IoTs. This is also why things like US Fighter Jets run on... you guess it, QNX. Ford is still using QNX. It is simply also now using Android that is running on top of QNX more commentary on this: Analyzing Blackberry Bear Argument - Case No. 1: Ford Deal
Image This is an interesting one to be sure. Facebook was being evil, like the do, and were caught using a number of BB patents. They settled in February, and the day that the settlement was finalized, John Chen (BB CEO) tweeted reminding everyone that BB is used on the ISS https://twitter.com/JohnChen/status/1358853064153784321?s=20 Well, the connection and speculation here is that Blackberry is going to the moon, and that the settlement is rather significant. Someone else also dug out some information in Facebook's most recent 10-K, specifically a portion for a 'non-cancelable contractual commitment' of an amount of $7500 million dollars. That's 7.5 billion btw. We don't know how big the settlement is, but it is worth noting that BB's entire market cap is 7.5B. I highly doubt that a settlement would reach such lofty numbers, but it could be possible that FB settled for some initial amount of $1B or so, as well as $1B in reoccurring payments over several years. We won't know until March 15th actually, so stay tuned.
Blackberry New Partnerships
Within the last few weeks, Blackberry has announced a stronger partnership with Baidu (China's Google), as well as their involvement with Baidu choosing to use QNX for their autonomous vehicles that will be hitting the road, as early as this year and next. BB has also announced their involvement with Motional, a joint venture between Hyundai and Aptiv, which will use QNX for their autonomous vehicles. Motional will be partnering with Lyft to use autonomous vehicles to begin serving customers and will be deploying their vehicles in 2023. It was also announced that QNX will be working with AOSP (Android Open Source Project), as well as announcing yesterday that QNX Hypervisor 2.2 is now released, which is what allows Android and Linux to run on top of QNX. A sum-up of all the recent news on $BB
Rumor: Blackberry Buyout? Here's why that's not happening:
Just read this post. It's quite revealing: Great Day for BB despite stick dipping. TL;DR: Amazon could have easily bought BB. Why didn't they? Well, all the big players are interested in this EV and IoT emerging sector. This is the new wave of technology that will dominate the market. First we had the dot.com boom, then the cell-phone and smart-phone market, and now we have the autonomous EV and IoT market. If Amazon were to buy BB, they would have to submit a tender offer. This would be a red flag to all the big players that Amazon were trying to buy up the best security out there. It would be a bidding war that could result in a double-digit multi-billion dollar buyout. It was much more to their advantage to create a secret alliance with BB and establish a 50/50 partnership, whose contract includes exclusivity for their use of IVY. Ouch! That's gotta hurt. This is where the importance of QNX lies. BB will be able to pull the rug out from any company that chooses to use something other than IVY. No IVY, no QNX, no EV. It will be a package deal where IVY is the big money maker. All other companies will have to build from the ground up or be forced to license QNX and make their money off of other sectors, such as the infotainment sector, as Google has already begun to do with the Ford deal. When this deal happened, the other big boys wet their pants realizing they needed to get into this space, and fast. Microsoft partnered with Cruise/GM. Apple tried to partner with Hyundai, who was so flattered, they may have initially said yes or indicated so, before realizing that they were already partnered with BB, so it was a no-go. Not sure if that is fact or fiction, but it is an interesting proposal.
Blackberry IVY + AWS Partnership:
Alright, so what's the deal with IVY? Why is it going to be so profitable? Why is IVY the real money-maker, while QNX has been used as the customer-acquisition software tool? Check out this picture: Image For one, IVY is designed for real-time communication between EVs or other IoTs. Autonomous driving level 5 requires vehicles to communicate with one another. This is where IVY comes in. IVY connects the different software components of an EV (which presumably are running on QNX), as well as harvesting data on those systems. The data used can be distributed for a wide-variety of uses, including, but not limited to, automakers and suppliers, app developers, consumer services, smart cities, EV charging providers, insurance companies, and vehicle maintenance providers. All of these different sectors will be willing to pay subscriptions for these data services, as well as the automakers and IoT makers who will also be willing to pay subscriptions for IVY. For instance, IVY can help share information between vehicles that will allow for a car detecting ice roads in one area so that other cars using IVY can take a different route. This results in less crashes, which helps the automakers. Insurance companies can use data from all these different data points as well, allowing them an inside-view of their clients. The list of what is possible here is inexhaustible. As for price points, the subscription models for multiple outside companies wanting to use the data will be create huge revenue streams for BB. With Amazon as a 50/50 partner, and with their resources and strategic management, BB will be poised to be the foundation in security and data sharing for the entire EV, and somewhat of the IoT market (the IoT market has more competitors for sure) Analysis on IVY Analysis on PTs
Revenue, revenue, revenue...
Blackberry is poised to be an industry leader in EV, government, and IoT security and data sharing with products such as QNX, IVY, Spark, and their other software products. Stock price will likely stay somewhat stunted until IVY revenue begins picking up. It is possible that more announcements and marketing related to IVY will make this growth more rapid. In my opinion, either way BB over the next 5 years will 10x. The question is whether you want to get in now at $12 / share or two years from now at $40 a share or something similar, assuming that either way this stock is going to push for that 100B market cap (it's currently at 7B). There will be bearish analysts that will continue to say that Blackberry is a worthless company until those IVY revenue streams begin to come in. It is also possible that a realistic competitor may emerge within the next three years, such as Tesla or Apple. But if Apple is seeking to create its own EV product, then both companies will have a hard time finding any way to license their software to any other company. It remains possible that Apple and/or Tesla may strikes deals with BB as well in order to be able to produce autonomous vehicles and get a bite of that market share
Really, no competitors?
Well it's called a business moat for a reason. As we have recently seen, QNX is working with AOSP, and so clearly, they are not to be worried about. Tesla is not a true competitor as their OS product is not certified yet, and has demonstrated difficulty in doing so, and additionally, other automakers will not want to benefit their competitors by using their product. A third-party non-auto-maker will be much more desirable. Other companies such as VxWorks, have a lot of to prove both in security and certifications, as well as producing an OS product that is compatible with an emerging autonomous level 5 EV market. QNX's embedded microkernel RTOS is very much unique in this regard. This type of system allows for real-time processing and power distribution, while protecting the system from attacks. In an embedded microkernel system, if one part of the system is attacked, the whole system will not shut down, in layman's terms. This is essential for the security of any high-risk product that is built upon an underlying software that controls that different components of the system.
Conclusion:
All eyes are turned towards Blackberry right now. People want to know what this deal with Amazon will look like, how it will work, what they will focus on, (will Amazon also use this system for a fleet of delivery drones? hmmm), what the revenue streams will look like, what are their projections, what markets and sectors are they targeting, what are their future goals, what will Amazon be doing on their end, etc, etc. The Amazon + BB webinar may answer some of those questions, or maybe they won't. Time will tell (Feb. 23rd, specifically -- here's a link to sign up and watch: Next-Gen Vehicle Architectures Unlock Unprecedented Opportunities for Automakers). Also look out for that FB settlement numbers on March 15th, and Q4 earnings March 31st. I don't expect Q4 earnings to be particularly interesting unless they include the FB settlement numbers. Could those numbers instead be put into Q1 earnings for 2021? Possibly. Initially IVY beta is expected to begin being released late this year. I will also be looking forward to see how Apple and Tesla respond in the coming months. Ultimately, BB is a long-term play, but is poised to dominate this emerging industry with the partnerships and security focused software they have secretly been building. Now if only the could do something about their logo, some rebranding would be nice... This is not financial advice, just my own opinions. I am not a financial advisor nor a professional. I own 14k shares in Blackberry, as well as options (10x 8/17/21 20c BB). Do your own DD and fact check me as well
Every time I see another pump article on the “next Chinese Tesla” because deliveries, I get triggered and have to put on chilled cow on spotify for 3 hours. Although entertaining, “NIO is going to squeeze like [redacted], all aboard!” comments on stocktwits is making my testicles feel like tiny furrowed cerebrums and not because it’s cold AF outside. So I had to put together some pleb research on TSLA, NIO, XPENG & LI for you to scoff at. This is NOT financial advice, I just don’t like these stocks. 1. Positions I know my lazy ass needs to switch A few more 2023s, I just went sniping randomly today. Full disclosure, I also hold and sell CCs on my Tesla shares, so this play doubles as somewhat of a hedge for me. Sorry, not up to YOLO standards, I'm a lil biatch. 2. The Chosen Ones: NIO & XPENG Did you ever look at TSLA and think, god damn that shit is overpriced? Then look at the price to sales and realize, holy fuck it is? Then looked at it a month later and the price doubled? Well guess what, NIO and XPENG are trading even higher than TSLA. Current PS as of 2/10/2021 - TSLA: ~25 - NIO: ~40 - XPENG: ~41 - LI: ~19 (It’s because their flagship SUV is hybrid electric +ICE, insane PS reserved for pure bloods only) Let’s compare. These guys aren't coding the next Gran Turismo 8, but let’s look at high margin tech anyways.
NFLX: ~10
ABNB: ~28
PLTR: ~72 (peter pan stock)
Actual automotives, old, unsexy, fell from grace, like your grandma’s teets - TM: ~0.8 - F: ~0.4 - VWAGY: ~0.5 I did some monkey spreadsheet math to forecast their updated TTM Revs after Q1. Don’t ask me how I did that, the answer either won’t impress you, or straight up glide over your smooth brain and I need you to focus on what’s important right now. Q1 2021 PS if MC doesn’t change - TSLA: ~22 - NIO: ~29 - XPENG: ~26 - LI: ~14 Yep, still overvalued AF. Before we get into the nuts and butts, there is always the risk (lotto upside in our case) that macros choke and correct >20% because of some black swan (I mean it’s 2020s, Murphy has been trying to prove a point). When this happens, we know what gets hit hardest, the ones with the high forwarding looking, rosy multiples. These EV stocks will get beat up worse than that washed up highschool varsity prom king’s girlfriend. Some other lotto events include China stocks being delisted, and who can forget the audit risk on those poorly cooked books, but enough to win the Great Chinese Bake Off. Can they grow Revenues though? Let's look. 3. Revenue Growth Stunted You might be one of those Stocktwats and you’re thinking; “but but... they’ll ramp deliveries exponentially and grow Revenues just like TSLA did back in 2018!” *Smacks you in the face*, no they won’t and here is why. Chinese people love brand name shit. I repeat, Chinese people love brand name shit. Quantitatively, go look at LVMH sales in China. The figures on Chinese tourists going on vacation, spending without looking at the price tag (naw they definitely check for them deals) is incredible. They’re not there to look at some antiquated tower (way better architecture back home), they tryin to get those furry Gucci Slips on discount (they are ugly AF btw). Tesla is no different, people worship Musk over there. You could probably sell his panties online, and some Chinese billionaire will pay millions for it, just like they did for his Gene Wilder house in LA. Qualitatively, I called my cousins in China, confirmed, he couldn’t stop jizzing at the slight mention of Tesla. Why does this matter? Owning a TSLA is like owning any other brand name shit in China, social status. Social status is EVERYTHING to much more of the population in China vs. RoW. The biggest difference is, you’re not going to be able to buy a knock-off TSLA in some shady, cigarette smoking thug’s closet on the 2nd floor of a Chinese dumpling street stand. TSLA just ramped the Model Y in China and started deliveries in Jan. That shit sold out in a matter of days. If you’re not buying one, you basically have to settle for an uglier wife (this is probably not much of an exaggeration). Well guess who has been selling mostly midsize SUVs without much competition from TSLA and achieving recording breaking deliveries up until now? NIO: 100% SUVs Xpeng: 40% SUVs Brand aside, some triggered specs nerd out there is thinking “Well, ultimately people will decide based on specs and value, not brand alone.” Fine, let’s take a look at what aspects of an EV people care about. Let’s break it down apples to apples for these SUV EVsTesla Model Y- Price: ~$52,800 - Range: 594 km (Kilometers for the apes) - 0-100km Acceleration: 5.1s - Charger network: 20,000+ NIO EC6 - Price: ~$57,200 - Range: 430 km (605 if you pay ~$9k for a bigger battery) - 0-100km Acceleration: 5.4s - Charger network: 290+ Xpeng G3 520 - Price: ~$30,580 - Range: 520 km - 0-100km Acceleration: 8.6s - Charger network: 866+ You may be thinking the G3 520’s price tag is looking pretty attractive. Then you imagine the future wife you’ll be banging, yeah, trade up for that Tesla boi. “But JJ, NIO has battery swap tech! It’s perfect for China’s dense cities!” If you know anything about product market fit, battery swapping for EVs is like trying to bang a gerbil's anus. First of all, battery swap stations are way more expensive to build, stock and maintain. Crazy upfront build out costs and battery requirements kill your rate of expansion (shit is important for demand). Tesla superchargers are spreading like wildfire and become recurring revenue generators over time, while battery swap stations stay cost centers over time, breakeven at best. That’s why NIO tries to charge a $150 subscription fee, I’d rather get punhub subs for the whole family. Oh btw, you can’t even do it yourself, you have to give it to a service technician to do the swapping for you. Be realistic, these wealthy, classist Chinese dirtbags (I’m Chinese and know some first hand) don’t want some lowlife service tech to sit on their mothball leather. Back to battery swapping and product market fit. Look, Tesla tried this in 2013, decided it was dumb, abandoned it and decided to make charging super fast and let you watch the actual Great British Bake Off while you wait. In 20 fuckin 13 some of you were still reading Robinhood as a picture book. Lastly, the people buying EVs above the $50k range have easy access to charging, especially Tesla’s network. So, battery swapping for cars above $50k is serving a niche market, a handicap, and a money losing operation. “But JJ… China EV Market Growth! They may have a smaller share right now, but the Pie grows for everyone!” Maybe, but if you look at the 2020 EV market growth, most of that came from guess who? Tesla. Oh, and a $8k mini, pretty much a golf kart that Tyrian would be uncomfortable in. Solar & batteries are money losing businesses right now for Tesla, but people are pricing in some of those rosy projections into the valuation. Nio and Xpeng haven't even hinted at the idea because people in China live in 3D printed skyscraper boxes. Home solar and battery doesn’t make sense, but this also means no revenue opportunity.Oh and let’s not forget about autonomy… no, let’s forget about it (for now). International expansion you say? Sure Nio and Xpeng trying to expand oversees to... Norway. No way has the population size of a small Indian wedding. Let's be honest here, would americans buy a "made in china" EV over a Tesla or even Ford/GM EV? I'm Chinese and I wouldn't even fuckin touch that shit. Back to Cars, to make matters worse for Chinese EV players, Tesla has already designed a budget model. Unfortunately, it’ll be hard, like wiping ass with sandpaper, for Xpeng and Nio is follow suite in this space because of... MARGINS. Let's look at this next. 4. Your margin is my opportunity - JB Retiree History lesson; how did China become #2 in GDP globally? They industrialized their massive population, kept the RMB artificially deflated to undercut the world through exports. Sure, quality suffered, but everything was “made in china” at some point. This is all to say, you can always increase demand by reducing price, and you can optimally reduce price if you have better margins than your competitors (or have the cash to sustain a loss to not bleed out before they do). Let’s look at the current state of margins. Q3 2020 Gross Margins - Tesla: 23.5% - Nio: 12.9% - Xpeng: 4.6% - Li Auto: 19.8% We’ll have to revisit Q4 margins when everyone reports in a few weeks. But wow, it’s not even close for Nio and Xpeng. This is not even taking out Tesla’s solar & battery margins, which are negative, like when your mom finds out you YOLOed your college tuition on [redacted] at $400. “But JJ, that’s not fair, Nio and Xpeng are still ramping!” First of all, so is Tesla, just on a larger scale. I mean, they are building factories like Starbucks locations. But fine, just taking a peak at margins for Tesla in earlier “ramp” years. 2017: 18.9% 2016: 22.8% 2015: 22.8% This may not look right, something must be wrong you’re thinking. Well, let’s we take a look under the hood, you won’t find Trayvon Martin. - Battery is the main cost of an EV. Tesla has been working on battery tech from the beginning, they invented and are retiring the “skateboard” design, saying it’s obsolete because they got something better, while Chinese EV companies are busy copying it. Ay caramba! - For the batteries them selves, just look at battery output distribution. Both Nio and Xpeng rely on CATL for their batteries in China. But so does everyone else at an Indian wedding, including Tesla. Either everyone is going to be supply limited, or someone is going to have to pay more. You can pay more when you have better margins to work with/bleed cash. At least Tesla will have their own way out soon enough. Can you find Nio, Xpeng or Li Waldo? - Tesla’s electronics are industry leading, Mario knows. Neo and Xpeng on the other hand outsources most of the Chips (Nvidia) and hardware (Mobile eye). When you outsource, you ultimately have less margin, control, speed and ability to freely synergize. - Tesla is also literally stamping entire cars like crispy cream donuts. It's almost if Chinese EVs are trying to take on Megatron’s fuckin Fusion Cannon with blow darts. Nio on the other hand abandoned plans to make their own factory due to cash shortage and partnered with JAC. A short term plat that won't help margins in the long run. - You know how Tim Apple gets a hard on every time he talks about service margins, EVs have some of that too. - In car entertainment: Tesla is building an app store, while Nio and Xpeng outsources - EV Charging: Tesla has the biggest network, Nio has $ losing battery swap, while Xpeng relied on and pays government network - Connectivity: Startlink? *shrugs* - Autonomous driving: Tesla is rolling out subs for FSD, and I wouldn’t trust Nio and Xpeng’s software with your wife’s boyfriend’s life 5. Closing Look, Nio is backed by Tencent and Bidu. Xpeng is backed by Ali. Their balance sheets pass the acid test with flying colors, so they can bleed cash for awhile. But Tesla has a meme lord at the helm. Let’s not forget some of the giant local players like BYD, who is backed by Bigly Buffet himself. There is also SAIC, Great Wall, Geely, BAIC, Chang Jiang, Kandi, and dozens more names you don't know, just like the name of your cousin's mail in bride. Tesla copy cats are literally coming out of the woodworks, when buyers have a paradox of choice, the clear pick defaults back to the trusted brand, guess who? CCP has already been 3 steps ahead of Biden (I mean, who isn't, lol) and EV bullish years ago. Matter of fact, EV subsidies (which Nio and Xpeng survive off of like a bums on opioids in the streets of San Francisco) are already getting cut by 20% in 2021, and phased out by 2022. I'll let you figure out what happens to deliveries when subsidies get cut, again comes back to magins and cash. If it comes down to EV price wars, I don't think it'll be Nio and Xpeng winning the bleed out. It'll be more like Matrix 3, rather than 1. I’m no voodoo magic chart nerd, but Nio tested $65 resistance again yesterday and failed. Xpeng in general looks like it’s peaked. Google search interest has spiked and all the little virgin armchair analysts on YouTube have pumped it 10 times over. I’ll wait for their earning numbers in a few weeks to take the temperature again. I'll likely add more to the position then, will update. At the end of the day, Nio and Xpeng may trade sideways for much longer than I can stay solvent, but fuck it, I’ve spent too much time on this, so sunk cost is set in hard, change my mind. TL;DR Not sure when, but bet on EV bubble popping with Puts on Nio and Xpeng. Better to sit on the side lines for Tesla and Li Auto
BB -- Blackberry AWS -- Amazon Web Services IVY -- Intelligent Vehicles Yo. I don't actually know if this stands for anything QNX -- Quick-Unix perhaps? It's a Unix-like embedded microkernel RTOS (real-time operating system) EOY -- end of year PT -- price target SP -- stock price EV -- electric vehicle SoC -- System on a Chip IoT -- Internet of Things TL;DR: Blackberry ($BB) is almost daily announcing new partnerships and new clients for their software, including new deals with companies that are just now or just this year launching autonomous vehicles that run on QNX software. The big kahuna of all these deals is BB's recent partnership with Amazon to go 50/50 into BB's software IVY, a scalable cloud-connected software platform designed for intelligent vehicle data gathering and data sharing. With Amazon's Jeff Bezos stepping down, and Andy Jassy filling his shoes, who was the CEO of AWS, BB will have some very firm support behind Amazon's new CEO. BB and Amazon are having a webinar Feb. 23rd about their partnership and IVY, which should be a strong catalyst moving forward. IVY beta earnings are projected to begin impacting BB's Q3 or Q4 earnings beginning in November this year, with IVY fully being integrated around the 2023 timeframe. Through a lot of reading and analysis, I believe BB has a four-tiered business model dating back as far as 2013 when BB's CEO John Chen was hired to begin the massive BB turnaround process. Tier 1 was development of QNX and IVY, lasting from 2013 to today and onward, however, Tier 2 overlaps Tier 1. Tier 2 was customer acquisition, primarily distributing their secure software in QNX, SecuSuite, Spark, and AtHoc. They secured 37 automakers during this time, including 9 of the top 10 automakers, over 106 governments from around the world, including all of G7 governments and 18 of G20 governments, as well as 77% of Fortune 100 companies, including partnerships with Amazon, Microsoft, Google, Sony, XPENG, XPEV, NVIDIA, Intel, Qualcomm, Baidu, IBM, LG, Samsung, and others. Well if they have such an incredible market share, why are they so undervalued? The answer is that QNX was not the end-all-be-all product. It was the base that the rest would be built on. Particularly IVY, which is the real money-maker. Tier 3 is IVY beta, and Tier 4 is IVY distribution and subscription revenue streams. So why is IVY the big deal and not QNX? They are both big deals, but QNX was never designed to be the money-maker. They are charging a one-time fee per vehicle use. There is a bigger goal here, to secure their clients as their customers for the bigger product in IVY. They also need QNX is to be a secure system in order for IVY to be trustworthy and reliable. And it certainly is secure. QNX has ISO26262 certification, as well as US government clearance, NSA clearance, and CIA clearance. The US government uses QNX and Blackberry products. Just let that sink in. That should tell you something about its security. Anyways, IVY will be used in autonomous vehicle level 4 and level 5 communication (note that QNX is level 5 certified... it has a business moat just in its security level and clearance), as well as EV and gas vehicle data collecting and AI-powered data synthesis. See below for more details on IVY. Wrapping up this TL;DR, BB is going to do well this year as IVY unfolds, but will do even better in the next 2-5 years. I have a PT of 25 by EOY and a PT of 80 by 2023 EOY, and a PT of 160+ by 2025 EOY TL;DR: TL;DR: BB go up, but go slow for now because IVY revenue not here yet, but big fast later. Make big monies, BB is the future tech that Amazon, Microsoft, Google, etc will be building upon in the EV and IoT market
FAQs:
1) Why is Blackberry stock price going down? A: A few possible reasons. One, as of today the whole market is down. BB is connected to overall market swings as most companies are. Two, there may be some market manipulation by bearish financial institutions as there are a lot of calls expiring on 2/19. I would expect that BB SP to be volatile between $11 and $14 between now and then, and to move upwards after 2/19 and especially after 2/23 (Amazon + BB webinar). Three, there are bearish investors who still think BB is a phone company and don't understand the underworkings of BB's business strategy, their software, their patents, or their partners. Their revenue has been affected by coronavirus and has not been particularly phenomenal so far this year. 2) Should I invest now or later? A: First off, I'm not a financial advisor, these are just my opinions. Invest at your own risk. In my opinion, BB will see a large SP growth by EOY, anywhere from 50% to 150% growth by EOY. While revenue will likely not increase much this year, the partnership with Amazon and news regarding IVY will likely create new floors for their SP much higher than the current SP right now, at around the $12 SP 3) What's stopping competitors from building a similar product and hurting BB's business? A: There's a lot of reasons why BB has a huge moat right now. One, notice the partners that BB has with QNX. They've got all the big boys working them, aside from Apple and Tesla. Seeing as SpaceX runs on QNX, and seeing that Apple was trying to make a deal with Hyundai that did not go through, I think it is still possible that either Tesla or Apple or both companies could also make a deal with BB to use QNX as their OS system. BB worked to develop their QNX embedded microkernel OS for the last eight years or so. Anyone trying to step into the game now is far too late. Apple has the best chance of all companies, as it has its own OS and Apple knows security very well, but this still requires an entirely new system in order to work in the EV sector. Also, Apple announced recently that they would be developing their own EV, although they did not give much details beyond that statement. The likelihood that they are both working on the hardware and software side of this thing is slim given the large number of difficulties that come with certification as it relates to the cybersecurity software space. Regardless, I would suspect that either Apple or Tesla is the most likely to be competitors in this space, but neither company has successfully completed a certified OS system, particularly for the emerging sector of autonomous EVs. Tesla is currently building a Linux-based system that is having a lot of difficulty in passing certifications such as ISO26262, a struggle that has been ongoing for years now. They may achieve a product that passes these safety regulations and certifications, but the question remains whether this will be in time as the EV and autonomous market picks up speed, and whether competing companies would even be interested in using their product. In fact, any car company is unlikely to develop their own OS software because none of their competitors would be likely to use it. BB is the perfect business to license since it is not competing in the hardware sector for the EV market. This argument can also be used for Apple if they are also building an EV. 4) Why is BB's revenue so low if they have so many customers and partners? A: QNX has been licensed so far as a one-time purchase, per vehicle or IoT using their software. IVY will be a subscription-based software that also includes a one-time purchase. Thus, BB's revenue streams are somewhat unimpressive currently, but they are playing the long game. If my hypothesis is correct, it is John Chen's goal to lay low as software is developed and customer relationships are built. It's the same with the book market. It's the sequel that makes all the money, not the first book. QNX is just the first book of a series looking to hook in its customers with low costs before hitting 'em with the strong follow up in IVY. Additionally, in order to build a competitive business moat, it was to their advantage to not forewarn any competitors of their involvement and plans. Consider John Chen's work as a CEO in his last business Sybase. Chen worked as the CEO of Sybase for 10 years. For the first 7 years, the SP remained at around $10 a share. Three years later, the SP was at $100 a share. I suspect he is implementing a similar model with Blackberry. Chen joined Blackberry in 2013. BB stock actually dropped for most of the last 7 years, resting at a stock price of around $5. Now BB is at $12 a share. I would not be surprised if BB reaches $50 two years from now.
Blackberry Clients and Partners Automakers: Honda, Audi, Jeep, Mitsubishi, Ford, Hyundai, Volkswagen, Bentley, Lamboghini, Byton, Mini (cooper), Toyota, Subaru, Fiat Chrysler, Mazda, Nio, BMW, Porsche, Lexus, Kia, Land-Rover, Mercedes-Benz, Buick, Jaguar, Visteon, Skoda, Chevrolet, Nissan, Acura, Continental, General Motors, Baidu, Motional Other: Denso, Aptiv, Bosch, Panasonic, Harman, Bugatti, LG, Vodafone, Bell, Carahsoft, CACI, Telus, iSec, KPMG, Tableau, Qlik Major: Amazon, Google, Sony, XPENG, XPEV, Li Auto, NVIDIA, Canoo, Microsoft, Intel, Verizon, Qualcomm, IBM, LG, Samsung Major Investors: PRIMECAP, Hamblin Watsa, Ontario Teachers’ Pension, Vanguard, Harris Associates, ETF Managers Group, Wells Capital, Arrowstreet Capital, Kahn Brothers Advisors, Norges Bank Investment Governments: Albania, Andorra, Angola, Argentina, Australia, Austria, Bahrain, Belarus, Belgium, Benin, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Burkina Faso, Cameroon, Canada, Congo, Croatia, Czech Republic, DR Congo, Denmark, Egypt, Estonia, Finland, France, Gabon, Germany, Ghana, Gibraltar, Greece, Guadeloupe, Hong Kong, Hungary, Indonesia, Ireland, Italy, Japan, Kenya, Kuwait, Latvia, Lesotho, Liechtenstein, Lithuania, Luxembourg, Macau, Macedonia, Malawi, Malaysia, Mali, Malta, Marthinique, Mauritania, Mauritus, Mayotte, Mexico, Moldova, Monaco, Montenegro, Morocco, Mozambique, Namibia, Netherlands, Netherlands Antilles, New Zealand, Nigeria, Norway, Oman, Philippines, Poland, Portugal, Qatar, Romania, Russia, Réunion, Saint Barthélemy, Saint Martin, San Marino, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Swaziland, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Togo, Turkey, USA, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Vatican City, Western Sahara, Zambia, Zimbabwe
Blackberry Current Revenues:
BlackBerry Revenues: How Does BlackBerry Make Money? -- Trefis This display the biggest bearish argument to BB. Until IVY begins producing new revenue streams, BB is likely to not exponentially increase revenue streams, but only sustain moderate YoY growth
Blackberry Analysis Regarding Infotainment and Google and Ford Deal:
see "Blackberry (BB) Stock News Analysis | What I need to say..." by Financial Live by LEYA on the forbidden video website The media recently picked out a story that left out a lot of pertinent information, making it seems that BB lost Ford as a client. This is not true. QNX is designed to be a SoC. This means that other operating systems, such as Linux or Android, can be easily added to QNX. It is in fact encouraged. The Ford and Google deal was simply announcing the Ford would be using Android as their infotainment system. I believe that BB was never intended to try and be the predominant entity for all software systems in EVs or IoTs, but the backbone that connects all together, and to protect all components in a secure system. Autonomous EVs and even regular EVs in general would not be possible without a secure system protecting the product, as is true with IoTs. This is also why things like US Fighter Jets run on... you guess it, QNX. Ford is still using QNX. It is simply also now using Android that is running on top of QNX more commentary on this: Analyzing Blackberry Bear Argument - Case No. 1: Ford Deal
Image This is an interesting one to be sure. Facebook was being evil, like the do, and were caught using a number of BB patents. They settled in February, and the day that the settlement was finalized, John Chen (BB CEO) tweeted reminding everyone that BB is used on the ISS https://twitter.com/JohnChen/status/1358853064153784321?s=20 Well, the connection and speculation here is that Blackberry is going to the moon, and that the settlement is rather significant. Someone else also dug out some information in Facebook's most recent 10-K, specifically a portion for a 'non-cancelable contractual commitment' of an amount of $7500 million dollars. That's 7.5 billion btw. We don't know how big the settlement is, but it is worth noting that BB's entire market cap is 7.5B. I highly doubt that a settlement would reach such lofty numbers, but it could be possible that FB settled for some initial amount of $1B or so, as well as $1B in reoccurring payments over several years. We won't know until March 15th actually, so stay tuned.
Blackberry New Partnerships
Within the last few weeks, Blackberry has announced a stronger partnership with Baidu (China's Google), as well as their involvement with Baidu choosing to use QNX for their autonomous vehicles that will be hitting the road, as early as this year and next. BB has also announced their involvement with Motional, a joint venture between Hyundai and Aptiv, which will use QNX for their autonomous vehicles. Motional will be partnering with Lyft to use autonomous vehicles to begin serving customers and will be deploying their vehicles in 2023. It was also announced that QNX will be working with AOSP (Android Open Source Project), as well as announcing yesterday that QNX Hypervisor 2.2 is now released, which is what allows Android and Linux to run on top of QNX. A sum-up of all the recent news on $BB
Rumor: Blackberry Buyout? Here's why that's not happening:
Just read this post. It's quite revealing: Great Day for BB despite stick dipping. TL;DR: Amazon could have easily bought BB. Why didn't they? Well, all the big players are interested in this EV and IoT emerging sector. This is the new wave of technology that will dominate the market. First we had the dot.com boom, then the cell-phone and smart-phone market, and now we have the autonomous EV and IoT market. If Amazon were to buy BB, they would have to submit a tender offer. This would be a red flag to all the big players that Amazon were trying to buy up the best security out there. It would be a bidding war that could result in a double-digit multi-billion dollar buyout. It was much more to their advantage to create a secret alliance with BB and establish a 50/50 partnership, whose contract includes exclusivity for their use of IVY. Ouch! That's gotta hurt. This is where the importance of QNX lies. BB will be able to pull the rug out from any company that chooses to use something other than IVY. No IVY, no QNX, no EV. It will be a package deal where IVY is the big money maker. All other companies will have to build from the ground up or be forced to license QNX and make their money off of other sectors, such as the infotainment sector, as Google has already begun to do with the Ford deal. When this deal happened, the other big boys wet their pants realizing they needed to get into this space, and fast. Microsoft partnered with Cruise/GM. Apple tried to partner with Hyundai, who was so flattered, they may have initially said yes or indicated so, before realizing that they were already partnered with BB, so it was a no-go. Not sure if that is fact or fiction, but it is an interesting proposal.
Blackberry IVY + AWS Partnership:
Alright, so what's the deal with IVY? Why is it going to be so profitable? Why is IVY the real money-maker, while QNX has been used as the customer-acquisition software tool? Check out this picture: Image For one, IVY is designed for real-time communication between EVs or other IoTs. Autonomous driving level 5 requires vehicles to communicate with one another. This is where IVY comes in. IVY connects the different software components of an EV (which presumably are running on QNX), as well as harvesting data on those systems. The data used can be distributed for a wide-variety of uses, including, but not limited to, automakers and suppliers, app developers, consumer services, smart cities, EV charging providers, insurance companies, and vehicle maintenance providers. All of these different sectors will be willing to pay subscriptions for these data services, as well as the automakers and IoT makers who will also be willing to pay subscriptions for IVY. For instance, IVY can help share information between vehicles that will allow for a car detecting ice roads in one area so that other cars using IVY can take a different route. This results in less crashes, which helps the automakers. Insurance companies can use data from all these different data points as well, allowing them an inside-view of their clients. The list of what is possible here is inexhaustible. As for price points, the subscription models for multiple outside companies wanting to use the data will be create huge revenue streams for BB. With Amazon as a 50/50 partner, and with their resources and strategic management, BB will be poised to be the foundation in security and data sharing for the entire EV, and somewhat of the IoT market (the IoT market has more competitors for sure) see "Is BlackBerry Stock Undervalued?" by Wealthy Mindset on the forbidden video website see "Roadmap to $180 a share (BlackBerry Stock)" by Wealthy Mindset on the forbidden video website
Revenue, revenue, revenue...
Blackberry is poised to be an industry leader in EV, government, and IoT security and data sharing with products such as QNX, IVY, Spark, and their other software products. Stock price will likely stay somewhat stunted until IVY revenue begins picking up. It is possible that more announcements and marketing related to IVY will make this growth more rapid. In my opinion, either way BB over the next 5 years will 10x. The question is whether you want to get in now at $12 / share or two years from now at $40 a share or something similar, assuming that either way this stock is going to push for that 100B market cap (it's currently at 7B). There will be bearish analysts that will continue to say that Blackberry is a worthless company until those IVY revenue streams begin to come in. It is also possible that a realistic competitor may emerge within the next three years, such as Tesla or Apple. But if Apple is seeking to create its own EV product, then both companies will have a hard time finding any way to license their software to any other company. It remains possible that Apple and/or Tesla may strikes deals with BB as well in order to be able to produce autonomous vehicles and get a bite of that market share
Really, no competitors?
Well it's called a business moat for a reason. As we have recently seen, QNX is working with AOSP, and so clearly, they are not to be worried about. Tesla is not a true competitor as their OS product is not certified yet, and has demonstrated difficulty in doing so, and additionally, other automakers will not want to benefit their competitors by using their product. A third-party non-auto-maker will be much more desirable. Other companies such as VxWorks, have a lot of to prove both in security and certifications, as well as producing an OS product that is compatible with an emerging autonomous level 5 EV market. QNX's embedded microkernel RTOS is very much unique in this regard. This type of system allows for real-time processing and power distribution, while protecting the system from attacks. In an embedded microkernel system, if one part of the system is attacked, the whole system will not shut down, in layman's terms. This is essential for the security of any high-risk product that is built upon an underlying software that controls that different components of the system.
Conclusion:
All eyes are turned towards Blackberry right now. People want to know what this deal with Amazon will look like, how it will work, what they will focus on, (will Amazon also use this system for a fleet of delivery drones? hmmm), what the revenue streams will look like, what are their projections, what markets and sectors are they targeting, what are their future goals, what will Amazon be doing on their end, etc, etc. The Amazon + BB webinar may answer some of those questions, or maybe they won't. Time will tell (Feb. 23rd, specifically -- here's a link to sign up and watch: Next-Gen Vehicle Architectures Unlock Unprecedented Opportunities for Automakers). Also look out for that FB settlement numbers on March 15th, and Q4 earnings March 31st. I don't expect Q4 earnings to be particularly interesting unless they include the FB settlement numbers. Could those numbers instead be put into Q1 earnings for 2021? Possibly. Initially IVY beta is expected to begin being released late this year. I will also be looking forward to see how Apple and Tesla respond in the coming months. Ultimately, BB is a long-term play, but is poised to dominate this emerging industry with the partnerships and security focused software they have secretly been building. Now if only the could do something about their logo, some rebranding would be nice... This is not financial advice, just my own opinions. I am not a financial advisor nor a professional. I own 14k shares in Blackberry, as well as options (10x 8/17/21 20c BB). Do your own DD and fact check me as well
I think WSB is sleeping on a huge opportunity in Apple this month. Here’s why.
TLDR: Due to a confluence of factors (none of which are technical analysis), I believe a perfect storm is likely forming for a monster, historic ER occurring sometime in late January. The initial main factor for this was that COVID issues were causing a delay in the iPhone 12 launch, pushing it into to this quarter, but that led me to discover numerous other factors now making up my thesis. I believe not only will earnings grow, but the multiple could even expand. How to play it: calls dated end of Jan or mid Feb.
Analysis:
Happy hangover day, fellow autists. I believe opportunities are rare to know when an ER is going to blow it out of the water by enough to overcome IV crush based on more than just a hunch, and when they occur once or twice per year you should swing big. When I play earnings releases, I’m almost always just a seller of spreads so that I can profit off of theta/IV crush surrounding the ER (theta gang always wins). This time however, I’ve bought outright calls. Here is what I’m seeing with Apple:
The iPhone 12 delay could mean huge YoY comparisons.
What kicked all this off was that two months ago I realized we could be heading for huge numbers this quarter due to an atypical delay in the launch of the newest iPhone. Typically new iPhones are announced in mid-September with preorders beginning immediately and shipments beginning before the end of the month. However this year because of COIVD delays the launch date got pushed into October. The iPhone 12 preorders began mid-October with shipments a week later, and the iPhone 12 mini and Max began preorders November 6. And that means no sales of the new models counted in the quarter ended Sept. 30 (Apple’s fiscal fourth quarter)as they usually do. This year all of those opening day sales have fallen into the upcoming fiscal Q1, setting up a potentially huge quarter in sales and making for easy YoY comparisons right out of the gate. Here’s a Fortune article on the delay of the launch.
The “super cycle” rumors appear to be true.
As a lover of new tech, I always have to remind myself that the average person doesn’t care about incremental new features as much as I do. So when I heard rumors earlier this year that Apple could be facing a “super cycle” of upgrades due to 5G, I was skeptical. How much does the average person really care about spotty 5G service enough to jump on a new iPhone? But based on reports starting to come out, those rumors appear to be correct. I’ve seen a few articles suggesting a super cycle not seen since the iPhone 6. Here’s a Yahoo Finance article on Wedbush’s analysis. Here are some notable quotes from that article since I know we don’t read around here.
"Based on our recent Asia checks we believe the supply chain is anticipating low to mid 90 million iPhone unit builds … a roughly 35% increase from our original and Street forecasts," says Ives, who covers AAPL stock for Wedbush. Compare that to the firm's expectations for iPhone 12 unit sales over time. Three months ago, Wedbush expected 65 million to 70 million unit builds for the December quarter; it raised its outlook to 75 million units in late October; and in mid-December, it set a "stretch goal" in the mid-80 million range. Wall Street broadly sees AAPL selling 217 million iPhones in the company's fiscal 2021, but Wedbush's bull case is "north of 240 million units (250 million could be in the cards – an eye popping figure)" that would easily surpass the 231 million units the company sold in its fiscal 2015. "We have not seen a launch uptrend such as this in a number of years for Apple and the only iPhone trajectory similar would be the iPhone 6 in 2014 based on our analysis.".
That bump in production would represent a 30% year-over-year increase in smartphone models produced, and is also well ahead of current Wall Street expectations, Ives wrote.
It’s anecdotal, but I personally skipped the iPhone 11 upgrade because I was perfectly content with my XS Max, however I did buy the 12 Pro Max.
The iPhone 12 sales mix:
It’s not just that phone sales will be up on the iphone 12 launch, it’s the mix within those sales. Typically when Apple launches phones they sell more of the of the entry level new phones than they do the premium, because the total addressable market is bigger. That doesn’t appear to be the case this time. As early as September people were reporting that Apple was making more higher end iPhone 12 models than entry-level handsets anticipating a shift in demand, and they appear to have been correct. Last year the entry level iPhone 11s outsold the premium iPhone 11s by a three to one margin. This year almost immediately after launch people were reporting that the premium iPhone 12s were selling as much as the entry models. Since then, there have been reports trickling out that the premium iPhone 12s appear to actually be outselling the entry level versions.
Apple sold out of nearly everything they make for Christmas.
See further below for one of the reasons this may have happened, in both my “macro” and “risks” sections. Apple introduced a slough of new products from iMacs to watches this year, and they sold out of all of them. The list of sold-out products at Christmas included the iPhone 12 Pro and Pro Max; iPad, iPad Pro, iPad Air, and iPad Mini; MacBook Air and Pro; iMac and iMac Pro; HomePod mini, and AirPods Max.Here’s a Barron’s article mentioning the sell outs. Apple wearables, I would argue, are now what economists call Veblen goods. These are unique products where the demand curve actually increases as the price increases. This can happen in goods such as wine, where the consumer lacks the knowledge in how to evaluate the product so they take pricing as a signal of quality. But another reason you can get that skewed demand curve is if the product conveys status. One example of this is sports cars. You can buy cars with 90% of the performance of the ultra top end cars for 30% of the price, but that’s not the point of owning them, is it? How often are you really out at the track? Lambo isn’t in competition with $50k sports cars. They could raise the price $50k per car and people who can afford them would just want them more. Louis Vuitton bags and $50,000 Birkin purses are more examples. In fact with Birkin they not only constantly raise prices, they forbid people from buying them. You have to spend a lot of money on other lower tier products before you’re “allowed” to even buy a Birkin bag. This just makes new money women want them even more. Those are dramatic examples of course and Apple isn’t behaving that way, but Apple just introduced very overpriced, new over-the-ear headphones which cost almost twice as much as the leading competitor, and yet...Apple sold out of every single color in the first two weeks and hit a three month waiting list by Christmas on a product that I would assume due to its high pricing has very fat margins. Apple charging twice as much makes them more appealing, not less, because wearables are worn and thus seen by your peers (and the opposite sex).
The Twitter rumor mill is reporting parts moving at a brisk pace
I can’t track down the things I’ve read here and there on Twitter and I’m starting to run out of steam here, so you may have to do some searching on your own, but people who usually track movement of parts through the companies forming Apple’s supply chain and normally have a good track record with their reports have reported that parts are moving through the chain at a very brisk pace. This is addressed some in the reports on the iPhone supply chain in my earlier links.
App sales are crushing it.
Thanks probably in part to quarantine, app sales have been crushing it and grew ~35% this December compared to ~17% the prior year, meaning sales have grown at twice the pace.
Reoccurring revenue bundle numbers will be announced
The biggest thing I’ve learned from 2020 is that nothing matters more to the market than the narrative surrounding the reoccurring revenue bundle...aka subscriptions. A company announces its cutting its dividend, but then tells you that’s because its going to pour all that money into boosting its subscriptions? The stock skyrockets. Look at Disney. ATT may be able to pull this off as well if it can convince people of that narrative with WarneHBO max and cut its dividend to pour it into content, but that’s a big “if” for them. Apple launched their new reoccurring revenue bundle this year. I personally signed up for the premium tier and now owe Apple $30 per month for the rest of my life. I was already paying them to backup my phone to the cloud, and now their bundle has thrown me into Apple Music, Apple TV+, etc. I am firmly entrenched in the Apple universe whether I like it or not. It is these reoccurring revenue numbers that offer the possibility of earnings multiple expansion.
RISKS
Are sellouts due to high demand, or due to COVID-related production problems? I don’t know. Based on the reports I’ve read, some of which have been linked earlier in my post, it sounds like everything is running full speed in China and the supply chain is running at near or above a record clip. One possible risk is that this was not the case earlier this year and thus Apple sold out of things because they hadn’t produced enough heading into Christmas. I personally believe that production may have taken a huge hit early in the calendar year, but by mid to late 2020 this was no longer a significant issue. I also believe that even if sales have taken a slight hit due to production, the market wouldn’t really care. Markets are forward looking. They know COVID has impacted things globally, and even if Apple reports sales difficulties they will be paired with significantly increased guidance for Q2. New reports have suggested that Apple has had to increase its iPhone production plans for 2021 by 20-30% because of strong demand An announcement like that is not a recipe for a stock crash. Macro factors causing a crash. A lot of people around here appear to be scared of an impending crash. This seems to be based on the simple idea that stocks have run up a lot and therefore must crash. A reversion to the mean is imminent. I don’t see it that way and I think the economy is more complex than that. Just because something has gone up a lot does not mean it’s going to crash. People have been warning of a California real estate crash for 70 years. I’m a little bit older than you guys (by probably about 10-15 years) and I can remember the market frenzy of the dot.com boom. A lot of people were saying the same thing then, and while they were ultimately proven right, they were very early. I remember seeing another year to year and a half of enormous gains after hearing all those warnings. Of course the problem with musical chairs is that we never know when the music will stop, but I would argue if anything stocks are roughly fairly valued, not dangerously overvalued. As we go into 2021, we face the following conditions: a vaccine roll out that sometime between now and late ‘21 will lead us into a v-shaped recovery. The Krugman argument for this vision, and The Bloomberg argument for this vision. We also just had the Fed reaffirm 0% interest rates and the continuation of QE. Add to all of that very easy YoY earnings comps for the first two quarters of this year and this is not a recipe for a crash, it’s a recipe for a steady market melt up. Where are the rich supposed to put all their money in a 0% interest rate environment? 0% pushes up the value of all asset classes, and this is especially true of real estate and stonks. Generally speaking, predicting macro economic movements is a losing game, but all of those things combined with the easy YoY comps means I don’t feel the need to be concerned of an impending correction for at least the next two quarters. A much smaller factor but still a factor, I have seen it suggested that Apple will be among the larger beneficiaries of the stimulus checks going out, although those have not started rolling out until just now so that may have an impact on Q2 if any. Bad subscription numbers If subscriptions to Apple One flopped, this could significantly overshadow sales and earnings numbers. I personally feel Apple isn’t likely to seriously miscalculate predictions on a subscription bundle because they have their market dialed in, but I don’t know that for sure. Sales could have cratered in October Sales often drop a little in the weeks preceding a phone launch. What if phone sales tanked during the delays waiting for an iPhone 12? That could be bad. I’m encouraged by the fact that iPhone 11 models appeared to still be having good sales numbers when the iPhone 12 was launched (see links earlier in this post), but I don’t really know what October sales look like. COVID could have tanked all phone sales. This report says all phone activations generally tanked 23% on Christmas Day. Two thoughts I have on that, that number is for all phone activations, not just iPhones. And two, that’s just for Christmas Day itself. There could be a wide array of reasons activations were down on that one day. To counter that, this report says the iPhone was the best selling 5G phone, even in October despite the phone not launching until the second half of that month. Additionally that article mentions pent up demand for 5G apple phones that sales are likely to be strong going forward.
Technical Analysis
I don’t believe in technical analysis. Charts don’t know any of the things I just explained, and are therefore, in my opinion, useless to me. Maybe somebody has figured out a system for charts to predict the future, but I am not that person.
Price Target
I don’t pretend to know things like that.
Fun rumors
I’m not big on speculative rumors and momentum type plays, but if that’s your thing there are certainly rumors in the air. The most famous of which is the rumor that Apple is back to working seriously on an EV Car. Another is reports are just coming out in the last day or two that Apple is seeing new successes in developing foldable tech. Whether these things will impact the stock price isn’t really my cup of tea, but if it’s yours those are two things to consider.
Is my post an attempt at a WSB pump and dump?
I’m under no allusions that my own WSB post is going to alter the trajectory of a $2.25 trillion company in any meaningful way. That sort of thing may work on a post-IPO company that hasn’t had its lockup expiration yet and thus has a tiny float (aka PLTR or numerous other recent “to the moon” meme stocks) with limited float. (That’s not to say those aren’t great companies or great trades. I’m just sayin’).
My positions:
I’m more conservative than most of WSB. While I love this place with all my heart and love you guys for it, I believe risking it all to chase screenshot-worthy gains is moronic and not the path to building real, long-term wealth. Thus my positions are probably more conservative than you’d expect. I have 20% of my net worth tied up in Apple via LEAPs. 9/16/2022 AAPL $87.50 calls. I consider this to be essentially stock I hold for the long term. Delta is approaching 1 anyway so they practically are stock. Sometime in the depths of March I loaded up on FAANG LEAPs with the intention of actually holding them for years and then converting to shares. Those LEAPs were a little OTM at the time I bought them. I have no interest in day trading my significant LEAP positions so that’s going to sit there for the next two years. But I also have put an additional 15% of my net worth into short term calls on Apple to play the ER. I have Feb 19 $130 calls which were about 10-15% OTM at the time I bought them. They are currently ITM. I also have 1/29 $135s and 1/29 $141s. This puts 35% of my net worth into Apple.
How to get rich
I intend to cash out my short term calls after the ER, and I don’t intend to reinvest or roll them out because I suspect Apple will be fully valued by then and there are better plays out there. I intend to keep my LEAPS because I bought those for the very long term and because at the very least I should hold them until March to hit the long term capital gains tax rate. I intend to take my profits from the calls and push them into shorting NNOX and XPEV, both of which have significant lockup expirations coming in mid to late February which I believe will significantly impact the stock prices in the short term. I have no interest in shorting XPEV right now, because you guys are crazy as fuck and for all I know EV stonks could all run up another 50% in the next month. Right about the time the Apple ER hits should be perfect.
Criticism
If you think I’m wrong, I would strongly encourage you to comment. I don’t give a fuck about looking correct or saving face but I give many fucks about not losing money. If I’m wrong, I want to know it.
The Most Important Factor
This ain’t my first day around here, and I know that DD is absolutely useless without rocketships, therefore: APPLE TO THE 🌙 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀🚀 🚀 🚀🚀🚀🚀. Godspeed, fellow autists.
Getting started with Trading/Investing from the UAE [2021]
Overview Since trading stocks and investing in general has skyrocketed over the past year, I think this post could be helpful to some people. This is specifically for people in the UAE (Although it may be applicable to some other GCC countries, not sure) who want to invest their money in international markets. This is not a guide on what stocks to trade or anything like that. I am not trying to advertise the companies mentioned below for any benefit of mine and I have no ties to these companies, aside from the fact that I use their services. I'm posting this because I had to do a bunch of research through reddit posts, as well as other websites, before I had a clear idea of where to begin and what platforms/brokers to use. Everything here is based on my personal experiences, you may or may not agree. Under each category, I'll list down the companies (with a brief summary for each company) I think are best to get started with here and why. Medium-Long term investments
Brief description from their website: Sarwa is an online financial advisor that takes the hurdles out of investing, while helping you maximise returns at a risk you’re comfortable with. Sarwa is a great platform to get started with investing. They create your portfolio for you based on the level of risk you select. There is no human element to their trades, the algorithm invests for you and you can view your entire portfolio to see how your investments have been diversified. It is fairly simple to get started, just visit their website, submit the documents, have a minimum of $500 initially, and you're good to go. some more info I've personally witnessed 8% returns per year. This can vary depending on the market and your appetite for risk, but I would choose this over keeping my money in a savings account ANY DAY. With Sarwa X, you don't pay for monthly transfers from your account. With the previous broker they used (Interactive Brokers) you would get charged like AED100 per transfer, but with their new brokerage Saxo Bank, there's no charge. They do however charge a 0.1% portfolio fee and a yearly 0.85% Advisory Fee. You can find more about pricing here. They are super transparent and generally very helpful, I have no complaints. You can pull your money out whenever, no fees. I would use Sarwa as a long term investment platform. So out of my monthly salary, a portion of it will go towards Sarwa, and the rest will go to my trading account. Trading Account 1)Interactive Brokers(IB) Brief description: Interactive Brokers (IBKR) is a brokerage you can use to trade different kinds of stocks from multiple markets. I use them mainly for US Stocks and there hasn't been a single stock that I haven't been able to find here. I must advise you that this platform is better suited for people who aren't complete beginners, as it might be overwhelming. I would suggest staying away from TWS entirely and using the IBKR mobile app or web app to execute trades. I keep my watchlists on Yahoo Finance and use IBKR solely to execute trades. They also give some good alerts and information for your positions (reasons for sudden dips, etc.). Tip: TradingView is also a good platform to keep an eye on the market and create your own watchlists. Unfortunately for us, IBKR Lite (no commission, no account maintenance fee) is not available in this region, so we have to go with IBKR Pro. IBKR ProFees Commission: $0.005 per share per trade, with a minimum of $1, This means that you will be spending at least $1 per trade. Account maintenance fee: No charge for the first 3 months, after 3 months it's $10/month. If you execute 10 orders per month, you will essentially not be paying this fee as you reach the $10 threshold. (Ex. If you execute 7 buy orders, you will be charged $3 at the end of the month. If you execute 10+ you will be charged $0 for your maintenance fee) How to get started Go to their website, create an account, submit the basic documents they require, fund your account, wait for approval and you're good to go. You would also need to declare that you have a good knowledge of trading. Make sure you use a Cash Account and not a Margin Account (Unless you really know what you're doing) For the proof of residency, you would need to submit either of the following: A) If you own a house in Dubai, you would need to submit your title deed as well as identification that is relevant to the deed. B) If you rent a house, you would need to submit your tenancy contract as well as relevant identification. If you live with your parents, for example, you would need to submit the identification of the person whose name is on the tenancy contract as well as your relation to them. Funding your account I used the Wire Transfer method. I transferred using EmiratesNBD and was charged $25 per transfer (Not from NBD). I would suggest transferring a large amount at a time (Ex. $5000 every 6 months instead of $1000 every month, you will end up saving a good amount yearly. 2)eToro I would highly recommend eToro for beginners. It is similar to IB but it is SUPER beginner friendly. Account takes minutes to set up and there is no commission, no fees (except for when you withdraw money from your account). Funding is straight forward. The only downside is that there are a lot of stocks that aren't available. It has a decent community and you can even do things like subscribe to someone to copy their trades. What I would do (personally): The money I allocate each month for trading/investing is divided into 3 amounts. 40% goes to Sarwa every month for medium-long term investments. 50% goes to eToro for medium-long term investments into stocks that I believe in (Popular stocks like Apple can generally be found on eToro, I like to separate my long term holds from my short term trades. If i can't find a stock I want to hold long on eToro, I use IB). 10% goes to IB (transferred every 6 months) for short-medium term investments that have a higher risk but also have a higher reward. I hope this has been helpful and feel free to ask me any other questions you may have. Edit 1: if you know someone who uses any of these services, tell them to send you their referral codes!! You both will benefit from it. If you don't know anyone, feel free to use my referral code for eToro and we both get $100 (it's only valid for 10 people so if it doesn't work I'm sorry lol): https://etoro.tw/36bUVh9 Edit 2: seeing a lot of useful info here, I appreciate the contributions. If anyone has any alternative brokers they use with no commission and no fees, I would love to hear about your experience with them. I chose IB as it had a good reputation, but the commission and fees can be annoying for some. Please do recommend other brokers for the people here!
After downloading TaskRabbit and completing your profile, click the “Profile” icon on the bottom of your screen. Then, select “Help your friends, Get $10” to find your unique referral link. Merchandiser. A legit secret shopper app that pays you to do simple and quick shopping jobs on your own schedule. Apps today can help you earn a side income. We've assembled 36 of the best money making apps to make you money and anybody can use to earn some cash. You can give gift of $10 in DO credits of your referral and after that referred use uses $25 in billings you will get $25 in your account. 8. DapperTime Refer a Friend Program - Make $10 over and over. Main thing in this refer a friend and earn money program is you can make $10 over and over. It doesn’t get much easier than that. Ibotta Referral Bonus – You earn $5 for every person you refer to Ibotta. Ibotta Referral Bonus Requirements – Refer friends to Ibotta using your unique referral code or link. You can find these in the Account section of the app. Browse the list of deals on healthy, organic, non-GMO, all natural foods; click on the ones you want to buy; and then upload a picture of your receipt after you purchase them. You can cash out via Paypal or gift cards. Berrycart’s referral program offers you $2 for each friend you refer with your referral code. Stash app: This easy-to-use investing app will give you $5 per referral, and give $5 to whoever you refer. M1 Finance : M1 Finance makes investing easy – and they charge no fees! Just pick a “pie” to copy (I asked them to copy Warren Buffett’s investments) and you’re good to go. 12. Survey Voices — Platforms: desktop and mobile web | Price: free. As kind of an aggregator for online surveys and market researchers, Survey Voices will offer you a variety of polls and questionnaires to complete for money. This is another app that pays you through PayPal. Drop works on a point-based system where you will get points for your cashback and referrals. On Drop, you can refer a maximum of 10 people and you will get 5,000 points ($5) for each referral. This means that you can get $50 for simply referring people to Drop! It’s one of the best apps that pay you to refer friends. Expect to make around $5 – $10 a month without referrals. This means that if you convince 10 friends to sign-up and use it frequently, you could earn an extra $10/month in passive income. Just make sure they’re using an Android device first. 9. FreeAppsFast. FreeAppsFast is yet another app that pays you to download apps to your phone.
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