Good morning, it has been a long time but I’m happy to be back with hopefully a lot more on the road ahead. For today, I wanted to update the list of stocks that I follow to include 2 newly turned public companies as well as one ticker change.
Priceline (PCLN) renames to Booking Holdings (BKNG): Priceline has been one of the top success stories in the past decade in the tech space and while Priceline.com is the property most American users would associate most with the company, the facts are that Booking.com is a huge part of the company’s business and while a large portion of the company’s business is in Europe, it has been growing worldwide. The name change is in part “to more accurately align our company name with our largest business,” CEO Glenn Fogel said in a news release.
The other 2 names are companies that I had discussed here and was hoping to see turn public soon. From a consumer perspective, I do love both companies but I’m also very skeptical of their long term success as independent companies.
Dropbox (DBX): Dropbox is an online storage company that started off early, has been loved by its customers. It charges a monthly fee for customers to have access to online space where they can backup and store their data. Because of how well their product is built, they’ve had little churn. Great business opportunity? I have 2 big concerns about DBX:
-Margins will be under tremendous pressure. Dropbox’s competitors are the big ecosystem plays that I often talk about. Google’s Drive, Amazon’s Cloud Drive, Apple’s iCloud and Microsoft’s OneDrive as well as more specialized players such as Box. That spells disaster for me. Several of these players consider online storage as a feature that they can include in other packages which will put tremendous pressure on prices but also mean they’ll likely offer the product for free with other products.
-Growth: I’m skeptical that DBX will be able to generate much growth. The company has been around for a decade and potential users typically already know about the company. They have not become customers yet either because they already have storage from a competitor or because they do not see the value yet. Not exactly easy to turn up the growth in my opinion.
I believe that DBX growth would need from building new products to existing customers which the company has attempted in the past with little to no success…
Spotify (SPOT): Like many of you I’m sure, I’m a Spotify customer and really like the product. I do have several of the same concerns about Spotify in the sense that it also competes with among others Google Music, Apple Music, Amazon Music and that will make it difficult to compete and even reach profitability. Tha being said, I do think Spotify has a better shot at making it because it could eventually start cutting out labels or signing its own artists because of its dominant position. If that were to happen, Spotify could improve its financial situation as its cost structure could become more fixed in nature.
I don’t expect to their DBX or SPOT in the near future but I will be monitoring and could certainly see myself shorting DBX after a few earnings are announced.
Did any of you buy SPOT or DBX? Which one do you believe in more?
SOURCE: Intelligent Speculator – Read entire story here.
