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In different reports over the past couple of months, Money Map Press experts have zeroed in on such social media plays as Yandex NV (Nasdaq: YNDX), Facebook Inc. (Nasdaq: FB) and Yahoo Inc. (Nasdaq: YHOO) as major profit opportunities.
Suddenly, Wall Street seems to have embraced the same viewpoint.
With the Standard & Poor's 500 Index and Dow Jones Industrial Average hitting new highs again yesterday, social media stocks were big beneficiaries. At midday, 12 social media stocks FoxBusiness said it was tracking were up an average of 3.3% – about four times the 0.8% advance of the broader S&P 500.
Yandex, Facebook and Yahoo! were among the "Social Media Dozen."
In late-afternoon trading yesterday, Yandex was up nearly 3.5%, Facebook had jumped 4.52% and Yahoo! 2.04%.
And those stocks have been thrashed in recent weeks as the Nasdaq Composite Index and other high-flyers have sold off. As trading got underway yesterday, Groupon Inc. (Nasdaq: GRPN) was down 47.6% year-to-date, while Twitter Inc. (Nasdaq: TWTR) was down 47.4%, SINA Corp., (Nasdaq: SINA) was down 42.5% and Yandex 32%, Fox said.
All along, however, our gurus have continued to underscore the huge profit potential they see for Yandex, Yahoo! and Facebook. In the near-term, that profit potential stems from the trading turnabouts our experts see for each of the three stocks. Longer-term, Radical Technology Profits Editor Michael Robinson sees tremendous business growth potential for Yandex – and Capital Wave Forecast Editor Shah Gilani sees the same for Facebook.
As for Yahoo: As Chief Investment Strategist Keith Fitz-Gerald told us last week – because Yahoo owns 24% of Alibaba Inc. – the stock has the potential to benefit from one of several powerful catalysts after the Chinese Internet giant goes public in the near future.
Given Wall Street's suddenly renewed interest in these "fallen angels" of social media, let's get a quick update on each of the three sector stocks that our experts have been recommending.
And we'll start with Yandex, which has been pummeled in sympathy with the Russia/Ukraine crisis that is giving investment pros an ever-worsening case of financial heartburn.
To Russia With Profit
Michael recommended Yandex — the "Russian Google" — at $29.67 a share back on March 25, arguing that the mess in Ukraine was giving us a chance to buy a still-growing tech heavyweight at a bargain-basement sales price. Instead the stock traded down as low as $21.70 (though it never closed lower than $24).
In recent days, Yandex has come roaring back. And Michael, a devout "technician," says there's more to come.
"Bill, when I look at this stock from a technical standpoint, it looks to me like it hit rock bottom – I mean, it crashed," Michael said. "But you need to see what's happened since, because it happened fast. It looks like it hit bottom, closing at $24 on April 25. But since then, in every trading session but one, it's ended the day in the green … with a winning trading session. We're now almost back to where we started. And there's more to come, especially in the long run."
Michael still looks at this as the consummate Russian ecommerce stock. And that's not a bad thing.
"I still believe that Yandex is the best end-to-end Internet/ecommerce play in the Russian space," Michael said. "Search is up, mobile is up, it's adding lots of social networking capabilities … this is a far-reaching company that's generating generous margins on its business. There's not a lot of need to add a lot of users in order to grow the company. They just need to keep adding to their offerings, and to keep growing them. And I believe Yandex will do just that."
Before you dismiss Russia as a viable tech market, check this out.
Just yesterday, industry reports said that Samsung Electronics is looking to launch a smartphone based on the "Tizen" open-source operating system – and is eyeing both Russia and India as its target markets for the rollout.
Those two countries were picked by Samsung because the Korean firm believes those markets will give the phone a good launch. According to The Wall Street Journal, Samsung will introduce that smartphone at an event in Moscow in the coming weeks.
"India and Russia are relatively open markets, where mobile operators have limited control over distribution channels," said Neil Mawston, executive director at researcher Strategy Analytics. "This makes it easier for Samsung to sell new Tizen models. Breaking into the established markets in Asia, Western Europe and North America, where operators have far more control over smartphone distribution, may prove to be trickier for Samsung."
But India and Russia – the No. 3 and No. 8 markets for smartphones – are good tech markets that often get overlooked for major new global product launches, Mawston said.
Then there's Facebook, which is down about 12.8% since Shah recommended it at $68.59 back on Feb. 21 – the day company announced its controversial $19 billion bid to buy WhatsApp Inc., the zooming mobile-messaging startup.
Despite the sell-off, Shah has never hesitated to repeat his mantra that Facebook is a new-media heavyweight that's destined for the kind of dominance that a Microsoft Corp. (Nasdaq: MSFT) enjoyed during its heyday years. And one reason he feels so strongly about the company's prospects is that it has a truly visionary leader in CEO Mark Zuckerberg.
Shah loved the WhatsApp deal. And he was pretty jazzed about Facebook's decision to shell out $2 billion for Oculus VR, a very hot virtual-reality gaming company. With that "interface deal," Shah explained that Facebook wasn't just buying into mobile: It was setting itself up for a piece of gaming – and for a whole host of other new ventures.
"Facebook has clearly figured out the mobile strategy thing," Shah told me in a recent interview. "This company is an ad-revenue-generating juggernaut. It's only going to grow its own 'ecosystem' and start generating a lot of cash. That will take time. In the meantime, as long as Zucks keeps using his stock as currency to buy into the future, I'm behind him … In fact, so far, I believe Facebook's acquisition strategy has been great. Oculus VR may be a bit of a 'flyer,' but on a cash basis it was a fair deal. The potential of that acquisition remains unknown. But if anybody can monetize their visualization product ideas, I believe that Zuckerberg can. He clearly has a vision for what Facebook should be, and that vision keeps evolving as the market changes. This is not a guy who should be underestimated. But that's just what I fear lots of analysts are doing."
Shah isn't the only in-house expert who sees the big picture.
Bret Holmes, the executive director of ecommerce and marketing here at Money Map Press, and one of the sharpest digital-marketing folks I've ever met (I'm serious … we're talking one sharp dude here), said Facebook has achieved monster status in its own sector – something Wall Street seems slow to understand.
"Facebook is making acquisitions for growth beyond its interface [and] is already acquiring more data and more users than Google could ever dream of," Bret told me. "We're talking about a company here, Bill, that's absolutely at the forefront of all social Internet browsing … it will dominate every aspect of how we share information and keep in touch with people. This is a company that is too big, too smart, and too positioned not to succeed. We hear the worries all the time. And, sure, all the kids will always go to a new service – but the underlying purchasing of those services and the sheer market value available to advertisers will crush any technology that people think is going to make a run at FB. Numbers don't lie, Bill. And Facebook owns the online native ad space arena. Facebook is the market."
I think both of my colleagues have it nailed. In fact, in an item that seemed to get very little attention here, Facebook announced a move in the Ireland market that will get the company into financial services – in the form of remittances and electronic money.
It's working on obtaining the approval of Irish regulators to roll out a service that would allow users to store money on Facebook and use it to pay and exchange money with others, according to published reports.
The authorization – which would come from Ireland's central bank – would make Facebook an "e-money institution," and would let the social media firm issue units of stored monetary value that represent a claim against the company.
Best of all: In a process known as "passporting," this e-money would be valid throughout Europe.
If it works there, you can bet that Facebook will look to expand it globally, and modify it for markets around the world.
Yahoo! invested $1 billion in Alibaba in 2005, and now owns 24% of the Chinese company.
And with Alibaba's looming IPO shaping up to be the biggest global stock offering in history, Yahoo! is poised to cash in.
Yahoo's shareholders will cash in, too – in one form or another, Keith says.
"Look, BP, the bottom line here is that buying Yahoo is a kind of 'back door' way to play the Alibaba IPO," Keith said. "As I've been telling folks, once this IPO gets done, Alibaba will have a ginormous cash war chest – as well as tremendous leverage in global markets. It could go hunting for new properties – and I think Yahoo! is a logical target. But even if that doesn't happen, because Yahoo owns 24% of Alibaba, Yahoo, too, is going to benefit in a big way. With most IPOs, once the offering is concluded, you watch the stock trade, and that's it. But with this deal, the IPO is just the beginning. There could be all sorts of financial twists and turns that follow. And investors who play this right can pocket a hefty gain – even if they didn't get a direct piece of the offering. Right now, the way I see it, investing in Yahoo! is kind of a 'back-door' way to play this mondo stock offering."
If you haven't made any of these moves, but are considering doing so, go back and read the original recommendations, which provide specifics in terms of prices, risk-parameters, or any other special instructions our experts presented. And keep checking in: Yandex and Facebook have both been ongoing stories for us, and now Yahoo will be, too.
See you all tomorrow.
[Editor's Note: Unless otherwise directed, we recommend investors employ a 25% "trailing stop" on all holdings.]
- Private Briefing: The "Back Door" Profit Play on the Biggest IPO in History.
- Private Briefing: Cash in Big … on the "Russian Google."
- Private Briefing: How the "Invisible Front" May Have Ensured a Russian Victory.
- Private Briefing: Shah Shares His Latest Views on Microsoft, Apple and Facebook.
- Private Briefing: Grab Your Share of the M&A Boom.
- Private Briefing: Even "Comrade Buffett" Would Dig This Stock.
- Private Briefing: Facebook: Never This Cheap Again?