Imagine this situation. You have a $1,000 investment and if this year you gain 50%, your money will be $1,500 – that is $1,000 plus (50%$1,000 = $500). The next year, the economy was bleak and affected your investment, so it lost 50%. Your money is $750, which is derived from $1,500 less (50%$1,500=$750). What is the message from this case? Your brilliance could be wiped out easily by mistakes. Decision-making to avoid mistakes should be a priority.Continue reading “Decision-Making to Avoid Mistakes: Misconception”
Howard Schultz, the CEO of Starbucks, has successfully transformed the coffeemaker into “the third place between your home and your work”. Could this business edge be replicated or competed? This is the central theme of our competitive analysis of Starbucks. We break down its financial report and marketing strategy to find the answer.Continue reading “Competitive Analysis of Starbucks: Behind The Experience”
Here are our key takeaways from the business analysis of Teladoc:
- Teladoc reported 9.6 losses as impairment due to the Livongo acquisition. But it is noncash, an ‘unreal’ loss, and just an assumption.
- Teladoc stock price falls more than 90% from its all-time high at 292 levels (July 2021) to 32 (August 2022). With its advantage as a prime mover, many investors assume that Teladoc is an opportunity.
- We beg to differ. The problem of Teladoc is in its underlying business, not Livongo. Livongo is okay, but the acquisition of Livongo can’t help Teladoc cope with the main problem.
Lets elaborate.Continue reading “Business Analysis of Teladoc: Live Long, Livongo”
This example of the decision-making fallacy gives us a simple conclusion: do not let your former glory ruin your future. Everything will change eventually, we need to adapt.
- After the acquisition of Nokia, Microsoft keeps the Windows (Phone version) as its mobile devices OS. This strategy ends miserably with a $7 billion loss.
- Lionel Messi – maybe the greatest player of all time – relies on his dribbling skill. As the player ages, the sharpness of his play deteriorates significantly.
- Cristiano Ronaldo – Messi’s greatest rival – begins his career as a dribbler, with many tricks, flips flop. But as he ages, he changes his play style. CR7 becomes more passive, waits in the penalty box, and becomes one of the deadliest poachers. He does not dribble much. He becomes much more efficient. His physical peak has been long surpassed, but he keeps delivering prestigious titles for the club and national team.
What do we learn about decision-making here? Let’s elaborate.Continue reading “Example of The Decision-Making Fallacy: From OS to Football”
Key points of Fundamental Analysis of Berkshire Hathaway(BRK):
- Officially, Berkshire Hathaway is transportation, energy, and an insurance company.
- Due to its area coverage and economies of scale, Berkshire’s transportation business enjoys a cost advantage over its competitors.
- Berkshire’s insurance enjoys a switching cost advantage.
- Berkshire’s business is durable, and reliable in the long run, but it is slow. What makes Berkshire’s price rise is probably due to its stock investment and buyback.
From the customer perspective, Disney is representative of a perfect User Experience. It tells a magical story in movies, then actualizes it in the real world through the Theme Park. Our competitive analysis UX (User Experience) tries to identify another company with a similar edge.Continue reading “Competitive Analysis UX: How Mediocre Product Win”
Key points of Fundamental Analysis of Rivian:
- Unlike other EV makers, Rivian has a durable competitive advantage with Amazon on its side. But we don’t know how much this edge contributes to Rivian’s revenue.
- We are still curious about how Rivian will transform in the future. Will it be Amazon’s arm for delivery or become an EV maker that specializes in SUVs?
- Conservative management, we like it. Low debt, and a high amount of cash – may be due to part of the Amazon deal and other investments. Unlike the other start-up.
- The business model has not yet been proven.
The key point of the fundamental analysis of Starbucks
- Reckless buyback is the factor why we do not buy Starbucks.
- We are happy when Howard Schultz takes the Starbucks helmet and decides to suspend that buyback program.
- But when he said that the suspension is just a pause (Schultz wants to resume the repurchase program) We worry that this pause is just lip service to calm the Starbucks worker.
- Revenue and earnings have surpassed the pre-COVID level. It is a good sign.
- Starbucks has a decent competitive advantage in its brand. It creates a unique user experience – also a story. Something that almost no other ” restaurant” could replicate. Even with its mediocre coffee.
The key point of Intel stock valuation:
- Intel’s market cap is 148 Billion (end of July 2022) with 19.8 Billion earnings in 2021. It means that you need 7 years to break even. Too long for a company with no growth prospect like Intel.
- Even when the CHIP program is passed and executed, it will not boost Intel’s earnings significantly.
- It is not difficult to say that we don’t recommend investing in Intel. But it doesn’t mean that the stock price will not rise in the future.
- Like the management says, maybe this is the bottom. But we don’t know how long Intel will be in this pit. But smart investors still could exploit this situation.
- Amazon Web Services (AWS) offers an intuitively easy User Interface, flexibility, affordability along with more features. But this isn’t enough to prevent its customer to use the competitor Microsoft Azure (or even Google Cloud) as a secondary cloud provider (as backup). This circumstance allows customers to migrate completely to AWS rivals.
- Amazon is busy building economies of scope as a competitive advantage like its acquisition of Medical One, a telecare company, instead of creating or strengthening its cloud ecosystem.
- In the long run, we believe the market share of AWS could be slightly eroded gradually by more intense competition due to a lack of switching costs. We think Amazon should take care of this issue seriously, especially when the cloud is its most prolific segment.