To market, to market to buy a fat pig. We fell away towards the end of the session, resources dragged the market lower, but we managed to hang on to the 44 thousand levels after all was said and done. What is in a level? The only level that I pay attention to the absolute level of the S&P 500, because until it changes and that the Chinese Shanghai Composite is the "one" leading us, it will remain American stocks. That may take a few decades to happen. And by then we would have hopefully seen that the rule of 72 had been kind to us!
The deadlock in the US capitol still continues, a shooting in DC yesterday of a woman known to have been mentally unstable may or may not have been linked to the shutdown and her being tired, but perhaps it shows you the desperation of ordinary people. But the resolution no doubt will happen soon. And a default? Not likely: Boehner Pledges to Avoid Default, Republicans Say, according to the NY Times article. I don't know, you don't know what is going to transpire over the coming days, just keep calm and carry on. And ignore the thousands of posters that detract from the original. The original is still the best. I think we should start a meme with this wartime poster:
Time for congress to eat less and pay more attention.
I executed a lame fist pump and an equally lame cheer when I saw that there was no no-farm payroll numbers today. Here is a screen grab from the Bureau of Labor Statistics website:
Why would I wish for there to be no non farm payrolls number? How would that help? Well I think that the importance of the number is overstated. It is a volatile dataset and is prone to wild revisions. But. Whilst I might think that it is an irritation, there are no doubt hundreds of thousands of people around the world that are gutted. Absolutely devastated that there is no number. AND, the business networks, who are partly to "blame" with regards to trumping (and I use the word Trump(imp), the fellow with the hair, that guy) the number up. It is important. More people getting jobs and spending in the world's biggest economy sounds like a good thing, right? Yes.
But placing too much time and resources to one number is a waste in my opinion. Do not get me wrong, it is extremely entertaining. I am starting to sound like the Grinch that stole Christmas, in this case of course Christmas for the traders has been stolen. It is a heavily traded and watched number with octoboxes and hype. I wonder what they are going to do today. Poor folks. I am just being a very mean spoilsport, just because those folks rely on a number for their livelihood, what a bum.
Twitter. It is finally closer to them listing and with documents released last evening. You can view them here: Twitter, Inc. filing. Share code TWTR. Awesome, that makes a whole lot of sense. 218.3 million active monthly users churning out 500 million tweets a day! 49 million active users in the US and 169 million international users, that would include us of course. And as they say, since the beginning of the business, over 300 billion tweets have been created since the 21st of March 2006 when Jack Dorsey tweeted: just setting up my twttr. And if ever you wanted to know what Twitter is (a lot of people still do not understand it), here is their description in the filing documents:
Twitter is a global platform for public self-expression and conversation in real time. By developing a fundamentally new way for people to create, distribute and discover content, we have democratized content creation and distribution, enabling any voice to echo around the world instantly and unfiltered.
And then a little later in the listing document, according to management, this is what the company is and this is what makes them different:
Twitter is a global platform for public self-expression and conversation in real time. Our platform is unique in its simplicity: Tweets are limited to 140 characters of text. This constraint makes it easy for anyone to quickly create, distribute and discover content that is consistent across our platform and optimized for mobile devices. As a result, Tweets drive a high velocity of information exchange that makes Twitter uniquely "live."
Perhaps they should have added to that last sentence of the first description , sometimes to the detriment of the Tweeter, which leaves them embarrassed as a result of their ill thought through Tweet. OK, but Twitter points out the evolution of content creation, distribution and discovery is as follows, Web Browsers and then Web Portals, which then evolved to Search Engines and then through to Social Networks, of which they are a part of, now. The only other social network that gets a mention is Facebook. We know how important Twitter can be to breaking news, because they are going to be having users everywhere, which quite clearly the networks cannot. Vine is their video service, 7 seconds. 140 Characters and 7 seconds of videos. That is it. And that is the beauty of it all.
But more importantly, if you want to own this company, you must realise that is is an advertising platform. Twitter details their "value proposition to advertisers" in the IPO document. They are the same sort of propositions that Facebook put forward, targeting (knowing about you and what you post and follow, and so on), as well as making sure the folks advertising get value for money by pay per click.
What do you need to know here? Well, they are raising 1 billion Dollars. Annual revenue has risen tenfold from 2010 to 2012. Costs are up threefold in that time. Losses for the last three years were around 270 million Dollars. So the business makes a loss, but less so last year. But early investors have been keen to invest in the business, they have 164 million Dollars in cash and cash equivalents. But the business as you can clearly see is growing at a breakneck speed, the staff compliment has gone from 200 to 2000 in just over 40 months, meaning obviously the company had to skill up.
Who are the existing shareholders? Well, for starters (or enders) the number of shares in issue post the IPO will be 472,613,753. DST Global (the same shareholders associated with Mail.ru, the business that Naspers has a nearly 30 percent stake) have 12,427,273 shares. But bigger still, Evan Williams, a vegetarian from San Francisco and early Twitter investor owns 56,909,847 shares, or 12 percent of the company. Wow. the aforementioned Jack Dorsey, one of the founders, owns 4.9 percent of the business, whilst CEO Dick Costolo (a buff and healthy 50 year old from San Francisco) owns 1.6 percent of the business, this is all BEFORE the offering, so these guys will be diluted.
What is the price? Well, the last price was over 20 dollars a share. So I am guessing out loud here, I suspect that after the seas settle, between 40 to 45 million new shares will be issues between 23 to 26 Dollars. #Justguessing. It may be a lot more. The company hopes to list before Thanksgiving, which is the third Thursday in November, right? If you believe that people will continue to adopt smartphones and continue to disseminate information for both fun and newsworthiness, then Twitter will continue to grow quickly. But then again, who knows? But I suspect that more people will adopt this platform, perhaps not on the scale of Facebook, but there are committed news junkies. Speaking of which, do you know that on the Bloomberg London feed in the morning, there is still a newspaper review segment. But no hashtag review by Bloomberg, so you know what is trending, rather the old stale paper news from yesterday!
Michael's musings! A Tale of two worlds
This morning I read an article about BMW scrapping plans to expand their operations in South Africa due to all the disruptions to production from strikes in South Africa. The statement from BMW says it all, "Future decisions are being made where South Africa would have been in the running. Based on the current environment we're definitely not. You could say things have changed."
The reality is that South Africa has two societies, the skilled and the unskilled, with translates into the haves and the have not's, and the gap between the two is just growing wider. One of the clearest places to see this is in Johannesburg, where Sandton (one of the richest areas in Africa) is on one side of the M1 and Alex is on the other side.
South Africa has an unemployment problem, and a vast majority of the unemployed are unskilled labour and as the technological revolution impacts the world, unskilled labour has a smaller role to play in the global population. South Africa like the other emerging markets, has their competitive advantage in that they have a vast amount of 'cheap' labour, our competition however is not the factory down the road but the one across our border. If we keep raising wages we are going to price ourselves out of the market, which hurts the country but most of all it hurts the unskilled labour.
Skilled workers can move to where there is a demand for their skills, whereas unskilled workers do not have the resources to move, but even if they could move, there no unskilled jobs around. I think that the wage of unskilled workers is barely a liveable wage, but surely having a job is better than not? Having an internationally competitive labour market will result in growth for the country, which translates into more wealth for everyone, which means that less of our next generation will have to work as unskilled labourers.
If labour doesn't come to the party, we are going to lose jobs to other cheaper countries or technology will find a way to replace the unskilled labour; with a robot and a couple skilled workers.
Home again, home again, jiggety-jog. We are lower here today and are likely to drift around until the politicians around decide to compromise. Which they probably will, sooner rather than later. Sigh.
Sasha Naryshkine and Michael Treherne
Follow Sasha on Twitter
011 022 5440
No comments:
Post a Comment