The Capitalist Investor - Episode 43

What do Snowflake, TikTok, and tech stock all have in common? They’re ALL trending news this week. In this episode of The Capitalist Investor, we’re sharing our take on the latest news. We talk about how the Snowflake IPO broke records. We talk about how TikTok has taken the world by storm. We’ll also share our thoughts on the tech pullback. Don’t miss it!

Outline of This Episode

  • [2:02] The Snowflake IPO
  • [8:29] The TikTok drama
  • [16:40] The tech pullback

The Snowflake IPO: shattering records

Snowflake priced its IPO at $120 (already higher than expected). But on September 16th it was trading at $245—double its IPO. It went as high as $319 but last time I checked, it was trading back below its first trade. Why all the hype? Why did it break records? Because Warren Buffet and Marc Benioff invested in it.

Snowflake is a data company. It isn’t the only game in town. There are hundreds of companies like it. So why did it trade so high? It was the right place, the right time, and the right investors. There’s nothing bad to say about it. Their growth story is awesome. But it’s priced too high. Snowflake is trading at 100x sales.

Derek loves Snowflake but recognizes that they haven’t made any real money yet. Up until the first quarterly call, you’re flying in the dark. You only buy into an IPO when you love the company and really want in. But it’s rarely a good idea. You’re buying hype.

What’s a good alternative play with a decent valuation? Listen to find out!

The TikTok drama continues

TikTok became a controversy because it’s a Chinese owned company—and TikTok owns ALL of the content you put on the platform. They can use the videos however they like. The worry is that they’ll use the user data against the US. TikTok has 100 million US users and there are only 330 million people in the US. Half the US population uses this app.

The last thing we want them to have is data on us and our children. Trump set a deadline to ban it if the rights aren’t sold to an American-based company. The first deadline was that it was going to be removed from the app store (it can no longer be downloaded). In November, it will be stripped off your iPhone.

The new company that was supposed to form—TikTok global—was supposed to have control over the company (over 50% ownership). But last we heard, Oracle and Walmart were only getting 20% ownership. There’s been chatter that they’ve planned to go on the open market and buy enough stock to get control of the company. ByteDance came back and said it wasn’t going to happen, they were going to keep control.

What will happen if TikTok IS banned? We share our thoughts—keep listening.

The tech stock pullback

The tech pullback is at the forefront of everyone’s minds. Apple is down 25% from its peak. But whenever you buy big companies (Netflix, Apple, Microsoft, etc.) in a bear market, it always works out. Tech overall is winning by 22%. In September, tech started selling off. But it isn’t indicative of a banged-up market or economy. Don’t get too worked up over the tech pullback. People are just starting to take in their profits. Tech will continue to be a leader because the world is changing. Tech is the future.

Resources & People Mentioned

Connect with Derek Gabrielsen

Connect With Mark Tepper

Send your questions and comments to us at info@SWPConnect.com

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Keep Listening to The Capitalist Investor:
Episode 5:
What We Consider A Smart Investment Strategy, Ep #5
Episode 22:
Play Ball! Why America Needs Sports, Ep #22
Episode 37:
What’s Next for Your Investments? Ep #37
Episode 6:
Why Investing In IPOs Is Not A Good Idea, Ep #6
Episode 21:
Kickin’ It With Kenny Polcari, Ep #21
Episode 38:
The 5 Keys to Retiring Early, Ep #38
Episode 7:
How a Joe Biden Presidency Will Impact Your Portfolio, Ep #7
Episode 23:
Elon Musk, Michael Jordan, and Capitalism, Ep #23