Not All Big Tech Bets Are The Same

Market response to rising bond yields and a potential sector rotation out of big tech was reversed when Federal Reserve Chair, Jerome Powell reassured markets that the Fed would continue to take an accommodative position on interest rates.  In spite of the slight rise in bond yields, many investors flocked to buy the dip on the GAMA (i.e Google, Amazon, Microsoft, and Apple) trillion dollar market cap trade and bolster their big tech positions with more Facebook, Microsoft, Netflix, and Tesla.  While these capital flows were being activated, an emerging grouping of digital giants gained traction in the market.  While not all big tech bets are the established Digital Giants, these big tech stocks have more than adequately served as large cap safe havens.  With a rising VIX and new themes emerging, expect more volatility over the next few weeks.

Meanwhile, emerging digital giants have shown the most growth in the winner takes all, post-pandemic markets.  Many of these post-pandemic winners enable successful digital commerce, market places, subscription business models.  In fact, these organizations exemplify the five traits of emerging digital giants and their 100 year platforms:

1. Build a > 50 million active member community or device network
2. Own the customer relationship, though they may not own the physical assets
3. Design data driven digital networks to compete for data supremacy and decision velocity
4. Deploy digital monetization models
5. Enter the market with a long-term mind set

Five Emerging Big Tech Stocks Follow The Theme Of Digital Giants

DOORDASH - BUY $230

Investment relationship - NO
Individual owned - Yes
Family owned- NO
Company owned - NO

Door dash reports on February 25th, with its first ever public quarter earnings.  Competitors in the food delivery space and last mile logistics space have show explosive growth.  Grubhub's revenues were up 48% YoY, and Uber Eats revenue grew 128% YOY.  Doordash was first to market in suburbs.  With the death of density as a business model and an urban exodus, Doordash is well positioned to see strong growth for Q4 2020. The food delivery giant will be both a pandemic and post pandemic winner.

AIRBNB - BUY $220

Investment relationship - NO
Individual owned - NO
Family owned- NO
Company owned - NO

As with DoorDash, AirBnB reports its first ever public quarter earnings and will report to the street Thursday February 25th.  Precision and aggresive cost cutting placed the company in the black for Q3.  The hospitality digital giant has proved to be a pandemic winner.  As lockdowns are lifted and vaccine doses are delivered, global travelers will be booking travel to make up for 18 months of confinement.  AirBnB is set up to emerge as a stronger and leaner post pandemic winner.

ETSY - BUY $240

Investment relationship - NO
Individual owned - NO
Family owned- YES
Company owned - NO

Q4 earnings coming out Thursday, February 24th.  Etsy has evolved from craft direct selling to facilitating creator and buyer marketplaces.  Etsy has helped folks move from the side hustle to full pandemic entrepreneur.  Online market places are hot and Etsy's International’s sxpansion will continue its growth trajectory.  Some fear openings will reduce commerce, however, in Etsy's case the lock downs have cemented buyer behaviors and enabled a community of creators

DOCUSIGN - BUY $280

Investment relationship - NO
Individual owned - NO
Family owned- NO
Company owned - NO

Docusign is a key enabler of digital signatures and transactions.  Docusign has emerged as an essential component of pandemic digital transformation. As digital signatures morph into the world of commerce, identity, and HR will play a large rols.  The track records has show explosive EPS growth of 274% over the past 3 years.  Avg yearly revenue growth reached 39%.

SHOPIFY - BUY $1400

Investment relationship - NO
Individual owned - NO
Family owned- YES
Company owned - NO

Shopify provides on-line market places and commerce software.  With a super hot direct to consumer sales market, customers and merchants trust Shopify to deliver the both the front facing and commerce experience. While the stock dropped 6% on Monday, the company raised $1.5B in stock sales to fund expansion.  Meanwhile, Amazon is going after this market.  This stock is another post pandemic winner as more revenue will flow throughj.