Cakmak Sees 'Paradigm Shift' for Tech Companies

joins us on the phone from Miami. James, James, it's great to have you with us. I want to start with with Meta here because this is obviously a big story with making reverberations. You've covered You covered Facebook, the company formerly known as Facebook for years. Talk about this inflection point that you see the company at right now. Yeah,

thanks for having me. I think the we can zoom out just one level here and just look at the broader big cap companies um in the context of Facebook and realize that we're going through a paradigm shift right now in determining which companies can command and control their destinies in the post COVID world. You know, Google, Amazon, Microsoft, they all have their first party data that they can leverage in a clear path towards success. But Facebook currently

still relies on third party data. And at the same time, which is why you saw the shortfall from the privacy changes that Amazon that Apple made. But further to that, they have a heavy reliance and a growing reliance on third party developers to really materialize this metaverse vision that they have. So they're stuck in this limbo state until until they get their true bearings. And and it could take some time, So James, limbo could be okay, right

if you get to a better place. Um and and let's all remember, we wouldn't have built the railroads if we didn't. You know, they took time to to build way back and required a lot of money. I'm just saying that it does take time to pivot for a company. Do you think, though, the pivot to metaverse is the future destiny for Facebook? Yeah? I don't. Facebook is not going anywhere. I mean, we need to be clear about that. Facebook is here to stay, and they will. Why do

you say that? Why do you say that because it connects nearly three billion people in the world, and and and has dependence on so many from people and communities and businesses. Um, it's just it's still commands a ton of attention. So it's not going anywhere. But in terms of your question, was um, it really depends on what type of timeline you have as an investor. Um. You know, if you have an indefinite timeline, then then then the homebuying and holding Facebook at these levels I think makes

a ton of sense. I mean, it's cheaper than a lot of legacy companies after today's move. But you know, it really comes to that trade off on which which stocks, which companies can deliver the greatest alpha in the time horizon that you have as an investor. What it's one quarter, one year or of five plus years? So is so is Amazon? And we're gonna talk. We're gonna talk Amazon. And second, I want to stick on meta because we have a do have a little bit of time with you,

which is great. James does does Facebook and meta platforms? How does it start to make money in the metaverse? I mean, if we're talking like a time horizon five fifteen years down the line here, how does it successfully make this transformation from a company that has served people ads in Facebook in Instagram and Instagram Stories. How does it make that transition to getting its revenue from the metaverse?

What does that look like? That's a great question, and I don't think anybody can tell you today definitively what that looks like. It's really going to be incumbent on and what the developers and creators of these content and experiences kind of come up with. You know, what is the world going to look I mean a few years ago, you know, TikTok wasn't even a thing, and now it's it's blown up to where people spend in an ordinate

amount of time on that platform. So in terms of monetization, you know, you can think of digital assets that are sold advertising opportunities within the metaverse itself, but giving a concrete UM kind of outlook on how exactly that will look at it. Quite frankly, I don't even think Marcus Zuckerberg and Facebook clearly no, I mean they for multiple quarters. You know, he's been talking about UM, the reliance on the creator community to to work with them. They can't

do it alone. So I think that path forward UM is still TVD, and I think that's what's giving investors ponse with the stock, it's not so much. The results estimates only came down by four percent, so you're not talking about a huge hit. The bigger question investors have is what is your confidence level in the growth trajectory and the estimates that you have for the other companies that you're seeing that have reported so far from megacap four of the five acts, Facebook has um has done well.

Because you have that visibility with Facebook, you just you can't say with a high degree of confidence that this will be the growth rate for this year and next. So it's kind of an interesting time, right James, when we're trying to figure out what is the world post pandemic For a lot of companies that benefited big time all on Netflix and others benefited during the pandemic, we just we kind of don't know. I hate to use the word normal because what the heck guy is normal anymore?

But I mean, like, what is you know, what is it the growth rate after the pandemic, especially at a time when there are some companies to trying to figure out maybe what their future growth is fundamentally meeting business changes like a Facebook. That's the perfect question and the and then it's the question then I think investors don't know um and I mean you saw so we before COVID, we had a pretty good understanding of what these growth

curves would look like for these companies. You can you can model that out pretty pretty well and with a pretty good degree of competence. With COVID, that growth curve steep and substantially. Um. Now we're much below that growth curve because there were lapping all of those monster quarters

that we saw from last year. So with that lapping, you know, investors are trying to discern is that new normal, this new rate that we're seeing, or will we actually go back to the average that it was before COVID. And that's what we're trying to do as investors, and we believe right now is one of the most monumental buying opportunities for companies that you have confidence in that will actually and tangibly uh revert back back to that

mean because you're buying them on fire sales prices. He's Amazon one of those companies we got to talk amaz on. It's up in the after hours right now. Big headline here the prime membership being raised by twenty dollars a year. That's going to be at one thirty nine year. Remember Prime came out in two thousand five. It was seventy nine dollars a year then, so seven increase since two thousand five. Amazon would say, hey, we've added a lot to that, but you know, talk about inflation there. Um

what do you make of these earnings? James, Well, first of all, thank god, because it's our second biggest position that's really definitely needed Amazon to work. When Amazon has been the bottle of champagne versus a bottle of Scotch tonight, is that what it is? Exactly? It was tequila last night and probably maybe tonight. Um no, but uh jokes aside, the Amazon was the company that was left behind. You know within these megacap companies, you saw surges from last year.

You know, Amazon has been a dead stock and and it's also gotten hit with the recent wave. Um we're recent down, down up in the market because I think people were just selling high pe names and the price to sales multiples we're kind of not really an issue. But um or we're not really uh incorporated into the valuation analysis. And today you're with Amazon and company that will actually on a pe basis trade about thirty forty

times next year. I mean, when have we ever been able to say that it has a pe multiple of UM in the double digits versus triple digits. So it's on the it's a much much deeper growth curve in terms of its bottom line performance and it's top line. I think people will increasingly understand that as we anniversary UM, the harder comps that this is indeed one of those companies that will revert back to its original growth curve UM.

And and with that being the case, that's why it's our second biggest position, because we've it and this can easily be a plus stock. Yeah, and today closing at seventy six, Hey help me out here, just got about forty seconds, So Amazon's up almost after hours, Pinterest is up, Snap is up for the invest co q q Q now up about two percent here in the after hours. Even Facebook is up in the after hours by about one percent. What's the play tomorrow potentially and just got

about forty seconds tonight. Are also Pinterest and Snap also our companies that are fully in control of their own destiny. So I'm not surprised with expectations being so low, um uh for them to move the way that they are after hours. But the play for us is you have confidence in the glowth grooms like an Amazon, like a Spotify which sold off date today for no real reason.

In our opinion, Um, you know there there's there should be incremental buying, and that's exactly what we're what we're doing, all right, just pulling up spot if I've seen what it's doing here in the after hours and it is up two point six. Just a f y I. James chock Mark, thank you so much. You walked us through the world of technology. We so appreciate. A partner in technology. Analyst at Clockwise Capital on the phone from Miami. What did you say, he's going to some white cloth tonight. Yeah,

a little bit of white cloth tequila last night. White Cloud to night, Amazon's second biggest position for Clockwise Capital,