008. The year of the Horse.

008. The year of the Horse.

Hello tech investors, happy new year. 2014 corresponds to the Year of the Horse in the Chinese calendar. Needless to be a chinese culture literate to know what a horse refers in terms of power, fastness and impulse. This year 2014 is gonna be fast, impulsive and powerfull.

As most of you surely know, this year could become the burst of the bubble. The bubble of IT start-ups which are over rated nowadays. See the earning per share of companies like Facebook, Twitter or Snapchat. See then their stock prices which are far higher than realistic prospections.

This situations seems to a second-before-galloping of a horse. There are intensity and anxiety in the sector, there are passion and sweat, there are expectations of a great race. But not every horse will be a champion. Time after the race starts we will see how some of the above companies will drastically deflate its prices, putting down to earth millions in stocks and throwing down to hell thousands of investors.

How to bet on the champion? We'll analize the most important horses running nowadays, one by one, to make clear each one's chances. Despite there are some others, we will compare the chances of those bigger brands according to its growing capacity, its market niche and it forecasts:

1. Facebook (FB). Despite its actual supremacy among social networks, its aquilles bead is lacking of usability, and difficulty reaching audience for companies paying their service fees. As a research shows in openculture.com the algorythm Facebook uses to show user`s contacts and fan pages makes it messy and unclear. Facebook against others emerging social media is a mature product which is not focused on anything usefull for the user (apart of wasting time or checking user's friends and family last holidays pics).

Graphic: Manuel Nappo

2. Youtube / Google Plus. The video site belonging to Google (GOOG). This fact by itself gives a clear path to confidence. Google is expanding its advertising market outside the pc, not only as futurible mobile devices developer but also as automobile Operating System provider. That means plenty of growing opportunities for Youtube Channels as they will appear inside a car as an option at the begining, and as electrical windows later on (a must have for a good car). Also consider at this point the Google Plus social media, not so impressive right now but going up quite fast.

3. Twitter (TWTR). A very interesting one! Its booming start on the markets made some analyst to suggest caution on its shares; however it is becoming a faster and better tool to find information on the internet, even better than Google when seeking for non static information. Also their advertising system is working in such a succesfully way that it is doubling revenues each year:

Graphic: Statista

4. Sina Weibo. (SINA). We speak about this one as it is the main one. This microblogging site has become very popular. It has a clear promotion strategy, the presence of luxury brands inside the social media: 

Graphic: Techinasia

Chinese population is becoming middle class, hence its social media companies are HUGE and are growing FAST and FURIOUS:

Graphic: Techinasia

5. LinkedIn.(LNKD). This social media has still plenty of room to grow. Specially if it manages well to expand to rising economies, where professionals (their target market) are growing in number.

6. Snapchat. Its rejection to a 3Billions$ offer from Facebook has spreaded like gun powder. This company offers a undervalued usability: is fleeting. But how many users of snapchat are really aware of its potential? Most of users of this platform do share pictures, the same way they share them on instagram or post them on facebook. So even the concept is brilliant, the segment of the market is not (by now) well attained.

7. We chat. A nearly 250 million users chat app owned by chinese web giant Tencent (TCHY). It is actually second only to whatssapp but its growth rate is overwhelming. Also its usability, as they are not afraid to book and pay a taxi service through this app, is a bright point.

Said that, we´ll conclude by saying that no all above mentioned companies will succeed this year of the horse. For sure some of those companies will run fast and become even bigger. Other companies will deflate quickly. My Bet? Look after west pacific companies instead of east pacific ones ;)

http://www.hugoplisbona.com/

Hugo P. Lisbona works as new technologies advisor for investment. This blog is altruistic and only seeks to share knowledge that is there, but it does not reach all the people who could benefit from it.

For any questions I will be happy to answer from contact@hugoplisbona.com