Bear Case Scenario for American Express $AXP, $V, $MA, $DFS, $COF, $XLF, $ORXCF

Mobile technology is altering the payment landscape in the biggest way since the advent of the credit card.

Competitors are making inroads into the premium space with ever more lucrative rewards offerings.

An increasing emphasis on low-end offerings will damage the American Express brand.

George Gutowski writes from a caveat emptor perspective.

 

Bull Case Scenario for American Express $AXP, $V, $MA, $DFS, $COF, $XLF, $ORXCF

American Express’ affluent cardholder base and its proprietary merchant and customer data provides opportunities to expand into additional wide-moat lines of business.

Third parties issue cards and acquire transactions, expanding the reach of AMEX Brand.

AMEX accounts for a large percentage of the electronic spending pie that is certain to expand for years to come.

George Gutowski writes from a caveat emptor perspective.

 

Bear Case Scenario for Twitter $TWTR, $FB, $BABA, $SINA, $BIDU, $GOOG, $YHOO

Twitter’s user base is much smaller than  Google, Facebook, and Yahoo. Some advertisers may require massive reach before allocating budget to Twitter.

Twitter is dependent on one style of advertising product. New advertising could turn users away from the service. They will have to be very clever.

Growth in MAU for Twitter may be sliding downward. Is the market potential maturing?

George Gutowski writes from a caveat emptor perspective.

Bull Case Scenario for Twitter $TWTR, $FB, $BABA, $SINA, $BIDU, $GOOG, $YHOO

Twitter’s ad revenue per user continues to grow, surpassing other social networking companies,

Twitter just agreed to a commercial deal with the National Football League to distribute proprietary content (short replays) to Twitter users. This establishes the importance of Twitter to partner companies. Cha Ching.

As Twitter attains a similar active user base to Facebook, the upside opportunity versus our current valuations is significant.

George Gutowski writes from a caveat emptor perspective.

 

Bear Case Scenario for $SOHU, $BIDU, $BABA, $FB, $TWTR, $GOOG, $TCEHY, $NFLX, $SINA

Sohu is about to release earnings. Ponder the Bear Case Sceanrio:

Sohu faces not only established portals such as Sina and Tencent, but also a growing number of vertical sites and social networking sites.

The market is crowded with many large players challenging for top spot, compelling Sohu to continue investing heavily in content and IT infrastructure in the near future.

Regulatory risks abound in the online gaming. The Chinese government has tightened scrutiny of game content and the virtual products allowed for sale in the games.

George Gutowski writes from a caveat emptor perspective.

 

Bull Case Scenario for $SOHU, $BIDU, $BABA, $FB, $TWTR, $GOOG, $TCEHY, $NFLX, $SINA

Sohu is about to release earnings. Ponder the Bull Case Scenario:

Diversified services enables Sohu to broaden its reach, generate higher traffic, and protect itself from unexpected events or slowdowns in any given business line.

Sohu’s strategy to build an extensive and high-quality online video library should help drive portal traffic and boost its appeal to brand advertisers.

Tencent’s recently announced strategic investment in Sohu’s Sogou search business could help Sogou grow  in search traffic, and accelerate paid search advertising.

George Gutowski writes from a caveat emptor perspective

Bear Case Scenario Herbalife $HLF

Herbalife is about to release earnings. Ponder the Bear Case Scenario.

Herbalife is a Multi-Level Marketing company. There is very little positive experience with MLM companies growing for long periods of time and continuing to create shareholder value.

Several hedge fund activists/investors notably Bill Ackman say the “Emperor Wears No Clothes”. They have pointed out many factors to regulators to assist with investigations and then prosecutions. Herbalife has retorted that they have nothing and are noise and wind.

For Herbalife this is life threatening. Other companies can actually sell off divisions and re-organize. Bill Ackman is calling this a colossal fabrication. Herbalife will need to continue a string of quarters with increasingly better financial performance. No company can do that for ever. The hedge funds are waiting.

Senior management is distracted with the hedge fund allegations and probably has taken their eye off the ball. We just haven’t seen the results yet.

George Gutowski writes from a caveat emptor perspective.