Why Ashton Kutcher passed on investing in Snapchat, twice

BY
David Becker / Getty

When Ashton Kutcher* first made the leap from actor to investor, he relied largely on his gut, investing in companies like Skype, Square and Foursquare because he was wowed by their founders and products.

“Consumer is my domain expertise,” Kutcher said on the latest episode of Recode Decode, hosted by Kara Swisher. “I am a consumer, so I can really try the product and explore it.”

But despite several hits in his portfolio, and the portfolios of his firms A-Grade and Sound Ventures — including Airbnb and Uber — Kutcher also remembers the ones that got away. After asking his Twitter followers for recommendations on cool new apps, he was flooded with tips about two: Tinder and Snapchat.

“I started using Tinder’s product and playing around with it and was like, ‘This is amazing,’” Kutcher said. “The swipe-left, swipe-right, just that simple product feature, I thought was outstanding.”

Not so much for Snapchat, which he passed on twice.

“I looked at Snapchat’s product and I hated the product,” he said. “I just thought it was like, a little crickety and a little rickety. It just wasn’t beautiful or elegant. And I have this dumb, personal pet peeve about that, and it really bugged me.”

“And I know the dirty little secret, that even though everyone thinks that there’s privacy and that their information disappears, it still sits on a server somewhere, and it’s totally hackable over time,” he added.

“[Snapchat CEO] Evan Spiegel doesn’t like hearing that,” Swisher pointed out on the new podcast.

“But it’s true,” Kutcher countered. “Or, at least, it was when I was looking at it. They may have changed it, I don’t know. But I went, the first hack, where these kids are showing whatever pictures they’re showing to each other on this thing, the first hack that comes out it’s not going to be good for the company, and it’s not going to be good for the users, and it really, really scared me.”

Well, it’s not actually true, as Snapchat often points out here and here. “We’ve said publicly before that Snapchat is not — and never has been — stockpiling your private Snaps or Chats,” said a company spokesperson.

And, today, Snapchat (which recently rebranded as Snap, Inc.) is valued at around $16 billion, so take that, dude!

* Disclosure: Kutcher is an adviser to Recode’s parent company Vox Media.

This article is republished from RECODE.NET

Better Buy: GoPro, Inc. or Ambarella, Inc?

Article Author – LEO SUN (TMFSunLion)

Shares of GoPro (NASDAQ:GPRO) and Ambarella (NASDAQ:AMBA) have frequently risen and fallen in tandem over the past two years. That’s because GoPro, Ambarella’s top customer, uses the chipmaker’s image processing SoCs (system on chips) in its popular action cameras. Pacific Crest estimates that orders from GoPro could account for up to 25% of Ambarella’s revenue this year.

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IMAGE SOURCE: GOPRO.

GoPro surged from its IPO price of $24 to $87 in late 2014, thanks to robust sales of its Hero 4 cameras. However, concerns about market saturation, slowing camera sales, and the stock’s lofty valuations knocked the stock down to just over $9 earlier this year. The stock recently rebounded on optimism regarding its new Karma drone and Hero 5 camera, but remains roughly 30% below its IPO price.

Ambarella’s stock hit an all-time high of $124 last July before dropping to the mid-$30s this May. The stock also rebounded to the $70s earlier this year on rosier expectations for GoPro’s new products, as well as growth opportunities in adjacent markets like drones, connected cars, and security cameras. The success of both stocks depends heavily on the upcoming holiday quarter, but will one fare better than the other? Let’s discuss their growth, headwinds, and valuations to find out.

How fast are GoPro and Ambarella growing?

GoPro’s sales have fallen annually for four consecutive quarters. Analysts expect another decline in the third quarter before growth finally returns in the fourth quarter on strong sales of the Hero 5 and Karma. Analysts expect GoPro’s sales to rise 55% annually to $677.2 million that quarter, eclipsing the $633.9 million in Hero 4-fueled revenue in the fourth quarter of 2014.

This could be a very tough target to hit because the action camera market is much more crowded today than it was in 2014. Furthermore, there’s no guarantee that GoPro can beat drone leader DJI Innovations, which recently launched the Mavic Pro, another foldable drone that is smaller and more powerful than the Karma. Even if GoPro matches analyst targets for the fourth quarter, its 2016 sales would still represent a 14% decline from 2015 — compared to its 16% growth in 2015 and 41% growth in 2014.

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IMAGE SOURCE: GOPRO.

Ambarella’s revenue has declined annually for two straight quarters, but analysts expect sales to improve 5% in the third quarter and 35% in the fourth quarter. That’s because Ambarella also provides chipsets for many of GoPro’s rivals, like Xiaomi-backed Yi Technology. It also supplies chipsets to DJI and other leading drone makers, so its future growth isn’t heavily dependent on GoPro’s Karma. Moreover, demand for Ambarella’s non-action camera chipsets is still expected to rise. But despite those encouraging signs, Ambarella’s revenue is still expected to fall 2% this year, compared to 45% growth in fiscal 2016.

Ambarella also faces some tough headwinds. Qualcomm (NASDAQ:QCOM), the biggest mobile chipmaker in the world, is aggressively expanding into the action camera, drone, and connected camera markets with 4G-connected chipsets. Ambarella also reportedly faces tough pricing pressure from Chinese chipmakers in the automotive SoC segment.

Profitability and valuations

Therefore, it isn’t surprising that GoPro and Ambarella’s margins are under pressure. GoPro’s non-GAAP gross margin fell 400 basis points annually to 42.4% last quarter. It posted a non-GAAP operating loss of $89.3 million, compared to an operating profit of $65.8 million in the prior-year quarter. Ambarella’s non-GAAP gross margin rose 180 basis points annually to 67.1% last quarter, but its operating margin fell from 29.6% to 14.2% due to weaker sales weighed down by heavier spending.

GoPro expects its fourth-quarter sales to boost it back to quarterly profitability. Analysts anticipate non-GAAP earnings of $0.46 per share, which would be a huge improvement over its loss of $0.08 in the prior-year quarter. But for the full year, GoPro is still expected to report a loss of $1.07 per share, compared to its profit of $0.76 per share in 2015.

Looking ahead, Wall Street expects GoPro’s annual earnings to continue falling at an average rate of 7% per year over the next five years, which gives it a five-year PEG ratio of 2.1. Since a PEG ratio under 1 is considered cheap, GoPro looks expensive relative to its earnings growth potential.

Analysts expect Ambarella’s earnings to decline 13% earnings in the third quarter, followed by 27% growth in the fourth quarter on strong holiday sales of action cameras and drones. For the full year, Ambarella’s earnings are still expected to fall 20% on higher expenses. On the bright side, analysts expect Ambarella’s earnings to rise 16% per year over the next five years, whichgives it a lower (albeit not terribly cheap) five-year PEG ratio of 1.6.

The winner: Ambarella

I personally don’t like either stock due to the tough headwinds in the action camera market, but Ambarella looks like a better buy than GoPro right now. It has a more diversified business, stronger margins, and lower valuations. GoPro, on the other hand, must post record sales this holiday season. If it can’t, the stock could go much lower next year.

This article was originally published HERE

GoPro’s New Cameras Should Fare Well, But Its Drone May Be Too Costly

Article Author – ERIC JOHNSA

After posting many quarters of big camera sales declines, GoPro’s (GPRO) new Hero5 cameras should allow the company to reverse the tide. Just how much its innovative-but-costly Karma drone will help looks like more of a question mark.

At a Lake Tahoe, Calif., event held this afternoon, GoPro unveiled the Hero5 Black, a new flagship camera that will sell for $400, and the Hero5 Session, a revamped version of the tiny, cube-shaped Hero Session that will go for $300. The much-anticipated Karma was also shown off — it goes for $800 — as were new PC and mobile video-editing apps and a $5 per month cloud service that automatically uploads content when a camera is being charged.

GoPro closed up 2.3% on Monday, after posting much larger gains earlier in the day. Video processor supplier Ambarella (AMBA) , for whom GoPro is the company’s biggest client, closed up 0.3%.

The Hero5 Black should be popular with GoPro’s core base of action sports enthusiasts. It improves upon the Hero4 Black, which launched in 2014, by featuring a touchscreen, voice commands, GPS/photo location capture, electronic (but not optical) image stabilization, wind-noise reduction (useful when skiing or skydiving) and RAW and wide dynamic range (WDR) photo-capture modes.

Like the Hero4 Black, the Hero5 Black supports 4K-resolution video recording at 30 frames per second (fps), and can take 12-megapixel photos at 30 fps. While both devices feature waterproofing, the Hero4 Black needs a camera housing to be waterproof, while its successor doesn’t.

The Hero5 Session improves upon its predecessor by adding 4K recording and support for 10-megapixel photos; the original Session topped out at 2K and 8 megapixels. It also adds voice commands and electronic stabilization, but doesn’t have the Hero5 Black’s touchscreen, GPS radio and RAW/WDR modes.

Whereas GoPro is discontinuing the Hero4 Black — it has already disappeared from the company’s camera page — it’s still selling the original Session for $200. The company has tried to use the Session line to expand its addressable markets to consumers wanting a small, rugged camera for everyday recording.

But weaning consumers off their smartphones cameras has — and probably will remain — a tough challenge. On the other hand, the new Session’s image-quality improvements might be enough to win over some action sports fans wanting a more lightweight camera than the Hero5 Black.

Can the Karma, which becomes available on Oct. 23, be the mass-market consumer hit that the Session has failed to be? The quadcopter drone’s impressive hardware and perhaps unmatched convenience/ease-of-use don’t hurt its cause.

The Karma can be folded into an included backpack/case, and comes with a controller that sports a touchscreen and looks like a handheld video game console. It also features semi-autonomous flight modes (also supported by some rival drones) and a three-axis stabilizer that can be removed from the drone and placed on the Karma Grip, an accessory that promises “ultra smooth” GoPro camera footage when either held or mounted on compatible accessories.

But all of this isn’t cheap. In addition to paying $800 for the Karma, a buyer will need to purchase a compatible GoPro camera — the Hero5 Black, the Hero5 Session or the Hero4 Black or Silver — to record footage. GoPro is offering $100 discounts to those who buy a Karma with bundled Hero5 Black or Session, but that still respectively spells a total cost of $1,100 or $1,000.

For comparison, the Standard edition of market leader DJI’s popular Phanton 3 drone can be purchased for $499 online. Among other things, the Phantom 3 can’t be folded up like the Karma, and the specs of the Standard edition’s built-in camera aren’t as impressive as those of the Hero5 cameras.

But at a price less than half that of the Karma bundles, many drone buyers are probably willing to accept such compromises. In addition to DJI, the Karma faces competition from many other drone makers, as a quick search on Drones and Quadcopters Store site shows.

Given such a competitive environment, and the fact the drone market is still at a stage where many potential buyers are wondering whether it’s worth purchasing one, it might just be a matter of time before GoPro slashes the Karma’s price or delivers a less costly model.

Diversified Porfolios

Diversified Porfolios

Any individual you speak with about investments will possibly inform you the very same trait: “Do not place all your eggs into one container!” This saying just means that when you are actually spending, you need to not put each one of your cash right into a singular company; alternatively a solitary field. This method of trading is actually gotten in touch with diversity, yet there is even more to variation in comparison to just adhering to the adage.

Understanding Variation

Diversification implies that you generate an expenditure portfolio that attempts to reduce threat using numerous forms of expenditures and purchasing over one business, and also within greater than one industry.

With a diversified portfolio, when one business or even company falls short alternatively has a large smash hit; the rest from your investments ought to be sturdy sufficient to weather the tornado and aid reduce the effects from the reduction. Diversification decreases your general danger. Meanwhile, if each one of your cash was actually spent into the equity from a singular company and also the firm does not be successful, your assets collection and also net worth is actually going to have a large smash hit and also decrease together with the worth of the assets. In addition, if you buy numerous business that are all within the same brand new innovation field which particular modern technology does not remove- your wallet will feel the discomfort from an unsuccessful technology and also you could drop your assets!

A strengthened strategy of diversifying an investment portfolio entails acquiring much more than simply company assets. If your financial investments are diverse, and also feature shares as well as bonds, company funded retirement, higher interest money market accounts and also cash as an example, you will definitely possess a powerful equilibrium in between higher threat and also channel danger assets.

For young clients, it is usually a far better method to buy even more risky assets, as well as be actually rather from an “vigorous investor”. This is actually given that you possess more age prior to you require your financial investments for retired life, as well as theoretically, the money invested possesses more age to recuperate if that should take a few smash hits. A youthful investor may possess an assets collection which contains 80% shares and TEN% connections, while someone deeper to retirement would certainly be actually a lot more conservative and perhaps have the contrary expenditure mix. Despite your age and whether or not you choose to be hostile or traditional along with assets, a varied portfolio will definitely lower danger as well as a mix of assets types will produce a well-thought-out expenditure portfolio.

Easy Method for Transforming Your Profile

For each people along with chicken feeds to invest and those that desire the absolute most simple road to a diversified portfolio, “a solitary balanced investment fund” might be a really good option.

Solitary well balanced mutual funds consist of a mixture of shares and also connections currently, so the client merely creates financial investments within the singular fund to generate a varied portfolio.

If you are an individual that appreciates choosing your personal stocks and connects coming from different providers and fields- you are actually not visiting be actually fulfilled along with the singular balanced stock funds as the real investments within the fund are decided on for you. But for individuals that want to commit however aren’t sure what to invest in, these funds are the ideal option!

For individuals with large amounts of cash readily available for putting in, a singular balanced stock fund is actually likely not the most ideal choice, either. Sizable clients need to decrease funds gains taxes through deciding on expenditures that can easily assist you in developing trusted streams of income.

Additional Diversification

One way to further expand your expenditure portfolio is actually to expand your assets past assets, bonds, retirement funds and also cash. For example, you can easily possess financial investments in real property depends on, or mutual fund.

Investment Tips For Beginners

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Investments in the correct places can be immensely profitable. This is a tried and tested statement with scores of people making enough amounts to live a high standard of living. But, it is to realize that even though they have a very juicy side, the other face of the coin is equally rotten. There are risks involved which are not seen in other forms like insurance or deposits in the banking sector. This is precisely the reason why all stock investment advertisements state that these investments are subject to market risks and all the offer documents should be read carefully.

If the general trend is studied, it would not be hard to understand that the vast majority of stock players are always on a lookout for short term goals with very few present to make a lasting impression. Most of these people fail in the first couple of attempts and give up. If they are lucky and do make a profit in the initial stages, they are known to make big mistakes in the later stages which leads to their downfall. Like any other professional work, there are certain economic laws which govern the markets and making a grasp of them all takes time. There are certain logics and calculations, which if used properly, would be able to predict the outcome (this of course does not include sudden and drastic changes).

Always remember that long term plans are much more secure than the short term goals. If you plan to invest in the stock market, do not opt for the route of making some fast money and leaving. Instead, try and stick to the place and think long term. The secret why big players always make profits in the stocks is because they do not hurry things up and let their investments bring out the maximum it can.
Research helps collect the basic factors which would eventually help in understanding the market trend. Hence, never try to ignore facts. Hang on to every bit of information available which might be help. Losing money is not something that can be taken in stride by everyone. The losses are hard earned money and for someone who is new, it may be a huge blow. Take precautions and invest only in sectors which are promising. If required, ask someone to make you aware of all the terminologies and the short comings which may be witnessed while trading.

Once everything is in order and adequate knowledge about how to deal is possessed. It is time to invest. As a beginner, never try to start big as even the smallest of errors would throw you out. Keep it small and grow with the market. Even if you do end up losing, the damage would not be so high. Once a profit is witnessed, try to increase the investment by small amounts. A part of the profits would of course be used for personal finances, but save up the rest for future investments. The principle amount of investment should never be utilized and should be kept in circulation in the market.