May 5, 2014

Doug Kass says dont buy social media stocks

Despite the recent drop in the Nasdaq, Facebook (FB) still possesses a $140 billion market cap. Twitter's capitalization exceeds $24 billion. 

LinkedIn (LNKD) trades at a market cap of more than $19 billion and a cool 750x earnings. Salesforce (CRM), which has been an awful stock, still has a $32 billion market cap (with financial statements that belong in the clouds because they are so damn confusing). 

Tesla (TSLA), down $60 from its high, is still priced as if gasoline won't have a commercial use in five years. 

Zillow (Z), although its commercials are touching, is priced at 20x sales, and last time I checked, it sells advertising and subscriptions. 

Then there is Yelp YELP, a collection of restaurant (and other) reviews, clocking in at 20x revenue.

Bottom line: Avoid the whole social media space and cover your ears when talking heads, people in flip flops with MBAs and those walking into traffic on their smartphones tell you otherwise.