Nabeel Qureshi: A Short Testimony
Monday, May 15, 2017
Friday, May 12, 2017
1999 called, they want their stock bubble back
May 11, 2017
Dallas, Texas, USA
File this one away under “Completely Obvious...”
Last night the parent company of Snapchat reported a quarterly loss of more than TWO BILLION dollars.
Snapchat, of course, is the photo-focused social networking app that’s adored by tweens and adults who still live with their parents.
(Talk about a lucractive demographic.)
The company IPO’d just a few months ago with a market capitalization of $30+ billion despite slowing growth and a history of never turning a profit EVER.
According to the company’s quarterly report its finances have gone from bad to worse.
Operating cashflow dropped from negative $92.5 million to negative $155 million; and its total loss for the quarter including stock-based compensation was $2.2 billion.
It’s incredible that this is the same company that was a Wall Street favorite just eight weeks ago.
In fact on its first trading day back in March, Snap’s shares surged 44% as investors clamored to own a piece of this loss-making company whose shares confer absolutely zero voting rights.
After yesterday’s horrific results, Wall Street seems to have woken up, and the stock tanked nearly 25% in after-hours trading.
It’s amazing that anyone believed in such a fantasy to begin with; it feels like the 1990s all over again.
During the ‘90s tech bubble, conventional valuation metrics went out the window.
Back then, Wall Street didn’t care how much money these ‘tech’ companies (i.e. websites) were making.
They only cared about “eyeballs”, i.e. how many visitors was a website getting?
If the site traffic was substantial, the company would IPO at some absurd valuation irrespective of how much money they were burning through.
The classic joke in the ‘90s tech bubble was “We lose money on every sale, but we make up for it in volume.”
Today we seem to have returned to the same madness.
Profitability and Free Cash Flow don’t matter.
All they care about is “Daily Active Users”, and they bet billions of dollars on a company based on this figure.
In fairness this isn’t really about Snapchat. Maybe the company figures out how to turn things around. Or perhaps they become the next MySpace.
But Snapchat is far from alone.
Netflix is another great example; as a consumer I love the service, but as an investor I think it’s a complete joke.
Netflix hemorrhages cash and hasn’t had positive free cash flow since 2011.
In fact, Netflix’s operating cash flow losses more than doubled from MINUS $750 million in 2015 to MINUS $1.5 billion in 2016.
And the business is on pace to post a RECORD LOSS this year.
Yet in that same period since the end of 2015, the company’s stock price is up more than 40%.
Why? Subscriber growth. Eyeballs. Daily Active Users.
Netflix had 74 million subscribers at the end of 2015 versus 99 million today.
So Netflix appears to be losing money on every subscriber. Yet Wall Street seems to think that they make up for it in volume.
This really is the same madness from the 1990s.
Look I’m not here to tell you that Netflix stock is going to drop or that Snap will go bankrupt.
The larger issue is that financial bubbles tend to pop VERY quickly.
There is no financial fantasy that can last forever, whether you’re talking about unprofitable companies or governments that lose trillions of dollars.
Sooner or later you have to turn a profit. You have to generate positive cash flow. You have to balance the budget.
And as the Snapchat stock collapse shows, when the public wakes up and realizes this may not be possible, the consequences can be pretty ugly.
Thursday, May 11, 2017
Christian Governor in Indonesia Found Guilty of Blasphemy Against Islam
By Joe Cochrane, NY Times, May 9, 2017
JAKARTA, Indonesia–An Indonesian court found the Christian governor of the country’s capital, Jakarta, guilty of blasphemy against Islam on Tuesday, sentencing him to two years in prison in a case widely seen as a test of religious tolerance and free speech.
The governor, Basuki Tjahaja Purnama, was defeated last month by Anies Baswedan, a former minister of education and culture, in an election in which the blasphemy case, and religion, became a major issue.
Blasphemy is a crime in Indonesia, a secular democracy with the world’s largest Muslim population.
The sentence was harsher than what prosecutors had asked for. They had recommended a sentence of two years’ probation on a lesser charge, which would have spared Mr. Basuki prison time. He began his sentence on Tuesday. The vice governor is to serve as acting governor until October, when Mr. Anies takes office.
Mr. Basuki told reporters that he would appeal the ruling, as supporters outside the North Jakarta District Court looked on in shock.
Hard-line Islamic groups opposing Mr. Basuki were seen celebrating.
Shortly after the verdict, the governor was taken to Cipinang Penitentiary in Jakarta, which houses criminals including drug dealers and rapists. Under Indonesia’s procedural code, the governor was not eligible to remain free during his appeal because the possible sentence he faced was at least five years, according to legal experts.
Mr. Basuki became governor of Jakarta, the country’s political, social and economic center, in 2014 when his predecessor and chief political ally, Joko Widodo, became president. Mr. Basuki, known as Ahok, was only the city’s second non-Muslim governor and had hoped to become its first directly elected non-Muslim leader.
He had been leading in the polls last year, but in September his campaign faltered when he tried to address attacks from Muslim hard-liners who argued that the Quran forbade Muslims from voting for a non-Muslim. Mr. Basuki said those making that argument were misleading Muslims, a statement that was interpreted by some as insulting the Quran.
Conservative Muslim groups organized several mass rallies against him, demanding that he be jailed for blasphemy. Mr. Basuki and his supporters claimed the protests were orchestrated by his political rivals to sabotage his chances of re-election.
His 16-point defeat last month was seen as a sign of the increasing power of Islamic conservatives, who have pressed for the adoption of Islamic law, or Shariah, throughout the archipelago.
Indonesia has more than 190 million Muslims and smaller numbers of Christians, Hindus and Buddhists among its population of 250 million.
The five-judge panel unanimously voted that Mr. Basuki was “proved legally and convincingly guilty of committing the criminal act of blasphemy,” the head judge, Dwiarso Budi Santiarto, said in reading the ruling.
The blasphemy law was created in 1965, and only a handful of people were prosecuted under that law during the next 40 years, according to Andreas Harsono, an Indonesian researcher for Human Rights Watch.
However, he said, the number of people convicted of blasphemy skyrocketed to 106 from 2004 to 2014, during the presidency of Susilo Bambang Yudhoyono, Mr. Joko’s predecessor. Mr. Yudhoyono’s son was eliminated in the first round of the governor election in February.
Mr. Yudhoyono twice publicly denied that he had orchestrated the protests to damage Mr. Basuki’s candidacy.
“It’s a sad day, and it’s frightening,” Mr. Andreas said. “If the governor of Indonesia’s largest and most complex city, and who is an ally of the Indonesian president, can be brought down and humiliated this way, what will happen to normal Indonesian citizens?”
Erdogan Blasts Israel
Barak Ravid, Haaretz, May 8, 2017
Israel and Turkey clashed Monday in the most serious incident since the two countries signed a rapprochement agreement in 2016. After Turkish President Erdogan verbally lashed out at Israel’s policy in the West Bank and the Temple Mount in Jerusalem, Israel responded in an unprecedented manner, accusing the Turkish president of being a serial human rights violator.
Erdogan, who was speaking a conference on Jerusalem in Istanbul, called on Turks and Muslims across the world to visit the Al-Aqsa mosque and voice support of the Palestinian struggle. He said Turkey backs Palestinian resistance to the Israeli occupation and attributes significant importance to it.
“As a Muslim community, we need to visit the Al-Aqsa Mosque often, each day that Jerusalem is under occupation is an insult to us,” Erdogan said in his speech. Erdogan also said that Israel’s policy toward the Palestinians in the West Bank is racist, discriminatory and reminiscent of apartheid.
“What’s the difference between the present acts of the Israeli administration and the racist and discriminatory politics that were practiced against black people in the past in America and up until a short time ago in South Africa?” he asked.
Erdogan also blasted a new law that passed in the Knesset two months ago which would restrict the Muslim call to prayer–or muezzin–saying it infringes on religious freedom. “Why are they afraid of the call to prayer? Are they unsure of their own fate? We do not and will not treat our Jewish citizens like that,” he asked, saying “we won’t allow the muezzin on Al-Aqsa to be silenced.”
Initially, the Prime Minister’s Bureau was considering not publically responding to Erdogan’s statements, but after his comments were widely reported on in Israeli and international media, Prime Minister Benjamin Netanyahu instructed the Foreign Ministry otherwise.
The response, unprecedented in its severity, took aim at Erdogan personally. “Those who systematically violate human rights in their own country should not lecture and take the moral high ground over the region’s sole real democracy,” Emanuel Nahshon, a spokesman for the Foreign Ministry, said.
This is the first time in which Erdogan has returned to lashing out at Israel with vehement criticism, reminiscent of the period the two countries ties were at a low. A senior Israeli official noted that at this stage Israel will make do with the response statement to prevent the tensions from escalating into a crisis in the already-sensitive ties with Turkey.
Dennis Edwards: The Bible tells us that Turkey will be involved with a Russia and Iran in an invasion of Israel. Keep your eyes open to these events. You can read an earlier article here.
