Even with a Negative Profit Margin, This Social Media Icon is Still a Buy

Shah Gilani|February 11, 2022

When you’re looking for a stock to buy, one that’s a real, solid investment, it’s generally in your best interest to seek out only the best. Companies large and continually growing revenues, net profits, and cash from operations and widening profit margins.

But today, that’s not the case.

This company’s financials are abysmal – but they’re not the reason why I’m interested in it. What got my attention, is its $4 billion buy back program. That sets up quite the opportunity.

Watch my analysis in the video below or see the transcript below.

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Transcript:

Hey, everybody – Shah Gilani with your Friday BS.H – that’s Buy, Sell, or Hold.

I’ve got a three-fer for you today.

First up, Disney. Yes, symbol DIS.

It’s a buy, people. Why? Because number one: I like it as a reopening trade. Number two: I like the company, always have. It has been a great ride. Yes, it’s been bumpy of late, certainly since the pandemic, but I think they’ve made a bottom. I think they’re going to start to continue to head back up.

Numbers just came out in earnings, and they were pretty darn impressive. As far as the theme parks – hit it out of the park. Revenue in the theme parks, up to $7.2 billion – that’s twice, two times what the revenues were for the theme parks a year ago. Absolutely fantastic. Talk about reopenings. So, you’re going to see more of that coming up, god willing, in terms of the Omicron subsiding and nothing else happening behind it. Reopening heading into the spring, summer, I like Disney down here trading around $155.

It’s Thursday as I’m recording this. Earnings are out the other day, yesterday late- absolutely great. I love the fact that the stock now is doing really well. It’s above its 50-day which is 149.05, and again, 155 today. The 200-day moving average is 168. I think the stock is gonna get up to 168. I think you want to buy it here. Now, me, if I bought it here and it went down, I wouldn’t worry. If it went down 10%, I’d buy more. If it went down 20%, I’d buy more. Because then you’ve got an absolutely solid low base there, and I would certainly accumulate on the way down.

I don’t think it’s going back down, that’s how good I feel about Disney here as far as it being a reopening trade, As far as Disney hitting it out of the park. New subscribers, plus 12 million for Disney+ in the quarter. Absolutely fantastic. Way ahead of analysts’ expectations for total subscribers for Disney+. Expectations were for 125.75 billion subscribers – they showed up with 129.8 billion. Hitting it out of the park. Disney’s numbers look great. I think the streaming is going to continue to be a very hot area for the company of course. And we see everything else is gonna hit it out of the park. So yeah, Disney in here is a buy at $155.

Next up, Twitter (TWTR).

I’ve gotta say… Twitter down here is a buy. It’s worth it, but the numbers are not the reason. The numbers are awful. I hate twitter’s numbers, tiny like less than 3% negative profit margin – yuck! Ridiculous. The company’s been around long enough, social media, they should be making money. They’re not. It’s just bad, B A D D D – bad. Ridiculous.

$4.8 billion in revenue, and they lose money. Net income to common shareholders – a loss of $181 million over the last 12 months. Come on, people, this is ridiculous. Company’s terrible – awful. Numbers – awful. I didn’t like any of the numbers that came out. Yeah, some of them you could point to and say, “They were better than expected.” Sum total of the picture of the numbers, revenue – ridiculous. Net income adjusted basis, $182 million for the quarter. That’s down from $222 million the same quarter a year ago. So net income, $182 million. The Street was expecting $290 million. Talk about a miss. And the stock popped a little bit on this. So you know what, I like it. I like it for one simple reason: You buy it here around $38 and change, you put in a 15% stop around $32, and if that doesn’t work for you, just get out. But I think because they are now executing yet again another buyback, $4 billion buyback program – this is on top of the $2 billion program, buyback program they instituted in 2020. That’s going to be a base support for the stock. That’s the only reason I would buy it here. It’s low, I think it could continue higher with the support of the buybacks, and I think investors might take a shot at it for that reason. So you could get a little bit of a pop out of this – maybe a really good pop out of this. And I would buy it down here. Again, I put a 15% stop on it. For those of you who want a tighter stop, 10%. Get out. It’s a trade, people, that might turn into something worthwhile as an investment – if the stock continues to work hard, if they get their act together, if they start making money. Well, good luck with that. I’m just looking at this as a trade Twitter down here, T W T R, at $38 and change, it’s a buy. With a tight 10%, 15% at most stop on it. When you get down there, get out and move on.

Last but not least, Uber Technologies (UBER).

What technology is there? You know what, first of all, I love the whole idea, but you can’t find drivers. Cars are hard to come by today. Their GPS is the worst. There’s a lot of problems with the technology. There’s a lot of problems with the model, the business model. Uber Technologies, people, has been around long enough now. Revenue is $14.48 billion. It loses – over the last 12 trailing months, it lost $2.36 billion. Uber, U B E R, Technologies. It’s a sell.

Actually, I’m gonna give you a little bit of a heads-up: If you own it, you can sell it here… I might just see if the market pops, and we’re having a little – it’s Thursday when I’m recording this – we’ve seen a nice turnaround from the inflation numbers, the bad CPI numbers, the market got hammered. It’s already turned around. The Dow has turned around to the upside. The S&P is on the plus side. The Nasdaq is on the flat side, we’ll call it. So that’s a heck of a turnaround, and it’s only 10:45 as I’m recording this on Thursday morning.

So, Uber could catch a ride if the market continues to leg higher. If the market digests these bad CPI numbers and goes higher in the face of rising interest rates, then the markets can go higher. We’re not that far off all-time highs in both the Dow and in the S&P. We got a longer to go, about 10%+ to go in the Nasdaq Composite before we get back to the all-time highs. We could get there, might take a little bit of a slog, could be a slog on the Nasdaq Composite – but if we get there, stocks like Uber Technologies could have a little bit of a ride. In other words, catch a a ride. All boats ride with the tide. So yeah, it’s a sell, except you might want to try to hold on. It’s trading around $41 and change. It could get to $44, and then it could possibly get up to $49. So I’d like to sell it at $44, some at $49. If it starts to fall too far back, just get out. Uber loses money. It’s a loser. Period. Profit margin, almost -16%. It can’t get it together, people. So Uber, it’s a sell. Or sell into any rising tide activity that the market benefits, that I should say that Uber benefits by. So there you go.

Disney: It’s a buy here at $155 and change. And if it drops 10%, 20%, you’re gonna add to your position on Disney.

Twitter: It’s a buy down here. It’s a trade, OK. You put in a 15% stop, get out around $32, you don’t want to have anything to do with it. Numbers aren’t good. Still, it’s a trade with a $4 billion+ buyback program helping to support the stop.

And last but not least, Uber Technologies, U B E R. It’s a sell. You want to sell right here, knock it out of the park. Do it. Just dump it, and go find someplace else to park your capital ­- like in Disney. Otherwise, see if the market continues to maybe leg higher, get out at $44 and maybe if you get lucky you can get out at $49. But I wouldn’t, I wouldn’t waste my capital on this stock. There’s plenty of other companies to be invested in.

There you go, everybody. Hope you all have a great Friday. I’ll catch you next week.

Cheers,

Shah