Stock Notes for 1/9/21

Cloudflare (NET)

Sean Emory, CIO of Avory and publisher of cool quarterly charts, is now covering Cloudflare. 🙌🏼

Cloudflare’s technicals from IBD explains the weird price movement we’ve been seeing over the last few weeks. Cloudflare trades alongside enterprise software companies which has a rating of D+; however, there is healthy accumulation that is happening with the stock at A-. So while we may see the stock run up intraday due to accumulation, the group/peers eventually pulls Cloudflare back down during a broad sell-off.

Tesla (TSLA)

Tesla reported its Q4 2020 production and delivery numbers early this week:

  • Q4 2020: Produced 179,757, delivered 180,570
  • FY 2020: Produced 509,737, delivered 499,550

While Tesla slightly missed its FY 2020 delivery target of 500,000, I think it’s good progress that Tesla produced over 500,000 vehicles in 2020. When you couple new factories in Shanghai, Berlin, and Texas, Tesla is on its way to produce & deliver 1,000,000 vehicles in 2021.

In other news, Chamath Palihapitiya reminds everyone that Tesla is a distributed energy business that is transforming how energy is harnessed, stored, and used for productivity - automotive is just one of its manifestations. The biggest disruption yet to be recognized is powering utilities, trillions of dollars in value sitting in the dirty energy generation infrastructure that will flip upside down when Tesla begins to build clean energy infrastructure.

Lastly, Chamath says why bet against Elon Musk? Invest in people that know what they’re doing, won’t bend to short term profits, and will drive the train for 10 to 20 years as they make the world a better place. When the music is on, you gotta dance. And these guys are dancing. And so, we keep on dancing! 🕺🏻

Tesla has an A+ report card (top line sales growth trumps ROE for now). 😄

T-Mobile US (TMUS)

T-mobile US released and discussed their 2020 performance on Citi 2021 Global TMT West Conference.

Here’s the gist:

  • Full-year 5.5 million in additional postpaid customers, ending the year with 102 million subscribers; postpaid is outpacing prepaid where prepaid lines are being added to postpaid accounts
  • Churn: remains “muted” with slight improvement from 3.82% in Q3 2020 to 3.03% in Q4 2020 (for context, standalone T-mobile was at 2.86% in Q3 2020)
  • Network: 280 million pops covered with 5G Extended Range (their 600 MHz low band) and 106M pops covered with ultra high-band (their 2.5 GHz mid-band). Over the last 9-months, T-mobile stood up a “network factory” which is capable of upgrading 1 thousand sites per week, which will be in production mode throughout 2021.
  • Sprint Migration: Sprint traffic migration went from 15% to 20% of traffic, which is about 4 million Sprint customers now on the T-Mobile network.
  • Synergy milestones with Sprint acquisition should be viewed as follows: (1) What is happening from a network build perspective, (2) what is happening from a traffic migration perspective, and (3) the decommissioning of Sprint’s network
  • Growth areas: small town rural areas covering 1/3 of the population; winning enterprise RFP contracts which was part of 2020’s growth story where companies are upgrading their corporate networks and choosing T-mobile; prime families including over 55 year old and military; and being developer friendly to 5G use cases.
  • T-Vision: not a massive cost nor profit center, it’s an aspirational product
  • Monetization strategy of prioritizing $/capacity (they have a ton of capacity to monetize) over $/device, which means they’re not overly concern about increasing average revenue per user (ARPU) at the device level as much as competitors like Verizon

It was another amazing quarter for the un-carrier, a company I no longer have a position in but remain a fan of a well-run pure-play mobile internet business with the best spectrum position and network. T-mobile also has an awesome executive team that continues to execute post John Legere‘s departure.

T-Mobile’s technical ratings shows its group is not favored by the market right now. The upsides for TMUS are increase of sales change of 74% and accumulation rating of B.