Stock Notes for 12/26/20

Tesla (TSLA)

Steve Jobs once said…

You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.

Steve Jobs, Stanford University commencement address, June 2005

So it’s a bit comforting to see Tesla joining the S&P 500 with over $600 billion market capitalization and Elon Musk reveal the following…

Tim Cook refusing to meet with Elon Musk was a defining moment in Tesla’s history. And perhaps for the better. Tesla’s development cycle is way faster and transparent than Apple’s, so I am glad that Tesla stayed independent. It was meant to be. 😄

Square (SQ)

In a bit of odd news this week, Square is reportedly in talks with Tidal for a possible acquisition:

To make sense of this, I think the best way to analyze this is from the perspective of Square’s mission: economic empowerment.

A platform like Tidal would help diversify Square’s product portfolio and empower not just musicians, but all content creators. I believe Square could broaden Tidal’s platform and open it to other categories like podcasts. Since Square’s model does not rely on advertising, Square would enable a direct to consumer monetization model for content creators similar to (gasp) Only Fans. This model removes a ton of middlemen present in the music business and would economically empower content creators by giving them greater control of their intellectual property and share of dollars.

Lastly, I think Square’s partnership with Spotify early this year provided key insight to this thesis and provided product market fit/validation.

Cloudflare (NET)

Muji at Hhhypergrowth published an excellent piece on the state of Cloudflare:

I’ve worked in an IT infrastructure organization at an aerospace and defense company in Seattle for over 5-years. And the most exciting part of Cloudflare’s thesis is simplifying the corporate network. When you have a company with over 100,000 employees, the corporate network can get very complicated. Cloudflare One simplifies how companies connect their branch offices, how workers connect to the corporate network, and how companies secure intellectual property (to put it simply).

Another aspect I think is exciting about the simplified corporate network thesis is that as more Fortune companies join Cloudflare, there will be network effects such that business partners would benefit in moving their corporate network to Cloudflare as well. One of the challenges in existing corporate networks is the difficulty in sharing classified or proprietary data between companies. Cloudflare’s software defined zero trust network can address this challenge since all data is passing through Cloudflare’s private network.