Not long back I made mention of a phenom which I’ve come to label as: future-hype. What this term means is what I describe as the now near comical press releases, CEO jawboning, or anything similar that takes place right before earnings (usually a week or so, give or take) either from “The Valley” or tech space in general.
Usually what you’ll read, see, or hear (and echoed jubilantly by some next-in-rotation fund manager) is some grandiose announcement of some super-duper, sounds really awesome, coming attraction that has the potential to not only change everything, but also, to fill investor coffers with riches beyond the imagination.
All one needs to do, as to engage and embrace in this vision, is to use their own imagination, then buy into the “dream” with real legal tender, literally. Because, without those investor dollars continuing to pour in? The “dream” as they say – will be lost. Along with any earlier proceeds. Rinse, repeat.
Why is the above relevant? Fair point, and it is this: It sure is a nice thing to be able to bring access of the internet to – BILLIONS!
(Remember that “eye-balls for ads” model is the key, and this offers up the main course for the headline reading algos’ to feast upon. But, back to the headline.)
That’s just “FANTASTIC!” right? I mean all the ads for fresh eye-balls that have not only never had the opportunity to have a Facebook account, but never had access to the internet, and probably never even hear of it! Oh, the money they’ll spend and the profits to be made.
Did you just have a “Wait…What?” moment there? I hope you did. If not read that last line again only slower and let it sink in. I’ll come back in a moment.
Did it hit you? For those not sure of where I’m going re-read my earlier quote above, particularly the line: “Spend (or lose) $100mm per quarter is perfectly acceptable, and even encouraged, as long as you can show 102 million eyeballs came for free.”
In that article I cavalierly made the comment that Elon Musk and Jeff Bezos would nod their head in approval. For this has become so blatantly obvious to anyone paying attention, it’s now downright comical.
Why? As I’ve been stating for years – It’s all about how to play the headline reading, algorithmic, front running, HFT, trading bots. Hint: Remember how every time it seemed Amazon™ stock valuation was questioned there was suddenly barrage of “news” about drone deliveries? All coincidence I’m sure. After all it’s not like it worked for the Fed, right?
Yet, if you want to possibly buttress the idea that maybe there’s a little more to all this “coincidence” than meets the eye or press release. Today we have no finer example for one to ponder than Mr. Musk himself in what can only be deemed as one of the most blatant examples of what I’ve coined “future-hype.” Via his Twitter™ feed. To wit:
“Just received verbal govt approval for The Boring Company to build an underground NY-Phil-Balt-DC Hyperloop. NY-DC in 29 mins.
If you want this to happen fast, please let your local & federal elected representatives know. Makes a big difference if they hear from you.
City center to city center in each case, with up to a dozen or more entry/exit elevators in each city”
Sounds “fantastic!”, right? Sure does, only one problem. This is all “news” to those whom one would construe are the “approvers.” Again, to wit:
Via New York City’s mayoral press secretary Eric Philips:
“This is news to City Hall.”
“also, if you’re stopping by City Hall, please bring a copy of the proposal. That would help.”
Via USATODAY™ reporter Nathan Bomey:
“I just talked to the New York MTA about this. Press aide is so flabbergasted that they’re asking me to spell Elon Musk’s name for them.”
Can you say, “It’s different this time?” Or, does one need to be shown a “picture” as the Silicon Valley aficionados likes to call them, for why this seemingly brazen, over the top claim, needed to be stated in the first place? Fair enough. Once again, to wit:
Suddenly everything about the “future” is getting questioned. Especially when it comes to all that future P/E payoff in riches. Or. said differently: “If it sounds too good to be true, maybe it is.” But we shall see, after-all…
Earnings are just around the corner.
© 2017 Mark St.Cyr