2 big trades coming on the way
I am going to make 2 huge trades in today's market
- $U: After analyzing I have concluded that the revenue deceleration projected is short-term and it won't impact the overall thesis (if it is solved by next quarter even better), so I will increase my position by at least 40% (lump-sum)
- $VOO: Given the market volatility, negative sentiment towards Unity and growth stocks in general and high beta of 2.24 of $U, I will increase my $VOO position by around 30% to maintain overall beta closer to 1.
Apart from that, I will be rebalancing my income portfolio to exhibit lower beta with lower dividend yield. Now that I have made these many trades last month I have depleted my cash from 6% to 3.3%. My new focus would be to add more of the cash position and bring it to around 6 (unless I get more opportunities - which I see more likely case).
At these prices $U certainly is enticing. I will likely buy a taster position but wait till next qtrs earnings to see progress on the 'temp issue' with the Operate product line. If by chance the $100M impact of revenue they have set expectations for is greater or will take more than 2 qtrs to normalize, that will be catastophic to $U (BTW, like you I do expect (not hope) the issue will be resolved, but not willing to bet the house on this expectation yet.
@gkotak Makes sense on waiting till Q2 results.
One thing impressive was even with bad data fed AI, they were able to meet the rev expectation. As far as I have researched, it seems to be relatively easy but time consuming solution given they have pinpointed the issue (gotta process 3B users data and train the model again). And, definitely will be adding more if there are positive signals towards improvement in AI.
As of now, I think I will have a bit of apatite to buy more of $U at these valuations.
Also, I was reading a bold claim from John saying they will be profitable by Q4 (which I find hard to believe), or I may have completely misunderstood it lol
@investor_from_nepal Yep that's exactly what he said. and that's my point. since he said, if it doesn't happen that'll be really bad.
and i don't quite buy it's relatively easy. it may be so reexecute, but there is risk in the outcome being as good as before since it is a data issue
@gkotak i was expecting it to be profitable by Q4 23 - Q1 24. It will take leaps to be profitable by Q4 22, or if i have serious misjudgement. But, if $U continues to grow in similar pace and gets pinpointer issue solved, i would see that as one more buying opportunity.
let's see how they get the pinpointer issue solved, if they get it solved and increase accuracy, they will come better off when Google enforce IDFA like changes.