Name: Mark Mahaney of RBC Capital Markets Highlights Ten Current Market Trends in Ten Minutes
Uploaded: 2019-07-16
Duration: 11 min 17 s
Description: Mark Mahaney, Managing Director and Lead Internet Analyst of RBC Capital Markets gives an overview of ten current market trends - in just ten minutes.

All right, you give me ten minutes, I'm gonna give you ten trends. Here we go. Why should I give this presentation? Because I am the oldest, longest lasting Internet analyst on the street in the galaxy. Why shouldn't I give this presentation? Some of you who saw me last year will remember that my stock picking sometimes sucks. I put a sale on Amazon in 2003, right before it began one of its meteoric stock rises And I put a buy on Blue Apron at the time of its IPO. So caveat invest or 10 minutes 10 trends here we go first. Market conditions are extremely robust. Show of hands people here born before 1955 Show of hands a few people so I can categorically tell everybody else in the room that you just experienced the best june of your lives. In June the S & P 500 Rose 7 %. The best performance since 1955, the first half of this year. Stock market was up about 20 %. It was the best first half in the last 22 years. Extremely good market conditions and what happens when you have extremely good market conditions as you get these things really good, interesting. IPOs Uber Lyft Pinterest, Zoom, Crowdstrike, Chewy, yes I know some of these companies generated a massive amount of losses but they're chasing really big opportunities. These are companies that are usually very well seasoned. Times are different. Back in 99 and 2000, there was this thing. Some of you remember him Or her or it. This was Pets. com. Just as a reminder why it's different today, pets com went public with 5 million and trailing 12 month revenues. 5 million. This is today. This is truly actually this is Gracie my golden doodle This is a hand portrait sent to me by Chewy, as they do with all loyal customers. This company went public about a month ago with 3. 5 billion in trailing 12 month revenue. 5 billion, 3. 5 billion. Times are different today, they're better. All right, market conditions are really robust, that's trend number 1. Trend number 2 There's this perception that tech is in a major slow down and I disagree. But people looked at the first quarter of this year and they saw the slow down by Google, Amazon, Netflix, Facebook, booking all of these companies, I think along the way have presented here. And they saw growth rates go back to receipt 2014, 2015 levels and the call was perhaps tech Growth is declining, structurally and the answer is no, it isn't because these companies have what are called GCI or growth curve initiatives. And they all have the opportunity to take that growth curve, that deceleration and bend it and maybe even bend it back up. So that's Netflix with price increases An extremely strong contents laid in the back half of this year. It's Facebook being able to monetize Instagram stories. It's Amazon rolling out prime one day. So, there are GCIs, growth is not over, there is no tech slow down. Trend three, this is a serious one. It's a real one. One of the speakers just talked about this rising regulatory risk. They're ramping really rapidly. Say that five times quickly. The DOJ and the FTC divided and conquered. And they took the four tech leading, the four leading tech platforms Amazon, Apple, Facebook, and Google with carving them up. I think what's not gonna happen is to bust off a big tech. I don't think Google is gonna be forced to divest YouTube. Facebook, Instagram, Amazon AWS, I think that's extremely unlikely to happen based on the work we've done with academics and regulators to unwind acquisitions from multi years ago, I think that's extremely unlikely, but what is a probability is in the next year or two these companies are gonna face more fines, finally from the US government not just from the EU, Nobody Association have some business practices. And maybe the biggest thing we'll see is the lack of large scale acquisitions. So this is a real trend. Regulatory risks are ramping really rapidly. They're having an impact. trend number four, I also think is a non trend. So most people assume they think the privacy risks are rising. The people the public is getting more and more concerned about violations of privacy. I'm not sure that that's true. We run survey work every six months. We asked two to 3000 people are concerns about data privacy, materially impacting your usage of social media. We see a rising percentage of people who say no. Now they're still a minority. It's 49 %, so 51 % say yes. But my guess is that as we keep going through this cycle we'll see fewer and fewer people concerned about privacy. Of course people are concerned about privacy but there's a basic trade- off. You give me free services, entertainment, news, communications tools You can have some of my data. So the idea that you would have privacy book company coming out that could share with it's users the revenue that they generate. You give them your data, they'll pay you for it. I think it's a pipe dream. So if you look at three large platforms that generated 2 to 300 that, that currently have about 2 to 300 million. Consumers. PInterest, snap and Twitter. They generate about five dollars and five cents in ad revenue per user per year. So imagine some privacy book coming out and saying I'll cut you a check for 21 cents a month if you come over to my network. It's not going to happen it's a pipe dream. Okay. Trend number five, advertising and commerce like chocolate and peanut butter they're coming together. I'm not talking about Amazon although I am talking about Amazon and AMS Amazon Marketing Services, which is now the third largest advertising platform in the world outside of China. I'm talking about what's happening with some of these other traditional advertising companies Instagram's snap, particularly Pinterest, and they're taking that. Marketing funnel, you know, brand awareness at the top, direct promotions at the bottom, transactions comes out of the funnel. They're collapsing it, they're smushing it just like that Reese's peanut butter cup. And you're going to see the opportunity for companies' platforms, traditional social media advertising platforms like Instagram and Pinterest Become really truly large and disruptive e commerce platforms. That's the fifth trend. Sixth trend, this is coming at us live. I think it's November 12. That Disney plus launches its streaming service and Apple, whatever they're going to call it. Apple plus is going to launch. HBO Max is going to launch in the next couple of months. Everything Pringles potato chips is going to launch a streaming service. [ LAUGH ] And why are they doing it? Because they see this thing called Netflix. It's got 150 million global paying subscribers, and they're gonna have 3 to 500 million within 5 to 7 years. Why are they doing it? Because we're going through the accelerated decline of paid TV today. Last year, paid TV companies lost about 800, 000 subs a quarter. This year, it's 1. 2 million subs a quarter. Next year is gonna be one and a half to 2 million. It's an irrevocable trend. People wanna go into streaming their ways to play this by the way, you can invest in Netflix because they're the winner and it's very hard to see them being overturned in the next five to ten years. huge scale advantages. Trend number seven, surrender now AI is taking over I'm gonna give you just two examples to think about. This is a massive investment area, CAPEX and OPEX. I think about what Google did ten years ago, the amount of money that they put into predictive search, start typing Aspen and it'll fill out a bunch of different options for your multiple languages, by the way. That's a massive step up in computational firepower. They're doing the same thing now with predictive text. You start writing your Gmail and it will give you alternative endings, you can do this with your books, book ideas or research reports. It'll be a real time saver. [ LAUGH ] That's a real simple example of AI. Here's the father or mother of all AI examples. So Waymo just got cleared to certify to finally drive in California. Now they have to have another driver with you, a human in the car. They can't charge you, it's just three year experiment, but you know what's gonna come out at the other end of it. This is the biggest AI experiment that's out there. Autonomous vehicles and it's coming to a city, a town near you soon if you can wait three years, all right? [ UNKNOWN ], let's get physical. I know we had Walmart here earlier today I think the most interesting I should have. You should have asked this. You should have asked this question. I think the most interesting innovation that's occurring in retail right now. It's what's happening in these Amazon go stores. How many people here have shopped and an Amazon go store Okay, so that's about 39. 7 %. [ LAUGH ] If we were to leave this conference, leave Aspen, go across the country, it'd 1 %, 2 %, because there are only about a dozen of these damn stores, and if you're in New York, for some of you maybe New Yorkers, there is two in San Fransisco for you folks and there is one in New York and you have to go to the World Financial Center, you have to hunt for it to find it. What's that? [ INAUDIBLE ] Two in New York? [ INAUDIBLE ] Great, so there's two in New York. Still, my statement holds, its 1 %. [ LAUGH ] Who invited him? [ LAUGH ] And anyway, the idea is that you scan, grab and go, we're saving time. Think about all the time you spent trying to check out. It's like all the time you spent in the damn TSA line, all the time you spent checking out of the store. You already know what you want. You know what the prices are. You're just going through the damn process of checking out. Amazon solved this. And you know it's coming to a whole foods not next year, the year after that, but in the next five to 10 years. I better be quick. I'm running out of time. AR and VR. Yeah, I saw this as somewhat fortunate did. I sent them my presentation last week, coincidence that it's on their cover? Coincidence. [ LAUGH ] Anyway, AR and VR Augmented Reality, Virtual Reality that's in the middle there that's me before and after my gender filter change. [ LAUGH ] You could decide which is which before or after. But this is now becoming mainstream. We're seeing IKEA, Verizon, you guys wrote about that in your article. Marriott companies using AR and VR to really boost the consumer experience. Gaming is going into the cloud, this is in the hype stage of reality then we're gonna go disappointment and then eventually real businesses will come out of this. I think this is one of the most interesting near term trends. That's ten trends, I'm almost done but I got a bonus one for you. Here we go, Crypto is going mainstream. The only way Crypto currency, [ UNKNOWN ] Crypto currency could ever go mainstream is if we had some massive platform endorse it. What massive platform could that be? Here's WhatsApp with over a billion users worldwide on a daily basis, Facebook messenger with over a billion users. They're gonna put this cryptocurrency on the wall on their, in their wallet in the app. And so these Libra coins are going to go mainstream. That's the last trend I got. Here's a quick summary. There's too many trends here to just summarize but if I were to pick out one negative one positive, the negative here is regulation. Regulatory risk is clearly ramping up. The real positive here is I think everything is going over the top. Music is. Spotify's a great example of that. Netflix is, and gaming is going over the top. That's it. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Mark Mahaney of RBC Capital Markets Highlights Ten Current Market Trends in Ten Minutes

Tech

Mark Mahaney, Managing Director and Lead Internet Analyst of RBC Capital Markets gives an overview of ten current market trends - in just ten minutes.