Until recently, the concept of taking someone or something viral was mostly reserved for content creators and influencers on platforms such as YouTube, TikTok, Twitter, Instagram, etc. However, last month, the phenomenon took on new life, as millions of users on Reddit and Discord effectively took this playbook to the stock market.
A number of years ago, I brought up a stock idea to our investment team because it looked undervalued to me at around $20. It had tumbled from the mid-50s a year or so earlier and was selling at a low price-to-earnings ratio. Due to the fact the S&P 500 had been rising for years, even back then, it was increasingly hard to find undervalued securities, but this company superficially appeared to qualify. The rest of my investment team was unimpressed, however.
Lewis Carrol’s tale summarizes the intuition behind the paradox of quantum superposition: in Schrödinger’s famous thought experiment, a cat can be both alive and dead at the same time. Schrödinger’s twisted logic was surely required to make sense of a week during which a mob stormed the U.S. capitol and stock prices broke multiple records.
Over the past two years, we have penned two separate letters highlighting some of the most high-profile Initial Public Offerings (IPOs) to hit markets. During that time, many of the companies we’ve discussed have had blockbuster performances, turning from promising unicorns, to high-flying publicly traded companies and ascending well beyond their list price over a very short period of time.
Typically, the reaction to one of my EVAs is like the sound of one-hand clapping. That was definitely not the case with last week’s “Take Profits!” edition.