Robinhood Portfolio Update (Q3 2017)

by | Aug 6, 2017

What’s in my Robinhood portfolio?

Here’s my first [ever] quarterly update of my Robinhood portfolio.

(NOTE: Robinhood is a commission free stock trading app. If you’d like to learn more about the Robinhood app, click here to read a review, which includes a short stock trade tutorial.)

Below are the stocks I’m currently holding, followed by the top five stocks on my watchlist.

Facebook (FB)

  • Current price per share: $169
  • Portfolio diversity: 25%

Facebook (FB) is the stock I’m most bullish on — largely because CEO Mark Zuckerberg has shown that it’s perfectly reasonable to anticipate FB to make sound acquisitions in the future. If you’re going to base a stock decision off the CEO alone, then FB is a strong play. But of course, we need a bit more than that.

As we take a look at the company itself, it was a bit surprising to read a lot of negative content about FB’s growth and monetization plans prior to its Q2 earnings report last week. FB owns 4 of the 5 most popular networking and messaging apps (i.e., Facebook, WhatsApp, Messenger, Instagram). I’m no genius, but one would imagine that companies like to advertise wherever eyeballs are.

If this crazy hypothesis holds true, then FB’s entities should generate a great deal of ad revenue. And that’s exactly what they did, as FB went on to crush its earnings report — generating a whopping $9.32 billion in revenue in Q2. And its $1.32 EPS was well over Wall Street’s expected EPS of $1.12. The results triggered about a 5.5% initial pop in FB’s stock, and there should be plenty more where that came from in the future.

FB has a home in my Robinhood portfolio.

Amazon (AMZN)

  • Current price per share: $986
  • Portfolio diversity: 18%

Amazon (AMZN) reached an all-time high of $1,083 per share last week, albeit the price took a tumble after AMZN earnings came in at 70% below market estimate. Let’s slow down for a minute, though.

AMZN reported revenues of $38 billion, which was slightly above the analysts’ expected revenues of $37.2 billion. The reason earnings were down is due to increased spending — CFO Brian Olsavsky focused on this quite a bit during AMZN’s conference call for its Q2 earnings.

Since Q2 in 2016, marketing costs are up 44%, technology and content spending is up 43%, and fulfillment costs are up 33%. AMZN has been hiring a lot of software engineers and sales reps, developing [and promoting] its Echo smart speaker products, adding warehouse space, and working on digital content for cloud video streaming.

The bottom line is that revenues were on par, while spending was through the roof. AMZN is focused on dominating the next few decades — not the next few months (i.e., short-term earnings).

Alphabet (GOOGL)

  • Current price per share: $945
  • Portfolio diversity: 17%

The parent company of Google, Alphabet (GOOGL), beat its Q2 expected EPS of $4.46, as the search engine giant reported an actual EPS of $5.01. However, GOOGL shares saw a somewhat steep drop from its all-time high of $1,008 prior to its earnings report.

On its conference call, GOOGL reported a drop in cost per click and traffic acquisition cost (TAC). These are key metrics to GOOGL’s business model, so one could argue its stock won’t reach a new peak. It’s a fair point, but for a long-term investor, this price dip is a prime opportunity to buy GOOGL — the company in charge of the two most popular sites on the web (i.e., Google, Youtube).

GOOGL isn’t going away anytime soon.

Aside from the obvious, the ongoing cable cutting trend gets me excited about stocks like GOOGL and AMZN dropping in price as of late. In Q2, the top five pay-TV companies in the U.S. lost over half a million customers combined, which means the TV streaming market grows by about two million people per year in the U.S. alone. That’s a nice catalyst for YouTube TV, which GOOGL conveniently launched in April.

That’s the thing with tech giants like GOOGL and AMZN — these companies bleed revenue streams out of their eyeballs. And they can acquire any startup that breaks out, so there’s always new revenue streams to be had.

Again, I’m no genius, but this isn’t rocket science.

Alibaba (BABA)

  • Current price per share: $153
  • Portfolio diversity: 14%

Alibaba (BABA) shares have soared throughout 2017 — with its price currently up 80% from this time last year. But there’s plenty of room for BABA to run, as its growth is being carried by strong tail winds.

BABA’s fiscal 2017 revenue increased by 56% year-over-year, and the company anticipates similar growth in its 2018 fiscal period as well. CFO Maggie Wu said on a conference call last month that the company expects 2018 fiscal revenue to go up about 45-48%.

That’s impressive, and it’s hard to see the momentum slowing down anytime soon. BABA has quickly established itself as an industry leader in online retail.

Barring anything weird, BABA is poised to dominate wholesale e-commerce for years to come.

 

Activision Blizzard (ATVI)

Robinhood Portfolio (Q3 2017) - ATVI
  • Current price per share: $62
  • Portfolio diversity: 13%

Simply put, I’m bullish on eSports growth. In total, eSports industry revenues grew by 51.7% year-over-year in 2016. And it’s expected to grow by another 41.3% in 2017, which would value eSports right under $700 million in annual revenue. Further, eSports is expected to be a $1.5 billion industry by 2020.

This is merely the start of a multi billion dollar industry.

Rapid growth of a competitive entertainment industry that’s based around video games is a huge catalyst for companies like Activision Blizzard (ATVI), which specializes in interactive entertainment. Or in other words, ATVI makes video games. It’s the company behind Call of Duty, Destiny, World of Warcraft, and Candy Crush, to name a few of its prized possessions.

Aside from eSports being great PR for ATVI — management spoke about its revenue sharing partnership with eSports leagues during its earnings call last week. Based on media rights and sponsorship revenues, ATVI will keep half, while teams will split the rest.

With that being said, it could take some time for it to make a difference in ATVI shares, since the price is a bit inflated right now due to anticipation. But ATVI did report $0.55 EPS, which was well over expectations at $0.30 EPS.

The earnings beat was fueled by strong digital growth — with 80% of ATVI’s revenue coming from digital sales, which provide far greater margins than hard copy sales. However, ATVI reported 2018 fiscal guidance below Wall Street expectations, so shares are in a standstill. But I don’t mind that, as the eSports wave is inevitable.

ATVI has a long term spot to stay in my Robinhood portfolio.

Electronic Arts (EA)

  • Current price per share: $117
  • Portfolio diversity: 13%

Like ATVI, the same case can be made for Electronic Arts (EA). Some of EA’s most popular games are Battlefield, FIFA, The Sims, Need for Speed, and Madden NFL, among many more household names in the gaming industry.

Due to its sports games like FIFA and Madden NFL, EA has been able to leverage that towards a partnership with ESPN. This made EA the first company to truly pioneer into mainstream media outlets, as the business relationship has been a gateway to broadcasts of FIFA Ultimate Team, Madden Nation, and other eSports competitions on ESPN.

As for company growth, EA reported strong earnings this quarter. Total revenues came in at a whopping $1.449 billion — up 14% from last year, while gross profits and operating income are up 19% and 33% from last year, respectively. EA’s impressive earnings report is largely due to 28% growth in digital sales, which net greater margins than hard copy sales.

Like ATVI, EA has a long term stay booked in my Robinhood portfolio.

Robinhood Portfolio Watchlist [TOP 5]

Here’s a list of the top five stocks on my watchlist as potential adds to my Robinhood portfolio.

1. Baidu (BIDU)
2. Apple (APPL)
3. Take-Two Interactive Software (TTWO)
4. Baozun (BZUN)
5. Wynn Resorts (WYNN)

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Join the conversation.

Please feel free to chime in with any comments or questions you may have. I’m curious to see what you think, and I’m always interested in chatting with like minded people.

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