Prof Galloway’s 2017 / 2018 Predictions
We hold our feet to the fire, and revisit our January 2017 predictions, regarding the upcoming year.
A prediction we made: Twitter will increase in relevance, and decrease in value. Sort of right, sort of wrong. Twitter has gained relevance, but its stock is also up.
Prediction: Verizon will walk from or shave $1 billion plus from the purchase of Yahoo, as they recognize they may be inviting Mr. Death, the mother of all liabilities, into their house. An honorable mention. Verizon shaved $350 million from the purchase price of Yahoo, and the deal closed.
Prediction: Hacking, phishing schemes and ransomware will reach crisis proportions, and take center stage in Congress. We got this one right. Equifax, Uber, the SEC and Chipotle, among others, were hacked, seriously hacked.
Prediction: We’ll see enormous write-downs from Unilever and Walmart’s acquisition of Dollar Shave Club and Jet.com, respectively. Wrong, mostly. Walmart’s acquisition of Jet.com was not only not a write-down, but is likely turning out to be a genius acquisition. Was Jet.com worth $3 billion? No. Was it worth more than $3 billion to Walmart? Yes. Walmart, likely the retailer of 2017, has been able to report year on year ecommerce gains of 60%-plus, likely adding tens of billions of dollars to its market capitalization.
Prediction: Amazon, having bested Apple and Google in voice and machine learning, will run a successful test for zero-click retail. We’re a little early on this, but it’s looking good. Amazon Prime Wardrobe sends clothes you can try on, and decide if you want to buy. The firm is now the fourth most valuable company in the world, and its stock was up 50% in ’17.
Prediction: Netflix becomes the operating system for the other screen in our life; television, and becomes the fifth horseman. Share price doubles, or is acquired by one of the horsemen, or Disney. We were mostly right, here. Netflix is becoming the operating system for television, and its stock was up 50% in ’17.
Prediction: Pinterest’s value will fall 50%-plus, as weak management and turnover begin to metastasize. We got this wrong. We don’t know what the value is – it’s a private company. But it wasn’t cut in half.
Prediction: Airbnb becomes the most disruptive private company, other than Amazon, in business, and has the IPO everyone is expecting from Snap. By the end of the year, the firm is worth more than Uber. Sort of/not really. At the beginning of 2017, Uber was valued four times Airbnb. Airbnb’s next round may approach or even pass the most recent valuation on Uber. It’s been a great year for Airbnb, and a *bleep*-y one for Uber.
Prediction: Wework loses 75% of its value from peak, $16 billion, and becomes a poster child of unicorn mania. Wrong. Wework has announced a bunch of innovative pilots that are going to extend the consensual hallucination between the firm and the markets.
Prediction: SnapChat will not go public, as it becomes evident they are losing traction, at the hands of Instagram. So-so. Snap did get out, but its stock has been cut in half, and is screwed. The Zuck owns four of the five top non-gaming apps globally, and all four have their guns squarely pointed at – what is the *bleep*-ing name of that company? Snap!
And now, our predictions for 2018.
The breakup of big tech begins. Wage growth fails to materialize, and someone does the math, highlighting that the heirs of Walton, Bezos, Zuckerberg, Gates, Brin and Page will soon be worth more than two thirds of U.S. households, combined.
Prediction: Amazon passes Apple in value.
Prediction: Alexa emerges as the iPhone of the next decade, fueling Amazon to ascend past $1 trillion in market capitalization. Voice makes the mobile wars look like a border skirmish, as big tech and the media industry try to establish their place in an increasingly Amazon world.
Cryptocurrencies crash by over 50% in a month. That’s a pretty wimpy prediction, but it’s likely going to happen in the first quarter. It will then rocket past $20,000 as crypto, specifically Bitcoin, has become a chaos proxy, and we are headed toward a constitutional crisis, which will confirm that millennials are smart, to not have trust in their institutions, or the Federal Reserve.
Prediction: The ad tech landscape goes from bad to worse, as the industry’s duopoly, Facebook and Google, cements the industry’s structural decline. Large communications conglomerates shed 20% to 50% of their value, when their growth engines’ digital agencies stall, as again, the duopoly begins making online creative and value-added services less valuable.
Twitter, Snap, Buzzfeed and Pinterest are acquired, or valued in subsequent rounds, for between 25% and 50% less than their market highs, as all continue to underwhelm, at the hands of the duopoly.
Almost every digital marketing content darling, Refinery29, AppNexus, etc., becomes a distressed asset.
M&A activity hits a fever pitch of horizontal and vertical tie-ups, as industry bulks up in response, again, to Amazon.
Online furniture firm Wayfair’s shares crash. A dotcom business model implodes, as weak customer loyalty, Amazon private label furniture brands, and strong offline brands, including Williams Sonoma and RH take the firm to the woodshed. This firm, Wayfair, is beginning to look increasingly like Blue Apron.
Amazon acquires either Nordstrom Carrefour; won’t acquire Target.
Walmart establishes a leadership position in online grocery, with Pickup. Everyone else, including Target and Amazon, has wrongly focused on delivery. This puts even more pressure on traditional brick and mortar retail, and forces Kroger to make a big acquisition. My guess: InstaCart or possibly UK best, Ocado.
Large CPG firms will either merge or forward integrate, and acquire retail, as they realize a voice-controlled world is really, really bad for them.
Disney becomes the fifth horseman. Disney is the only old economy firm with the scale, stones, access to capital, and leadership, to develop a Prime-like offering. Disney will offer a Prime/Netflix-like member offering, that will include a fat bundle of video programming, and preferred access to other assets, including cruises, parks and the like. The stock out-performs its peers, and becomes the first old economy firm to take on big tech.
Facebook stock peaks. The Zuck becomes the unwitting poster child for the movement against big tech, as a series of half measures, in response to the Russian interference, and the launch of a gateway drug, a social media platform for kids, burnish his reputation as the most tone-deaf CEO in tech. Business will continue to grow, but multiple erosion will occur, due to the threat of regulation.
A nation in Europe bans one or more of the four, opting for the Chinese model of stealing the IP, propping up a local entrepreneur, and capturing the value domestically.
Time’s 2018 Person of the Year? Robert S. Mueller III, Third Marine Division, Vietnam 1969, no bone spurs.
And finally, the world continues to be a better place. Infant mortality, the likelihood of death at the hands of another human, deaths from infectious disease, and wealth inequality between the poorest and wealthiest nations, continues to decline.
The number of girls attending college, global income, and great, original, scripted television, continue to increase.
We’ll see you next week.