October 28th, 2022 | 13:18 CEST
Returns like out of this world: Meta Platforms, Kleos Space, Commerzbank
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At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Meta Platforms: Mark Zuckerberg increasingly out of luck
When Mark Zuckerberg glides over the waves on futuristic surfboards or makes jokes at his own expense as an animated avatar, the images always seem a bit like the construct of resourceful PR people. The ulterior motive: The brittle Zuckerberg is unapproachable, and consequently, potential users do not have much confidence in the products of his Company Meta Platforms. If Meta manufactured everyday products, Zuckerberg's image would most likely not be so relevant. But Meta Platforms stands for Facebook, Instagram, WhatsApp and numerous other services that now play a significant role in all of our lives. The vision of the Metaverse is to create a parallel world in which we can work, have fun and invest. All you need is a pair of smart glasses. Although the Metaverse is still in its infancy, the new idea must gain momentum. Hence the numerous cute attempts to make Mark Zuckerberg seem approachable and human as the originator of all these plans - even if this ultimately often provokes ridicule and is a pitch for parodies.
The bare figures of Meta Platforms also underline that Zuckerberg's ambitious plans are anything but a foregone conclusion. Recently, the Company had to report shockingly bad quarterly figures. Although Meta Platforms still posted a profit of USD 1.64 per share, analysts had expected more. The plans around the Metaverse devour too much capital. After some executives at Meta Platforms recently quit, it is getting lonely for Mark Zuckerberg, who has lost some of his charisma in recent years. The stock is trading at its low for the year, around EUR 100. The valuation is okay, but the future is uncertain. Meta Platforms is an expensive bet on the realization of a vision. The odds are too poor for an entry.
Kleos Space: Data from space at a discount price
Investors have much better odds with the Kleos Space share. The Company offers security services using satellites. Specifically, it involves monitoring radio traffic and evaluating it using artificial intelligence. The analogy to betting is actually not applicable to Kleos Space, as the Company has already launched several satellite clusters into orbit and is generating data. It also already has several partnerships, such as with the US military and other companies. In the fourth quarter, a rocket will launch and take Kleos Space's fourth satellite cluster into space. After that, the Company will be able to monitor 119 million km² daily.
Some time ago, Kleos Space announced a contract around the analysis, modeling and simulation of Kleos' capabilities to support the US government's current and future needs for commercial high-frequency reconnaissance. While this will not generate significant revenues, according to Kleos Space, the collaboration sets the tone for the future. While Kleos Space's stock has become increasingly cheap in recent months, the Company continues to work toward its goals. With a market capitalization of around AUD 45 million, the Company is the right size in the market to be able to lift investors' returns to new spheres if it is successful. Although Kleos Space is speculative, the starting position looks promising at the current level.
Commerzbank: Everyday frustration instead of startup glamour
A stock that is actually very down-to-earth is Commerzbank. Why then is the stock mentioned in unison with the pioneers of Meta Platforms and Kleos Space? In addition to its traditional banking business, Commerzbank has distinguished itself as a successful startup investor in recent years. The subsidiary Commerz-Ventures has also invested in many startups over the years. The best example was the US payment service provider Marqeta, which is now listed on the stock exchange. The small team said to have only eleven employees at the time, decided to invest in 2015 and multiplied it within a few years. But in the meantime, the euphoria surrounding startups has died down. Exits worth billions have become a distant prospect. At Commerzbank, too, the core business is dominating again. It is under pressure due to the burgeoning recession and the full braking of the real estate market. The share currently has momentum, but above EUR 9, the air is getting thin.
The examples of the three companies mentioned show that investors who want to aim high with speculative investments must pay attention to two things: First, ambitious business models must be sufficiently represented in a company. A small division in a billion-dollar corporation is not much fun for shareholders. Second, the valuation of speculative business models must leave room for returns. In the case of Meta Platforms, the share price still contains too many successes from the past - how much of this substance will last is questionable. Kleos Space, on the other hand, is a genuine growth stock. Data from space is needed and makes sense for smuggling, human trafficking and other border violations. In addition, the valuation is low. Those who can withstand volatility can take a closer look at the stock.
Conflict of interest
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