Show Me How To Short These Three Bubbles

Lately I’ve been feeling like a lemming. I’ve grown a man bun well passed the tipping point. I bought a diesel Mercedes long after its anointment as the hipster whip du jour. I moved to Santa Monica at peak rent.

So it’s time to cultivate my “predictive” side. Here’s my imitation of Christian Bale in The Big Short.

Ad tech.

Digital advertising has certain bubble properties.

Mainly, purported value. For example, the ad views that Facebook sells advertisers are misguided. 3 seconds in the newsfeed counts as a “viewed impression.” Yes, their targeting is spooky and it can be effective if used right (Trump campaign unfortunately) but most companies don’t know how to play the game intelligently or tastefully.

As for Google ads, an increasing amount of people are using ad-blockers, and click fraud bots are swarming. Companies are spending increasingly ridiculous sums of money on digital campaigns but actual brand consumer-engagement rates are falling.

Online ads are annoying and creepy. We’re disenchanted. Something has to give.

SVOD.

Subscription video-on-demand is skewing bubble.

Too many big players flooding the market, driving up licensing costs. Apple, Disney, Facebook, Snap — all succumbing to FOMO with big moves into the crowded space.

Other players have grown bearish. After a lot of big talk, both Spotify and Vimeo have decided not to get into the game. Spotify I get — their wheelhouse being music — but one would think Vimeo a perfect fit.

The ones who survive may be the companies with large eco-systems, like Amazon or Apple, who treat content as lead generators for their core products (retail, hardware, respectively).

That being said, the most vulnerable of the players is Netflix, ironic as they’re the pioneer. But their numbers aren’t adding up. 100 million subscribers generating over a billion a month in revenue, yet they’re spending 6 bn a year for licensing and another 6 bn a year on original content. Those are break even numbers without factoring in marketing/operating costs. Plus they’re running a 20 bn credit line.

I see ads in the near future for Netflix, which could turn a lot of people off.

Self-driving cars.

This is a matzo ball of a bubble. This is technophilia at its most depraved. 70 bn valuation for Waymo? More than GM, Tesla, and Uber? Is it just me or is the idea of robo-cars becoming ubiquitous within ten years a nut salad.

Autonomous cars are definitely a thing. The tech is amazingly cool. But I’m bearish on their supposed upcoming dominance. Consumer adoption is bound to be slow. People will still want to drive themselves. “Pull the steering wheel from my cold dead hands.”

They’ll be some bad fatalities. Regulation will have to come in and cool things off.

All I know is that if my ’83 merc coupe diesel gets rear-ended and I look behind to see some autonomous smart car I’m going to clip my man-bun and go Bale in American Psycho.