A funny thing happens when you write off a company. If it has a good, tenacious leader and that leader doesn't listen to the critics and gets down or gives up, there's always a chance for a resurrection.
Last night, we got three different resurrections from three different written off entities, and they are a reminder of the dynamic of capitalism and the need to keep some hope alive if the concept is a good one and the customers are happy with the product.
All three -- CBS (CBS), Zillow (Z) and Etsy (ETSY) -- were, at one point, darlings of the market that seemed to have lost their way. But their charismatic leaders, Les Moonves, Spencer Rascoff and Chad Dickerson respectively, never gave up on the vision. In fact, they never even believed that their companies had even hit speed bumps, even though in retrospect there were some legitimate concerns raised and some over-valuations that had to be corrected before their stocks could advance like they have today.
In other words, none of these three execs, I believe, would say they orchestrated comebacks. They would simply say they stayed the course, but some stock owners didn't. The ones who stuck by management, and, more important, doubled down when management told you not to worry, were the ones who reaped the biggest rewards.
Each one has a different, positive story; one that I think can last beyond today's stock wins.
Les Moonves is, by nature, given to hyperbole. When numbers turned weaker, he found numbers within the numbers that made you feel good even as one could argue that it seemed like there were insurmountable secular headwinds against broadcast television.
Moonves said that was just a silly presumption and that good content coupled with relentless value creation, including addition by subtraction -- first getting rid of outdoor advertising and now radio -- would always prove to be a winning combination.
Many didn't believe, hence why the stock could go from $68 in March 2015 to what now looks like a last-able low of $28 back in September last year. But Moonves clearly believed, or the share count wouldn't have fallen from 550 million shares to a little more than 450 million in that time period, including 10 million shares just purchased.
Moonves tells a story of how broadcast television didn't defeat digital, although he did suggest that digital audiences were overstated, but that the two can co-exist as long as people recognize that the best way to reach all generations, including millennials, is with great content including the NFL.
The acceleration in ad revenue growth even intra-quarter from 8% to 12%, as well as a phenomenal first quarter -- his word, not once but twice, which was the highest ever, with the first time breach of $1 per share, certainly does seal the case. This stock's very cheap even after this run, and I wouldn't be surprised if it had much more to go.
Zillow's story is one of tremendous revenue growth coupled with a game-set-match move when it comes to the online real estate selling category. When I look back at what happened here as the stock was cut in half, falling from $33 last October to $16 back in February, I think that people thought that the bloom was off the online real estate sales rose.
In retrospect, though, I think that what really happened here was that Zillow, in the zeal to own the category, stumbled when it bought the number two player, Trulia, in part because the regulators held it up so long. Now the combination is looking mighty positive and Rascoff appears to have this very lucrative market to itself.
My favorite line in the call? "According to Google Trends more Americans now search for the word 'Zillow' than for the term real estate." All categories of advertiser were strong and yet the company hasn't even scratched the surface of the giant real estate market, with 3.9% of transactions occurring with some sort of Zillow touch.
The sickening slide of Etsy from the stock's opening at $30 a little more than a year ago until last February when it hit $6 made you feel that this thing was just a classic 2001 dotcom bomb, excitement followed by financial ruin. The company, however, never promised you a craft rose garden. People just loved the notion of a craft Amazon.com (AMZN).
Meanwhile, Dickerson kept his head down and redesigned the site and produced some rather extraordinary growth year over year. With 1.6 million active sellers and 25 million buyers and an almost 40% acceleration in revenue with a 42% increase in gross profit year over year as well as an actual $1.2 million profit, in large part because of a dramatic decrease in expense, Etsy's justifying the big move of its stock off the bottom and then some.
Three companies, CBS, Zillow, Etsy, all left for dead. Three stocks soaring because the prognosis was just way too negative. It doesn't seem over. It just seems to be beginning.