Ubiquity. It's a cool word and also the reason for the dominance of the tech titans in the stock market. A good measure of ubiquity is world travel. As I have mentioned in prior RM columns, I am in Brazil now on a business trip, and being here is certainly the true test of ubiquity. The FAANGS run all of our lives in the States, seemingly, but is there growth for them in world markets? China is a tough nut to crack, but there are no such restrictions here. So, briefly here is a ubiquity check for some major U.S companies as per my own observations.
Alphabet's (GOOGL) Google runs everything. Google is our dark overlord and we must obey her! Or something like that. Seriously, I have used Google Maps and Google Translate at least 100x per day since I have been here. Also, as my Android phone is not responding well to being dropped on Sao Paulo streets, I will likely buy another one here. Valuation is, as always, in the eye of the beholder, but I see zero threat here to Google's dominance over everything, so I certainly haven't found any reason to be negative on Alphabet stock on this trip.
Facebook's (FB) WhatsApp is the lingua franca of the country. English, Portuguese, whatever, EVERYONE here communicates with WhatsApp. Not only have I used WhatsApp to set up meetings with clients, I have actually noticed clients chatting on WhatsApp DURING my meetings. Whoa, disrespectful, dude. But nobody pays to use WhatsApp, and while Instagram certainly has the youth market cornered here just as in the States and is valuable for advertisers, no one actually admits to using Facebook's core product, "Big Blue." Monetization is uncertain for Facebook on a corporate basis here, and that doesn't really jibe with FB's $777 billion equity valuation.
Apple (AAPL) is too expensive for this market. This is Android country (another Google reference) and the iPhone 12 has yet to be launched. As I noted in my first RM column on Brazil, GDP per capita here is in the $9,000 per annum range, near to that of Mexico or China. I am seeing the iPhone 12 Pro (with the 6.1" screen, not the 6.7" Pro Max) quoted at BRL 8,800 at electronics retailer Fast Shop, which is $1,650. People love their phones here just as much as we love ours in the States, but that's just too expensive. Lower-end versions of the 12 could do well here, but there has been frequent scuttlebutt about a "decontented" iPhone for emerging markets, and I think such a product would do well if introduced here.
Cornershop is here! No, not the extremely catchy Britpop band of the 1990s (they did "Brimful of Asha'') but a grocery shopping delivery service. Until writing this article, I didn't know that Chile-based Cornershop had been acquired by Uber (UBER) this year. The issue with Cornershop is that it is EXTREMELY labor-intensive. So, the red-shirted Cornershop guy (or gal) will walk around a store -- I have been going to a Carrefour "hipermercado" for my basics -- look at his phone and just put whatever items were ordered into a basket. I even saw a Cornershop guy checking those items out, slowly and one-at-a-time, at a normal, human-operated cash register. Where the hell is the value-add in that? It's ridiculously inefficient. Human capital may be cheap here, but it's not free. Cornershop is not disrupting anyone or anything.
Uber's core service -- the ride-hailing app -- on the other hand is very valuable here. I don't have to speak Portuguese (horribly,) worry about taxi rates (pricing is transparent and stable) or carrying enough reais to pay for the tax ride, and, just as in the States, I even know exactly when the driver will arrive. Uber is REALLY useful for international travel. Maybe the Cornershop guys use it to drop off their grocery orders, I don't know.
I have seen some bus shelter advertising for Amazon Prime video for BRL 9.90 per month (that's about two bucks) and while that's the only streaming service I use in the States I have not found anyone here who subscribes. Nor have I seen 10 million Amazon delivery vans on the road here. Amazon just doesn't dominate every aspect of everyday life here like it does in the U.S. or like Google does everywhere in the world except for China. Maybe that's a good thing.
So, that's a tech rundown Brazilian-style. To paraphrase Sergio Mendes, the digital economy is "mas que nada" here, especially for Google, but some of the titans would produce higher revenues with a little more local knowledge. Bom dia!
(GOOGL, FB ,and AAPL are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
