How to Profit from the Next Dot-Com Bubble

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dot com bubble It's official. We have now begun dot-com bubble part II.

Are you ready to profit from the coming boom?

The fact that Facebook ( FB ) is paying $19 billion for profitless WhatsApp is the buy signal of the century for momentum investors.


On top of the exorbitant price paid for the company, Facebook CEO Mark Zuckerberg went on to say he is putting no pressure on WhatsApp to generate revenue.

What he wants instead are eyeballs. Billion-user businesses are worth a lot, according to Zuckerberg.

He may be right. The last time this happened, the market exploded higher in a wave of irrational exuberance. I'm guessing the same will happen in dot-com bubble part II.

Some lessons are never learned, and while you may be concerned about that, you can also profit from it.

Focus on the technology boom occurring in social media and personal computing devices.

It's yet to be seen whether or not any of these businesses will be sustainable and more importantly profitable.

Does that really matter now? Of course it doesn't. Investors can and will make a lot of money on this second dot-com bubble , and you can too.

5 Dot-Com Bubble Stocks to Buy Now :

Facebook ( FB )

The leader of the next dot-com bubble has to be Facebook. While many bemoan the price paid for WhatsApp, can you really blame them? Facebook is in a precarious position, knowing that it is the "next big thing" away from itself becoming irrelevant. Forget about innovation. The name of the game here is to make sure you own the next big thing, which prevents your competition from beating you to the punch. Beating Google to buy WhatsApp  is mission accomplished for Facebook.

In a dot-com bubble part II, this stock could easily double in value or more. We are a long way from the music stopping. Investors can buy Facebook stock today and let the wave carry them higher.

Twitter (NASDAQ: TWTR )

Some speculate that Twitter might be a loser with a Facebook and WhatsApp merger. Not a chance. The next dot-com bubble will carry all boats higher, including Twitter. The site is becoming ubiquitous with respect to its daily use and influence in the media.  I wouldn't worry much about slowing user growth numbers. A misstep or two is to be expected for a young company. Twitter is poised to grow irrespective of profits - expected to be a penny per share in 2014. With shares trading $20 below their $74 peak, Twitter is a bargain for anyone looking to capitalize on the next dot-com bubble.

Pandora ( P )

This online radio stock made a small profit in 2013, but I wouldn't expect that to last. Not when you consider the competition the company faces from traditional media - not to mention Apple ( AAPL ) . Pandora should and will likely use any cash flow to grow its user base. What matters now is not growing profits. Just ask Amazon ( AMZN ) investors how important profits are. They are not. What does matter is having as many users as is humanly possible. Succeed there and you will win the game during this second dot-com bubble.

Yelp ( YELP )

Yelp lost money in 2013 and is expected to lose money in 2014. That's a good thing - as the assumption is the company is focused more on growing its user base. This social media darling was a first mover in the smartphone wars. It should use that advantage to solidify its spot in the pantheon of money-losing,  fast-growing user base companies that will likely be rewarded by investors in this second dot-com bubble. If WhatsApp is worth $19 billion, wouldn't it be reasonable to think that Yelp is worth more than the current market cap of $6.5 billion? I think so. In this new paradigm, Yelp easily doubles in value from here.

Angie's List (ANGI)

2013 was not a good year for Angie's List. The company lost a boatload of money and its share price sank. Just recently the stock was hit again after missing Wall Street estimates for the fourth quarter of 2013. Analysts are expecting more losses in 2014. That's the perfect set-up for the next dot-com wave. Angie's List now has a market cap less than a billion dollars. Compare that to the value of WhatsApp and I would say one could easily double or triple their money here. I want to see more losses! Just grow your user base and the investors will come begging for more. We can worry about profits later - long after the shares have appreciated and we have exited the position.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: FB , P , AAPL , AMZN , YELP

Wyatt Investment Research

Wyatt Investment Research

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