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Three Rules for Jack Dorsey

I am Jack Dorsey's biggest fan.

If he has an entourage, I would like to be part of it.

Even if he just needs a chauffeur, I would be willing to drive for free just to pick up little pearls of wisdom percolating through his brain.

He is perhaps the biggest name outside the vaunted FANG group that is not Microsoft (MSFT) CEO Satya Nadella.

The special Jack Dorsey issue (click here for the link http://www.madhedgefundtrader.com/a-straight-line-to-profits-with-square/) gloating about his company Square was not a misjudgment.

I am supremely bullish on his other company Twitter (TWTR) too.

Like I said last time about Dorsey, do not bet against Jack Dorsey.

Rule No. 2 don't bet against Jack Dorsey.

If he has a heartbeat, then success will follow him wherever he goes.

Dorsey co-founded Twitter in 2006 and was sacked, later to return in a blaze of glory seven years later ala Steve Jobs.

Evan Williams, the other co-founder of Twitter, got rid of Jack after he found out Jack slipped out of work each day at 6 p.m. for drawing classes, hot yoga sessions, and fashion classes where he learned how to design mini-skirts.

Williams reportedly told Dorsey, "You can either be a dressmaker or the CEO of Twitter, but you can't be both."

Williams replaced Dorsey as the CEO of Twitter in 2007.

Dorsey's dismissal led him to Mark Zuckerberg's doorstep where he was practically hired at the Menlo Park offices but could not find a suitable role at the company.

What a legendary exclusion if there ever was one!

Out of options at the time, Dorsey summoned his inner genius and created a new company named Square (SQ) in 2009. Ironically, he was rehired at Twitter as CEO in 2015 and currently runs both companies at the same time.

Apparently, his dressmaking career died before it could take off.

Dorsey is such a stud, he does not even have an office or a desk at his corporate offices.

He simply roams around the office wielding an iPad solving problems that need solving.

He starts his day at Twitter and walks across the street to Square after lunch.

How convenient!

In 2015, Twitter was having growing pains. User growth stagnated in Q4 2015 at 305 million users, down from the 307 million users in Q3.

Management wrote an investment letter promising it will "fix the broken windows and confusing parts" and boy, did they.

Fast forward to today and Twitter just nailed down its second profitable quarter in a row. Monthly active users (MAU) topped 336 million in Q1 2018, up from 330 million in Q4 2017.

Management projects (MAU) to increase at a nice 6% per year clip.

The lion's share of the growth derives from the mass migration of advertisement dollars to social media platforms, the same reason why Facebook (FB) harvests spectacular profits.

Video content has transformed into a robust growth engine carving out more than half of Twitter's revenue.

This is something that never could have been envisaged in 2015. As the quality of broadband develops, more video will be splashed across its platform.

Twitter considers video as a vital part of the road map moving forward.

Video is a better way for advertisers to engage users. Plain and simple.

Summer projects to be an exciting one with the biggest entertainment every four years, the 2018 FIFA World Cup in Russia, set to invigorate Twitter feeds throughout the world.

America missed out on World Cup qualification on the last day of qualifiers because it could not salvage a draw against a second-string Trinidad and Tobago team.

It doesn't matter.

Eyeballs will be glued to the matches in Russia and the audience will vent, cry for joy, and express their emotions on Twitter feeds.

Live events energize Twitter feeds, and advertisers will be throwing money at Twitter to put themselves in the store window for targeted Twitter followers.

Twitter will stream every goal from the World Cup, which is a nice coup.

In total, Twitter has 30 live partnerships and hopes to expand.

MLB, Major League Soccer, and People TV are other live programming that will integrate with Twitter's live feed.

Twitter's total ad revenue is expected to grow by 6% in 2018, which is a nice feather in its cap compared to 2017 when revenue dipped by 6%.

As the pie for ad revenue grows, it will not be one winner takes all.

Facebook, Google, Amazon, and Twitter are strategically positioned to benefit from this mass migration to digital ad spend.

Twitter is a unique product that cannot be undermined. The platform is the mouthpiece for every notable person in their world to speak their piece.

No other platform gains this type of trust from the elite in the world.

That won't change anytime soon.

What's more, Twitter has morphed into a reliable news feed. Its nimbleness is reflected with breaking news flowing into the Twitter channels first, even before the traditional news media can get a sniff.

The agility of tech companies continues to be a huge competitive advantage versus the stalwarts of antiquity that move at sloth-like speeds.

Dorsey epitomizes this ethos by his systematic efficiency, making him view a corner office as a physical and psychological barrier to preventing him from success.

Financials back up my diagnosis. Total revenue increased last quarter 21% YOY.

Twitter has little exposure to data regulations as the data is posted in the public. It does not sell any individual personal information.

A year and a half of continuous double-digit daily active user (DAU) growth resonates with advertisers.

Twitter continues to enhance the core products and executes in fine fashion. This outperformance feeds back into the quality of products basking in advertisers' satisfaction.

Moving forward, expect video to extract a higher percentage of revenue because of the attractiveness to advertisers.

In addition, expect moderate growth from daily active users and more live events integrated into the Twitter platform.

Video has been a salient reason for the great success in the past year and a half. The Twitter management, led by Dorsey, has a great handle on the steps it must take going forward.

Jack Dorsey is the preeminent CEO of his day. A bigger problem is finding an entry point into Twitter or Square.

Granted, Twitter climbed from a low base after Dorsey was reinstalled in 2015 as the CEO. It took him a few years to figure out how to briskly execute and to harness the potential of Twitter.

Both companies have shot to the moon in 2018. Waiting for macro sell-offs to get into these stocks makes more sense than chasing the fumes.

Dorsey is on record saying Square will be bigger than Twitter because it speaks the language everyone understands - money.

Twitter, Square, and Jack Dorsey are the real deal.

Rule No. 3: Don't bet against Jack.

_________________________________________________________________________________________________

Quote of the Day

"You are the product on Facebook, Facebook is a data company by its very nature of mass surveillance, collective manipulation and hacking the attention economy for profit," - said cofounder of Apple Steve Wozniak when talking about Facebook's business model.

June 13, 2018

Tech Letter

Mad Hedge Technology Letter
June 13, 2018
Fiat Lux

SPECIAL ACRONYM ISSUE

Featured Trade:
(FB), (AMZN), (GOOGL), (NFLX), (BABA), (BIDU), (TWTR), (SNAP), (INTC), (QCOM), (VZ), (T), (S)

Special Acronym Issue

Tech Letter

The tech industry is infatuated with acronyms.

The two-, three- and four-letter acronyms of yore have been spruced up by a new wave of contemporary terms.

There are a lot more of them now and readers will need to absorb the meaning of each term to avoid our content seeming like a Grecian dialect.

The Mad Hedge Technology Letter will break down the relevant terminology that applies to the current tech sector.

This will aid readers in their pursuit of financial satisfaction.

FANG: Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (now Alphabet) (GOOGL)

Jim Cramer, the host of CNBC's Mad Money, coined this term as this quartet became such a force to reckon with, that they deserved their own grouping. Financial commentators and analysts often refer to the FANGs that ultimately represent the developments and destiny of large cap tech. Apple is sometimes grouped in this bundle with analysts adding a second A inside the acronym.

AWS - Amazon Web Services

The cloud arm of Amazon is its cash cow. Amazon invented this business out of thin air in 2006. It offers the ability for Amazon to operate its e-commerce division close to cost by plowing profits from its thriving cloud arm. AWS is the backbone to the whole Amazon operation. Without it, Jeff Bezos would need to rethink another genius business model because current and future success hinges on this one subsidiary. AWS is the market leader in the cloud industry, carving out 33% of the total market. Microsoft is the runner-up and saw its market share surge from 10% to 13% in the latest quarter.

GDPR - General Data Protection Regulation

Europe has been a stickler concerning individual data protection, and the American companies running riot with Europeans personal data has reached its climax. On May 25, 2018, new European regulations were implemented to give the user more control of handing out their personal data. Penalties for non-compliance are steep. Companies risk being fined up to 20 million Euros or 4% of annual worldwide turnover, whichever is larger. Facebook's Mark Zuckerberg now has a reason to behave like an angel. The least regulated industry in the world is finally experiencing the bitter regulation pill most industries have felt for centuries.

SaaS - Software as a Service

A software distribution model licensing software on a subscription basis. Instead of installing many of these software programs, many of them are available through the Internet on the cloud. Most subscriptions work on an annual basis, and this recurring revenue model has carved out additional income from companies that were used to paying a one-off fee for software. This model has been highly successful. Even former legacy companies have deployed this business model to critical acclaim.

AI - Artificial Intelligence

An area of computer science that strives to deploy human intelligence into machine simulation. The four main tasks it carries out are speech recognition, learning, planning, and problem solving. A.I. has been identified as a cutting-edge tool to fuse with technology products boosting the underlying performance creating massive profits for the participants. This phenomenon is controversial with the prophecy that robots might advance rapidly and turn on their inventors. As each day passes, A.I. is starting to infiltrate deeper into our daily lives, and humans are becoming entirely reliant on their positive functions to carry out daily tasks.

IoT - Internet of Things

Internet connectivity with things. This network will connect billions and billions of devices together. Your bathtub, thermostat, and razor will be armed with sensors and processors that reroute the performance data back to the manufacturer. Deploying the data, engineers will be able to enhance products with even more precision and high quality serving the end customer needs. 5G testing is ongoing in select American cities and new hyper-fast Internet speeds will make mass adoption of IoT products a reality.

5G - 5^th generation wireless system

This is the successor to 4G and is poised to increase wireless Internet speeds up to 20 gigabits per second. Some of the traits will be low latency, high mobility, and will be able to accommodate high connection density. This technology is crucial to the development of the next generation of groundbreaking technology such as autonomous cars that need a faster Internet speed to run elaborate software. The war to develop this technology with the Chinese has turned into a heated standoff. China is stubbornly bent on becoming the global leader of technology in the future, and the communist government views 5G as the keys to the Ferrari. U.S. companies Verizon (VZ), AT&T (T) and Sprint (S) plan to roll out 5G in 2019. Other key companies are Huawei, Intel (INTC), Samsung, Nokia, Ericsson and Qualcomm (QCOM).

BAT - Baidu, Alibaba, and Tencent

This trio is the Middle Kingdom's answer to America's FANG. The nine-year domestic bull market has been led by large-cap tech, at the same time China's economy has been fueled by Baidu, Alibaba, and Tencent. Baidu and Alibaba are tradable through American depositary receipts (ADR). Tencent is public on Hong Kong's Hang Seng stock exchange, the third largest stock market in Asia. These companies are all a mix and mash of functionality that covers the same broad spectrum of the FANGs. They are the best companies in China and are on the cusp of every single cutting-edge technology from A.I. to autonomous vehicles. The Mad Hedge Technology Letter does not recommend these stocks to our subscribers because the Chinese government is on a nationalistic mission to delist Alibaba and Baidu from America and bring them back home. Initially, Alibaba wanted to list on the Hang Seng Hong Kong stock exchange, but draconian rules applied to dual-listing made the company flee to America.

NIMBY - Not In My Back Yard

Local opposition to proposed development in local areas. Although not a pure tech term, the epicenter of the NIMBY movement is smack dab in the middle of the San Francisco Bay Area where all the premium tech jobs are located. Local opposition has made it grueling for any developers to build.

What's more, the expensive cost of land has made any new building a tough proposition. This explains the 10-year drought where San Francisco experienced not a single new hotel built. The dearth of housing has caused San Francisco housing prices to skyrocket to a medium price of $1.61 million as of March 2018. Exorbitant housing prices have triggered a mass migration of Californians fleeing the Bay Area in droves. The shocking aftereffects have put highly paid Millennial tech workers spending the bulk of their salary on housing or living in dilapidated shacks. The extreme conditions we are now seeing are forcing schools around the Bay Area to close in unison as young families cannot afford to stay. Tech companies have become public enemy No. 1 in the Bay Area as locals are desperate to maintain their current lifestyle but are finding it more difficult by the day.

MAU - Monthly Active Users

Favored by social media companies to measure growth trajectories. This is how Twitter (TWTR) analyzes the health of its user numbers delivering a narrative to potential investors by hyping up user growth. If investors value this metric, this allows companies to focus on driving growth at the expense of burning cash. Thus, emerging social media companies such as Snapchat (SNAP) run huge loss-making operations for the promise of future profits after scaling.

ARPU - Average Revenue Per User

Favored by maturing social media companies, particularly Facebook, which has already grown global usership to 2.2 billion. Once the emerging hypergrowth phase comes to an end, social media companies focus on extracting more income per user through targeted ads. Facebook and Alphabet have the best ad tech divisions in all of Silicon Valley. The business model has made Facebook an inordinate amount of money as advertiser's flock to this de-facto marketplace paying more for effective ads whose price is set at an auction. It's a vicious cycle that attracts more traditional advertisers because it is the only method of selling to Millennials who are addicted to social media platforms. Cord-cutting is accelerating this trend forcing advertisers to co-exist with the Mark Zuckerberg model.

There are many more acronyms in the tech world that need explaining and that is exactly what I will do. The Mad Hedge Technology Letter will be back with another slew of technical terms to help subscribers understand the tech universe.

_________________________________________________________________________________________________

Quote of the Day

"You can worry about the competition... or you can focus on what's ahead of you and drive fast," said Square and Twitter CEO Jack Dorsey.

June 5, 2018

Diary, Newsletter

Global Market Comments
June 5, 2018
Fiat Lux

Featured Trade:
(THURSDAY, JUNE 14, 2018, NEW YORK, NY, GLOBAL STRATEGY LUNCHEON),
(DON'T MISS THE JUNE 6, 2018, GLOBAL STRATEGY WEBINAR),
(THE TALE OF TWO ECONOMIES),
(FB), (AAPL), (AMZN)

June 4, 2018

Diary, Newsletter

Global Market Comments
June 4, 2018
Fiat Lux

Featured Trade:
(WEDNESDAY, JUNE 13, 2018, PHILADELPHIA, PA, GLOBAL STRATEGY LUNCHEON)
(THE MARKET OUTLOOK FOR THE WEEK AHEAD, or NEW ALL-TIME HIGHS AND NEW ALL-TIME HIGHS),
(AAPL), (FB), (AMZN), (MSFT), (TLT)

The Market Outlook for the Week Ahead, or New All-Time Highs and New All-Time Highs

Diary, Newsletter, Research

We knew the May Nonfarm Payroll Report was coming in hot when the president leaked the numbers ahead of time. He tweeted that he "Was looking forward to" the numbers hours before the official release.

Last month, when the report was weak, we heard nary a word from Twitter. Just add that to the ever-growing list of unpredictables we traders have to deal with on a daily basis.

As for myself, I was looking for robust numbers last Tuesday when I piled on an aggressive, highly leveraged short position in the bond market, right at the four months highs. When bonds collapsed my reward was a 62.50% profit in only three trading days.

In the blink of an eye, we have made back half of the drop in interest rates prompted by the Italian political crisis. Ten-year U.S. Treasury yields plunged from 3.12% all the way down to 2.75% and are now back up to 2.92%. Bonds have almost fallen three points in three days.

This trade instructs you on the merits of going outright long options instead of more conservative spreads when you expect a very sharp, rapid move in the immediate term.

The result was to take the performance of the Mad Hedge Trade Alert Service to yet another all-time high. Those who signed up at any time in the past 12 months have to be extremely happy.

After one trading day, my June return is +2.94%, my year-to-date return stands at a robust 23.31%, my trailing one-year return has risen to 59.20%, and my eight-year profit sits at a 299.78% apex.

The payroll report suggests that the nine-year economic expansion will easily growth to 10. Never mind that we are putting it all on an American Express card and that our kids are going to have to pick up the tab. For now, it's happy days.

That means my 2018 year-end forecast is alive and well for a (SPY) of 3,000. If earnings continue to grow at a 25% annual rate and you assume a modest 17.5 X, getting there is a chip shot. Next year is another story, when year-on-year growth rates fall to zero.

The jobs report came in at 223,000 versus the three-month average of 175,000, and the Headline Unemployment Rate dropped to 3.8%, a new decade low. Average Hourly Earnings rose to an inflationary 0.3%.

Retail gained 31,0000 jobs, Health Care 29,000, and Construction 25,000. Only Temporary Workers lost 7,800.

The broader U-6 "discouraged worker" unemployment rate fell to 7.6%, a 17-year low.

The major hallmark of the week was an upside breakout of technology. Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), and Facebook (FB) all hit historic highs.

I don't know why tech is breaking out here. Maybe the market is discounting another round of blockbuster quarterly earnings that starts in two months. Possibly the tech growth rate is accelerating at the granular level.

Perhaps there is nothing else to buy. But for whatever reason, tech is going up and I want in. Tech is the secular growth story of our generation and will remain so for the foreseeable future.

The smartest that I have done this year is to start my Mad Hedge Technology Letter in February as it added 60 hours of research into tech companies into our research mix. As a result, the readers are swimming in profits.

This coming week is nearly clueless in terms of hard data releases.

On Monday, June 4, at 10:00 AM, we get May Factory Orders.

On Tuesday, June 5, May PMI Services is announced.

On Wednesday, June 6, at 7:00 AM, the MBA Mortgage Applications come out.

Thursday, June 7, leads with the Weekly Jobless Claims at 8:30 AM EST, which saw a fall of 11,000 last week from a 43-year low.

On Friday, June 8, at 8:30 AM EST, we get the Baker Hughes Rig Count at 1:00 PM EST, which rose by only 1 last week.

As for me, I will be glued to my TV watching the local Golden State Warriors trounce the Cleveland Cavaliers. That's providing they can overcome LeBron James, who seems to be a force of nature.

Good Luck and Good Trading.

New Highs!

June 1, 2018

Diary

Global Market Comments
June 1, 2018
Fiat Lux

SPECIAL REAL ESTATE ISSUE

Featured Trade:
(TUESDAY, JUNE 12, 2018, NEW ORLEANS, LA, GLOBAL STRATEGY LUNCHEON),
(WHY YOUR FANG STOCKS ARE ABOUT TO DOUBLE IN VALUE),
(FB), (AAPL), (NFLX), (GOOGL), (LMT), (ROKU),
(HERE IS YOUR TOP-PERFORMING INVESTMENT FOR THE NEXT FIVE YEARS),
(ITB), (PHM), (KBH), (DHI), (AVB), (CPS)

Why Your FANG Stocks are About to Double in Value

Diary, Newsletter, Research

The shares of FANGs are all about to double in value in the Silicon Valley if commercial real estate is any indication of the future growth rates.

The group is gobbling up office space at such a prodigious rate that only a vast expansion of their business would justify these massive long-term commitments.

Commercial real estate commitments are one of the most valuable leading indicators of stock performance out there. They show what the companies themselves think are their future prospects.

Apparently, the stock market agrees with me. Technology is virtually the only group of shares moving to new all-time highs in these otherwise dismal trading conditions.

Just this month Facebook (FB) signed a lease for the entire brand new 43-story Park Tower in downtown San Francisco, and that's just to house its Instagram business.

Google (GOOGL) is leasing 39% of the office space in Mountain View, CA. It is currently in negotiations with the nearby city of San Jose to build a skyscraper occupying an entire city block that will house 10,000 tech workers. It also is building another 1 million square feet near an old prewar dirigible landing strip in Moffett Park.

Apple (AAPL) is hogging some 69% of the office space in Cupertino, CA. It is just now moving into its new massive spaceship-inspired headquarters, where 10,000 workers will slave away. The world's largest company is currently on the hunt for a second headquarters location.

Netflix is slowly gobbling up Los Gatos, CA. It was recently joined by the set top device company Roku (ROKU), which is growing by leaps and bounds.

Fruit canning was the original industry of Silicon Valley at the turn of the 20^th century, taking advantage of the surrounding peach, plum, and apricot groves. When I was a kid after WWII, defense firms such as Lockheed (LMT) took over, creating thousands of high-paying engineering jobs.

It didn't hurt that Stanford University was spitting distance away, and the University of California was just on the other side of the bay. These two schools supplied the manpower to fuel the hypergrowth ahead.

To say the growth has caused local headaches would be an understatement in the extreme. The San Francisco Bay Area now sports the world's most expensive residential housing. The median San Francisco home price has skyrocketed to $1,334,000 and requires an annual income of $334,000 to support it.

Small businesses such as dry cleaners, nail salons, restaurants, and barber shops have been driven out by soaring rents. It's not uncommon now to go out to dinner only to find a "closed" sign on your favorite nightspot. Your personal assistant now has to travel miles just to get your suits pressed.

As for traffic, forget about it. Rush hour has ceased to exist. Freeways are now jammed a nonstop 12 hours a day in the worst neighborhoods.

Success has its price, and this was never truer than in Silicon Valley.

The New Apple HQ

Where Instagram Now Lives

May 16, 2018

Tech Letter

Mad Hedge Technology Letter
May 16, 2018
Fiat Lux

Featured Trade:
(WHAT'S UP AT FACEBOOK?)
(FB), (NFLX), (GOOGL), (AMZN), (GS), (AAPL), (IBM)

What's Up at Facebook?

Tech Letter

Capitol Hill unleashed a healthy dose of criticism on Facebook (FB) CEO Mark Zuckerberg and he has mobilized the forces to avoid a repeat shellacking.

Zuckerberg's response has been to reshuffle his cabinet at the Menlo Park, CA, headquarters, and a few tell-tale signs offer a unique glimpse into Facebook's future.

Basically, something needed to change at Facebook.

The company single-handedly took the blame for the entire sector and was not the only company with a liberal stance on personal data.

Zuckerberg would like to eschew public humiliation and avoid being a sitting duck.

The episode in Washington highlights the need for Facebook to decouple itself from ad revenue, which makes up the lion's share of revenue at the firm and find other levers to pull.

Down the road, Facebook's ad business could get crimped by regulators, and a lack of fallback options haunts Facebook investors in their sleep.

Consequently, a whole slew of high-level management rotation is underway at Facebook.

It is the biggest shake-up in the history of Facebook.

The road map starts with one of Zuckerberg's best friends and protege Chris Cox who will manage the new "family of apps" segment.

This collection of projects he will preside over include WhatsApp, Messenger, Instagram, and the Facebook Core App.

The step up in responsibility is warranted for Chris Cox who was credited with creating the Facebook news feed after joining the company in 2005 after ditching his Stanford graduate degree program at the time.

The executive reshuffle coincided with WhatsApp co-founder Jan Koum, one of Silicon Valley's biggest advocates for data privacy, who quit his post as a show of disapproval to Facebook's business model.

Mark Zuckerberg wants to aggressively monetize the WhatsApp messenger service that was acquired for $19 billion in 2014.

Zuckerberg's blueprint involves using the WhatsApp phone numbers as a vehicle to monetize through offering different products.

Facebook would then collect the data from its 1 billion usership and WhatsApp would become Facebook's new advertisement clearing house.

WhatsApp's leadership vehemently refused this U-turn and Koum decided he would rather leave then see his baby ruined.

Facebook consistently refrained in the past from passing WhatsApp to the data mining scientists and was able to prevent full-scale implementations of advertisements onto its platform.

Currently, there are no ads on WhatsApp's interface, and users could be in store for a massive transformation in look and feel.

Facebook investors have been clamoring for Zuckerberg to start the process of making WhatsApp into a material revenue stream.

Time is of the essence as the big data police creep in from the shadows.

Putting Zuckerberg's top guy on the job embarks Facebook down a new path of hyper accelerated profit-making.

Well, that is the goal.

Compounding Facebook's pivot to other businesses is commissioning a new blockchain tech team.

Blockchain technology, the technology that helped unearth bitcoin, has seen a recent slew of endorsements from financial heavy hitters such as Goldman Sachs (GS), which acknowledged the formation of a new business brokering in bitcoin futures.

A year ago, no reputable organization would touch blockchain with a 10-foot pole.

The utilization of blockchain technology would allow trackability and provide more security.

That would help Facebook to understand the provenance of unique problems allowing staff to nip problems in the bud before they snowball.

Blockchain tech fits nicely within the constraints of the model and would enhance the existing Facebook product.

Let's not forget that Facebook has a mountain of cash to fix any problem that crops up.

It is not one of these early stage seed companies burning through heaps of cash waiting for "scalability" down the road.

Facebook is here and now, and it has the money to show for it.

The pillars of blockchain revolve around cryptography. Blockchain would effectively allow individuals to possess more power over their identity decentralizing the stranglehold from Menlo Park.

Thus, Facebook must invest deeply into blockchain to counter the fear that this technology can marginalize the core business.

This epitomizes the tendency for large-cap tech to become preemptive.

None of the powerful FANGs want to miss the next big shift in technology, and the cash hoard allows them to have skin in the game in each revolutionary trend.

The tide has changed at Facebook from the early years where growing the user base was paramount.

Now that user base has matured into a 2.2 billion marketplace.

Facebook's strategy has shifted to extracting more revenue per user and management closely follows this metric.

Mike Schroepfer, the CTO of Facebook, was tabbed as the man leading the charge for Artificial Intelligence (A.I.), Augmented Reality (A.R.), and Virtual Reality (V.R.) technology.

Facebook was able to poach Jerome Pesenti from IBM (IBM), where he was a critical cog in the development of IBM's Watson, to run the Facebook A.I. team. A.I. is routinely implemented into Facebook's core products to enhance performance.

Promoting Chris Cox as the next in line and giving him control over all the powerful products effectively pushes ad tech down the pecking order.

Javier Olivan is the new man at Facebook tasked for managing ads, analytics, and integrity, growth and product management.

Moving forward, the ad division will be laced with a certain level of security to avoid a repeat of Cambridge Analytica.

Zuckerberg must know that there are other Cambridge Analytica's hidden somewhere in the system; another incident would knock down the stock 5% to 10%.

Facebook could look vastly different in a few years if some of these profit drivers prove successful. It only needs one to work.

Disrupt or be disrupted.

At this point, the big tech companies are considering anywhere or anyone to capture accelerated growth. The FANGs are spilling over to other companies' turf.

Crossover is everywhere and this is just the beginning.

Expect Amazon's (AMZN) ad division to grow from the already $2 billion per quarter, gradually challenging the duopoly of Facebook and Alphabet in the digital ad revenue industry.

It is yet to be seen if the new revamp of management will produce better results.

This move could backfire as the management carousel excluded any fresh blood from taking part.

Effectively, Zuckerberg rotated his best friends into different parts of the business without demoting anyone.

Solidifying his close-knit circle of trust is no doubt a defensive reaction to being hounded the past few months, leaving his existing circle as the few people on which he can still count.

Facebook's stock remains healthy and the brouhaha stoked by the data leak gave investors a timely entry point.

I pounded on the table calling the bluff, begging readers to get into Facebook.

The long-term Facebook story is intact but the stock is overbought short-term.

Investors should not sleep on Facebook as it is a profit machine printing money like Apple (AAPL) and the executive revamp is a bullish development for Facebook.

My bet is that Chris Cox goes for the low hanging fruit monetizing WhatsApp, inciting the next leg up in Facebook shares later in the year.