#16 Merry Christmas 🎄+ 2020 Stock Predictions Retro 📈
Celebrating the holiday and reviewing how my 2020 stock predictions played out, including Tesla, Disney, Square, Netflix and Starbucks
Merry Christmas and a belated Happy Hanukkah to my fellow Jews!
I didn’t grow up celebrating Christmas but Carole has helped me learn to enjoy this holiday with champagne, oysters, foie gras and lots of other delicious food. Maybe this is the unique French way of celebrating Christmas but I’m all about it.
We’re having a couple of friends over today for food and drinks. We hosted them last year and enjoyed it enough to make it a tradition.
SF is pretty slow at the moment so on Saturday we’re driving up to Oregon for a week. We’ll spend a night in Shasta then the rest in Bend. I’m excited to get out of the city and enjoy the wintery outdoors with Carole and George. I’ve never been to Bend but heard great things. Hopefully some things are open there.
While I won’t have any work meetings next week while we’re in Bend, my plan is to spend a few hours each day reflecting and journaling about my first half at Facebook in preparation for performance reviews in January. I’m looking forward to putting memories into words.
Wishing you all happy holidays and an excellent 2021. I know this year has been challenging in all kinds of ways but I’m optimistic that things will return to “normal” by the end of next year. Here’s to optimism! 🥂
2020 Stock Predictions Retro 📈
Even during a typical year, the stock market is extremely hard to predict. This year was particularly crazy. As 2020 comes to a conclusion, I wanted to close the loop on my stock predictions from a year ago.
In case you weren’t a subscriber yet, in my newsletter from 12/31/19, I made the following predictions about stock prices at the end of 2020:
Tesla (TSLA) was trading at $420/share and I predicted it would be trading above $500/share by the end of 2020.
Disney (DIS) was trading at $144/share and I predicted it would be trading above $200/share by the end of 2020.
Netflix (NFLX) was trading at $324/share and I predicted it would be trading below $250/share by the end of 2020.
Square (SQ) was trading at $62/share and I predicted it would be trading above $80/share by the end of 2020.
Starbucks (SBUX) was trading at $87/share and I predicted it would be trading above $110/share by the end of 2020.
Here’s where these stocks ended up one year later (as of 12/24/20):
After a 5-for-1 stock split, TSLA is trading at $660. This is effectively $3,300/share if the stock didn’t have a split. 560% higher than I predicted.
DIS is trading at $174/share — 13% lower than I predicted.
NFLX is trading at $514/share — 106% higher than I predicted.
SQ is trading at $228/share — 185% higher than I predicted.
SBUX is trading at $102 per share — 7% lower than I predicted.
While I was directionally wrong about NFLX, I slightly over-estimated DIS and SBUX growth, and completely under-estimated TSLA and SQ growth.
If you took $100k and followed my predictions to buy TSLA, DIS, SQ and SBUX by investing $25k into each stock, today your investments would be worth:
TSLA: $25k -> ~$196k
DIS: $25k -> ~$30k
SQ: $25k -> ~$92k
SBUX: $25k -> ~$29k
In summary, you’d have converted $100k into ~$348k for a total return of 248%.
Now, you might be wondering what would have happened if we included the high-performing NFLX stock in our portfolio. Let’s do that math.
If you invested the same $100k equally across TSLA, DIS, NFLX, SQ and SBUX by putting $20k into each stock, today your investments would be worth:
TSLA: $20k -> ~$157k
DIS: $20k -> ~$24k
NFLX: $20k -> ~$32k
SQ: $20k -> ~$74k
SBUX: $20k -> ~$23k
In summary, the portfolio with NFLX would have converted $100k into $310k for a total portfolio return of 210%.
Even though NFLX was up 58% last year, the no-NFLX portfolio would have outperformed the portfolio w/ NFLX by $38k; outlier stock picks like TSLA (+686%) and SQ (+268%) can have outsized impacts on an entire portfolio.
I’ve believed that Tesla would be massively successful company but I (like many) thought the stock would grow in a slower, steadier manner. While I didn’t expect the skyrocketing price in 2020, I’m rooting for Tesla and hope the company keeps delivering on its mission.
I knew the market was going to appreciate Disney+ in 2020. With COVID shutting down theme parks and movie theaters, it seems that Disney+ saved 2020 for this company. If it weren’t for the pandemic, I have no doubt DIS would be trading above $200/share.
My incorrect Netflix prediction taught me something: I no longer think streaming services are a winner-takes-all market. As HBO Max, Disney+, Amazon Video, and Apple TV have grown, Netflix stock has only increased. As more consumption of entertainment moves online, the market is betting on NFLX to maintain market share in a growing ecosystem.
I’ve been bullish on Square for a while but what I missed was that the stock’s growth this year would primarily be driven by the company’s fast-growing Cash App, which is now its biggest source of revenue. Apparently Bitcoin revenue is now generating over half of Square’s revenue! Didn’t see that coming at all.
Even during a global pandemic, Starbucks stock went up. With many locations closed for large parts of 2020, Starbucks evolved its retail model to implement safety procedures and minimize touch. People responded by drinking lots and lots of coffee as they shifted to working from home. I believe that Starbucks will grow as more work happens outside of offices, as a coffee provider but also as a cheap provider of desks.
That’s it for the 2020 predictions retro! Thanks for playing along 🙏
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