This Chart Shows Why Tech Stocks Are Always Exploding Higher (LNKD, P, GRPN, OPEN, NFLX)

JP Morgan has a report out on the internet sector and they make a good point that explains a lot of the exploding growth of internet stocks: there just isn't that much growth elsewhere in the stock market.  "Our analysis of S&P 500 companies shows investors are willing to pay for outsized revenue growth as it suggests more sustainable long term EPS growth…Only 9% of companies in the S&P 500 are growing revenue above 15% and they trade at a ~60% premium to the rest of the index," they write. In other words, one reason why investors are bidding up internet stocks is because it's one of the few places in the market where there is growth, and investors want growth. Here's the chart:

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CHART OF THE DAY: Hopefully You're Not A Short Term Investor In Tech IPOs (P, JIVE, DMD, GRPN, ZNGA, LNKD)

From Demand Media to LinkedIn to Pandora to Groupon, and then Zynga and Jive, 2011 was the year private companies finally started breaking into the public markets. It's all set up for next year when Facebook finally IPOs. That should be one of the biggest, most interesting events of the year. But before we jump into 2012's IPO market, we're taking a look at how this year's IPOs treated investors who bought on the first day of trading. As you can see, buying into a tech IPO on the open market was a losing move. (Of course, buying into any stock and hoping to win the investing game is a losing move.) Will these crappy short term stock performances affect the next wave of IPOs? We doubt it. Each company is different. And Facebook is the big one everyone has been excited about.

Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:CHART OF THE DAY: Apple And Google Get A Record Breaking ChristmasCHART OF THE DAY: After Losing Its Star Writers, Engadget's Traffic Has Gone UpCHART OF THE DAY: Apple's Bumpy Year

Microsoft Apologizes After Trying To Cash In On Amy Winehouse's Death

Microsoft was called out for trying to cash in on Amy Winehouse's death this weekend. The company asked its Twitter followers to buy the artist's Back to Black album on its Zune site. Yesterday, its UK public relations team offered up this from its tweetbox 360 account: "Apologies to everyone if our earlier Amy Winehouse 'download' tweet seemed purely commercially motivated. Far from the case, we assure you." Then it went on to say: "With Amy W's passing, the world has lost a huge talent. Our thoughts are with Amy's family and friends at this very sad time." Meanwhile, Winehouse's album topped the sales chart on iTunes on Monday. Now click here to read about 13 people who got fired for Tweeting > Please follow War Room on Twitter and Facebook.Join the conversation about this story »See Also:Whole Foods Employee Cites Hypocrisy In 2,000-Word Resignation LetterObama Endorses Reid Plan, Democrats Call It "Offer Republicans Can't Refuse," Boehner Says "It's Full Of Gimmicks"Netflix Misses On Revenue, Stock Plunges

MUNSTER: 3 Reasons Apple's Stock Will Go Higher (AAPL)

After soaring throughout 2010, Apple's stock has basically flattened for 2011. Piper Jaffray analyst Gene Munster says investors are worried about Apple's stock for three reasons:

The stock is already owned by major investors, so who's going to buy up more shares?

Apple can't possibly maintain its impressive growth rates and its about to run into tough comparisons for earnings from a year ago.

Apple's shares have been down since it reported strong earnings. 

We'd add another one Munster seems to be missing: Apple is in an uncertain state right now. It's unclear what's happening with Steve Jobs. The next iPhone isn't coming until September -- a break from the normal pattern. Also, we aren't hearing rumors about any amazing new products on the horizon. Regardless of all that, Munster says Apple is still a screaming buy. Here are his three reasons, direct from his note this morning:

"Even if the multiple does not increase or goes down, we believe the stock will move higher based on positive earnings revisions. Apple currently trades at 10.8x our CY12 EPS of $30.78 including cash, 8.5x ex-cash. Assuming Apple does more than $48 in EPS in CY14 (25% EPS growth), at current levels the stock would trade at a 6.9x EPS including cash and 4.4x EPS excluding an estimated $120/share in cash. We believe a mid-teens multiple is warranted given EPS growth rates in the mid-to-high 20s over the next four years."

"We believe Apple's entrance into a new product category, possibly televisions, will unlock new perceived value in the company, and thus the stock."

"We expect Apple to announce software features for iPhones, iPads and Macs at WWDC on 6/6 that could serve as a near-term catalyst, as expectations for the event are relatively low."

Related: CHART OF THE DAY: Who Bought And Sold Apple Shares Last Quarter For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.Join the conversation about this story »See Also:CHART OF THE DAY: Who Bought And Sold Apple Shares Last QuarterTHE APPLE INVESTOR: Stock Going Lower, Although Fundamentals Indicate The ContraryHTC Cofounder/Chairwoman Spotted Shopping In Palo Alto Apple Store

CHART OF THE DAY: Apple Just Pre-Announced Its Best Ever Quarter Of iPad Sales And Nobody Cares (AAPL)

Buried in Apple's big WWDC keynote yesterday was the revelation that the company is on track to sell 8 million iPads for the 2011 June quarter. That would be Apple's best quarter of iPad sales yet and a 74% jump over what it did just last quarter. It would also beat analyst estimates for iPad units which were around 6.5 million-7 million. And yet, no one seems to care. Apple's stock is actually down 1% for the day. Maybe investors are spooked by seeing a rail thin Steve Jobs, or they're disappointed about the lack of a new iPhone.

For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.Join the conversation about this story »See Also:Apple Leaked How Many iPads It Sold In Q2 And It's A Good NumberThe 10 HUGE Things Apple Just RevealedCHART OF THE DAY: Apple: See, We're Not Getting Clobbered By Android!

CHART OF THE DAY: Steve Jobs Leaves, Apple's Stock Soars (AAPL)

Since Steve Jobs left his post as CEO of Apple, the stock has taken off, rising 10%. Somewhat surprising, since you would think the stock would tank after the company lost its visionary leader. Apple is trading at an all time high, closing today at $413. The company's market cap is $390, and it will soon be over $400 billion, giving it a very good chance to be worth more than Google and Microsoft combined. But, the Jobs situation was hanging over the stock, keeping it in a holding pattern. With him out, that uncertainty is out of the way. Also holding the stock in check -- the company deviated from its normal pattern by not releasing a new iPhone this summer. The next iPhone launch is expected in weeks, which is getting investors excited.

Follow the Chart Of The Day on Twitter: www.twitter.com/chartoftheday Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:Why Apple Was Dying Before Steve Jobs Returned, According To Steve JobsThe Top 10 Coolest Patents Held By Steve JobsCHART OF THE DAY: The iPhone Is Absolutely Slaughtering The Blackberry

Sorry, But It's Not The SEC's Job To Stop Investors From Making Stupid Decisions

In the wake of the Groupon stock implosion, some pundits are bemoaning the government's plan to modestly relax regulations on small public companies by implementing the JOBS Act. The normally very clear-eyed Andrew Ross Sorkin, for example, has suggested that, before he signs the bill, President Obama should look at what just happened to Groupon investors. What just happened to Groupon investors? Well, those who bought Groupon the IPO price or immediately after the IPO--and held onto it--have gotten demolished. So, we should tighten IPO regulations, not weaken them, right? Absolutely not. The reason investors lost money on Groupon, as well as Demand Media, Pandora, and other flame-out IPOs, is not that regulation failed. It's that the investors paid too much for the stocks. The SEC gave Groupon a proctology exam before it went public. That didn't stop the stock from cratering. And it cratered long before the embarrassing earnings restatement Groupon announced last Friday. And it's not as though there wasn't a healthy diversity of opinion about Groupon's prospects before and after the IPO. Many analysts, including Jim Cramer and yours truly, were screaming from the rooftops that Groupon was overvalued--a crash waiting to happen. (See, "I Wouldn't Touch Groupon's Stock With A 50-Foot Pole.") Investors who bought Groupon on the IPO chose to ignore these warnings. Importantly, these Groupon bulls might have been right. That's what makes a market, after all. One investor on each side of the trade, one of whom is right, the other of whom is wrong. Every time a share of stock trades--which happens about a billion times a day on the NYSE alone--one investor makes money and another investor loses money. These gains and losses go hand in hand with stock market investing. And all the regulation in the world will never change that. Importantly, the gains and losses don't just happen with innocent mom and pop investors (who should never, ever buy stocks like Groupon). They happen with professionals, too. Just think of all the professionals who got their clocks cleaned in all the bank and housing stocks in 2008 and 2009. Just look at hedge-fund genius John Paulson, who incinerated half of his clients' money last year. Why does stock-market investing cause so much pain? Because stock-market investing, especially short-term stock market investing, especially concentrated stock-market investing, is risky. The stock market is not an FDIC-insured savings account. It's not a government insured Treasury bond. It is a stock market. It offers the potential for high return in exchange for high risk. Even the most cursory glance at history shows that stock markets do not just gradually and safely appreciate. Rather, they boom and crash. And this is especially true for high-risk, high-reward technology stocks like Groupon. Investors who don't like that should not go whining to the government for protection from stock-market losses. They should stop investing in the stock market. Or they should at the very least stop buying hot tech IPOs.. The SEC has now launched an inquiry into Groupon's earnings restatement, presumably to figure out whether the company committed fraud. If Groupon committed fraud, the SEC should prosecute that fraud. But investors should also realize that the vast majority of stock-market losses have nothing to do with fraud. They have to do with volatility and risk that goes hand in hand with stock-market investing. Nothing the government does will ever change that. And in the interests of encouraging innovation and job-growth, the government can--and should--make it easier for emerging companies to raise capital from investors who voluntarily choose to take big risks in search of big rewards. These investors should be viewed as the adults they are, not as children. And they should take full responsibility for their decisions. There's no free lunch in investing. You can't get big returns without taking big risks. And nothing will ever change that--even all the regulation in the world. (PS: Fortunately, there are simple ways to lessen stock-investing risk: Buy diversified, low-cost index funds and own them for decades. That's what most smart investors do with their own money, if not their clients' money. See: FINALLY, SOME DECENT INVESTMENT ADVICE: Don't Play The Losers' Game.) SEE ALSO: So Long, Groupon Investors, I'm Outta Here!!! Please follow Business Insider on Twitter and Facebook.Join the conversation about this story »See Also:McCain: SEC Chairman Should Be FiredIn A Totally Rational Move, The SEC Is About To Ban Short SellingFannie and Freddie Reveal Subpoenas

CHART OF THE DAY: Netflix's Bad Stock Timing (NFLX)

Netflix "is showing investors how not to buy and sell stock," says the Bespoke Investment Group. Last night it sold $200 million worth of stock at $70 a share. It had to sell that stock as part of a deal to raise another $200 million in the form of convertible notes. The financial moves will dilute shareholders by about 10%, according to Credit Suisse. The timing is really embarrassing for Netflix because it spent $200 million buying back shares at an average price of $218 during the first half of the year. Buying high and selling low is not how you should do it. For what it's worth, as you can see in the chart below, Netflix's timing wasn't always terrible! It was pretty smart buyer until the second quarter of 2011.

Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:CHART OF THE DAY: A Really Scary Chart For YahooCHART OF THE DAY: Are You Ready To Buy The Yelp IPO?CHART OF THE DAY: Here's How Traders Did Flipping Groupon, LinkedIn, And Pandora Stock On IPO Day

CHART OF THE DAY: Apple's Stock Flattens, Confuses Investors (AAPL)

For about a year and a half following the financial crisis, Apple's stock was a rocket ship zooming from a low of $85 to a high of $360. But all of the sudden, the stock has flattened. Year to date, it's down. And this has investors confused. put out a note just trying to make investors feel better about the stock's prospects. What's holding the stock back? It's not like Apple isn't delivering results. And while the general market is flat for the year, you'd think Apple would outperform. Our best guess: The company is just in flux right now with Steve Jobs out indefinitely, and no hot new products rumored in the pipeline. What's your guess?

Follow the Chart Of The Day on Twitter: @chartoftheday Please follow SAI: Silicon Alley Insider on Twitter and Facebook.Join the conversation about this story »See Also:Apple Paying Nokia $715 Million Upfront To Settle Patent Dispute, Estimates AnalystTHE APPLE INVESTOR: Mac Sales Off To A Slow Start In The Quarter, Could Make It Up In JunePhew: Facebook Hasn't Forgotten About The iPhone After All

Why Amazon's Tablet Business Is Nowhere Near As Good As Apple's (Yet) (AMZN, AAPL)

Amazon just disappointed Wall Street with a big revenue miss in the last quarter of 2011. But more interesting story comes when you contrast how Amazon is talking (or not talking) about the Kindle Fire, versus how Apple talks about the iPad. Amazon gave no sales stats for the Kindle or Kindle Fire, saying only that sales of the entire Kindle line was up 177%. But overall expenses were up $4.7 billion from last year's quarter -- that's more than revenue, which grew $4.5 billion. Amazon doesn't break out expenses or revenue by product line (Kindle hardware sales are lumped in with the broad Electronics and General Merchandise category), but if Amazon is really losing at least $5 per Kindle Fire sold, it makes sense that expenses are going up faster than revenue. As a result, net income dropped 58% from last year, to $177 million. Contrast that with Apple: in its Q4, the company sold 15.4 million iPads. Apple doesn't break out profit by product line either, but it showed a huge overall profit of $13.06 billion -- the fourth largest quarterly profit for any company, ever (the top three are all oil companies). But that's exactly the plan. Amazon is not a hardware company. It never expected to make money on the Kindle Fire. The whole idea is to seed the world with these tablets which are primed for shopping and consuming media -- all sold by Amazon. The value of a Kindle Fire isn't in the profit margin. It's in the lifetime value of each customer captured. Investors who buy Amazon stock are betting that lifetime value will be way more than the $5 or so that Amazon is losing on each sale now. Please follow SAI on Twitter and Facebook.Join the conversation about this story »See Also:THE GOOGLE INVESTOR: Motorola Sells One Million Tablets All Last YearLIVE: Amazon Blows Q4, Stock Plunges 8% After HoursCHART OF THE DAY: The Kindle Fire Is The Most Important Android Tablet For App Makers