market folly

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is Vikram Kumar of TT International who pitched a long of TomTom (AMS:TOM2).


Vikram Kumar's Sohn London Presentation 2015

Long TomTom (AMS: TOM2) 

TT International  have owned TomTom stock for two and half years.

The Satellite Navigation industry has been shrinking by 25% per annum since 2007. TomTom is misunderstood. It is primarily a mapping software company not a seller of devices/ hardware. Its main business is intellectual property. There are only three global mapping databases: Nokia, TomTom and Google. The barriers to entry are extremely high as it would take at least 10 years to build up a global mapping database.

Google’s map data is not good enough according to interviews that TT International has done with car companies. Accurate maps will be crucial to self-driving cars. It is the key underpinning for the next stage in the development of the automobile. Mapping is going to become more important. Kumar sees Nokia and TomTom as a duopoly. They will have great pricing power in the future.

All Apple mapping data is underpinned by TomTom data. TomTom have recently signed an agreement with Uber to provide all their mapping data. Kumar believes that location based advertising through mobile devices is going to be very important for businesses like Facebook. Push and pull advertising will be targeted by map based technology depending on your location.

In the spring of 2015 Nokia announced that it had been approached by multiple parties and eventually was bought by a consortium led by VW, Audi, Daimler and BMW. Kumar said that this deal proves that mapping is growing in importance to car makers. TomTom is the last remaining independent owner of mapping software in the world. It will be the target of other car companies.

Given that Nokia sold for $3.1bn Kumar thinks that TomTom is worth between $3-5bn.



Be sure to check out the rest of the Sohn London Conference presentations.