Technology equity analyst. Investor. Tech co’s. Electrical Engineer. CFA Charterholder. Took that photo above in the Kruger Park in Jun '17. Lovely cheetah!
$RBLX - Roblox Observations & thoughts
Been through the prospectus & IR materials
Bottom line - exciting, not cheap, worth studying further
Popular platform for games & interaction for kids but extending to wider age group & other use cases -> metaverse
A thread...
1/n
Tech companies -
Free Cash Flow margin after DEDUCTING Stock Based Compensation
SBC is a feature of many tech co’s. Several boast healthy FCF mgns but when you deduct SBC the picture changes
Some popular names sorted by (FCF-SBC)/Rev
Once again
@KoyfinCharts
makes this easy
Stock Based Comp is a big feature of tech co’s
Necessary to pull in talent, but we shld watch for too much dilution
Thanks to
@KoyfinCharts
“formulas” here’s some popular names sorted by SBC/GP
I like the ratio - shows how much mgn is taken up by SBC
Observations follow...
I think there’s good opportunities in the making
Look at $FB
PE ratio back to 21x, same as bottom of the COVID March 2020 fall
Last 2 PE lowpoints proved to be great buying points.
- At 18x in beginning of 2019 - subsequent gain 80%
- At 21x in Mar 20 - subsequent gain 150%
$RBLX - Roblox
Spent quite a lot of effort over past week or so going through the prospectus
Should I make a thread with my comments, observations and questions ?
Would you appreciate it?
Will take me some time to put together. I have plenty notes...
Stock Based Comp is a big feature of tech co’s
Necessary to pull in talent, but we shld watch for too much dilution
Thanks to
@KoyfinCharts
“formulas” here’s some popular names sorted by SBC/GP
I like the ratio - shows how much mgn is taken up by SBC
Observations follow...
“Now stop worrying & go live your life”
The last 2 months have been tough for me. But God answered my prayers & spared me. Plus I had a top class surgeon who saved me - with grace & professionalism
(thread 1/n)
$SE
What I like about this South East Asian gem is that price can go up 50% from $200 to $300 in 8 months but the P/S ratio stays the same at about 20x
Growth monster
@QCompounding
Thanks for the thread
@QCompounding
But just so people know, Damodaran offers a lot of his course materials for free from his website
Have a look
Notes, YouTube Videos, sample files etc
$NET - Cloudflare
TTM Rev $530M
MktCap $51B
MC/Rev = 96x
What needs to happen to get some kind of investment return over the next 5y?
Lots of talk about them being the 4th cloud & can take some share from $AMZN ‘s AWS
Let’s investigate...
@ChrisBloomstran
@ChrisBloomstran
, $ARKK has outperformed massively
Your fund has underperformed the S&P 500 for 7 out of the last 10 yrs 👇
Your fund focuses more on capital preservation than growth
So maybe you targeting older wealthier folk & $ARKK is targeting younger folk ?
Free Cash Flow yield update
$FB 7.9%
$GOOG 4.9%
$AAPL 4.6%
$MSFT 3.2%
All gone up a lot this year. FCF might be under pressure in the near term though
Amazing to see that when Berkshire bought $AAPL (around 2016) it’s FCF yield was way higher - above 10%!
Several high g tech co's are at eye-watering multiples
What IRR can you get over 3,5,7 yrs if their P/S multiple halves or gets cut to a third?
Here's my basic IRR calculator for this situation
Bottom line - if multiples get tanked, it's going to be hard to get a decent IRR
High growth SaaS - metrics, observations & thoughts
$NET $CRWD $ZS $DDOG $MDB $SNOW
Bottom line
🟢 Valuations have come down a LOT
🔴 But so has rev growth
🟡 They still spending LOTS on S&M
▶️ To make a good return, they’ll need high durable g & strong FCF
A thread…
1/n
There are often strong rallies in bear markets
Last week, NASDAQ was up a strong 9%!
Should we get excited yet?
I don’t think so
During the Dot com crash, we saw many such strong up runs & weeks on the way DOWN
Let’s review
Upruns during dot com crash (3 > 30%)
$NVDA FCF rocketship
Over last 10yrs :
1. GP mgn steadily improves from 52% to 65%
2. Has flowed through to FCF mgn DOUBLING from 15% to 30%
3. Combined with strong revenue growth, FCF has rocketed up more than 10X from $640M to $8B
Super video
Always great to hear
@saxena_puru
go through his thoughts on the market. He explains things very clearly.
And wonderful to have Rob from
@KoyfinCharts
pulling up the relevant charts while Puru is talking
Lovely, thanks gents 👍👍
Check out the latest episode of Investing Wizards where
Puru Saxena
@saxena_puru
discusses his current market thoughts, where we are in the Fed cycle, which indicators he's monitoring to get more bullish growth and stocks he currently owns.
D-Local $DLO
Been through *most* of the prospectus & IR materials for this exciting emerging markets Fintech player.
Have plenty of notes 😀
Also had a chance to ask IR questions
It will take me some time but who’d like me to do a thread on my first impressions?
Still lots of growth in the years ahead as more people connect to the internet
$SE - Asia
$MELI - Latam
$BABA - China
And watching for Africa - just not sure yet about $JMIA
cc
@MadsC007
,
@saxena_puru
,
@trevmuchedzi
,
@iafrikan
What’s $BRK Berkshire seeing in $HPQ HP Inc?
HPQ makes laptops & printers
- far from sexy in today’s nextgen cloud software world
BRK bought 11% for $4.2B. Why?
✅ it’s doing well, producing good cash & not expensive
Let’s compare $HPQ to Tech peers of its day
Thread...
I started as a technology sell-side equity analyst at Societe Generale Securities in July 2000
A year later, the NASDAQ was 53% down
2 years later, it was 73% down
Those two years were a great education 😂
Tech moving down
Great opportunities starting to be formed
Can $MSFT get to $200? (Now $244)
$NVDA - will be see $130? (Now $159)
$DDOG P/S now 23x, can it get to below 20x?
$ADYEY now $12.80 - will we see $10?
$CSU CAD1852 - will we see 1500?
$AMZN - soon to be below $100
Check this
$MELI vs $SHOP
Similar mkt caps ( $43B vs $37B)
Yet $MELI produced $1B FCF LTM
$SHOP only $58M (million)
Either $MELI is too low or $SHOP is too high 🤷♂️
$PTON
Price has dropped to $56
Markets are interesting. This is the price it was end June 2020 (on way up). Buying it like crazy. P/S was 11 times
Now P/S is less than half & the shares are being thrown away
I know the outlooks are different but still
Opportunity or trap?
Free Cash Flow vs Stock Based Compensation
A short thread covering selected co’s to show the contrast
First, let’s look at those with SBC > FCF
Ie they’re paying staff in SBC more than they generate in FCF
Worst one is $TWLO
Totally divergent ❌
FCF down, SBC flying up
$SNOW - Snowflake
If they achieve FY29 targets ($10B rev, 25% FCF mgn)
& assuming 4% dilution
To get a 20% inv return over next 6y, they'd need a P/FCF of 69x at that point
For a 15% return, they'd need a 54x multiple
10% would need a 41x multiple (more reasonable imo)
$ROKU
Since Dec 19 (pre COVID)
✅ It’s gone up 2.2X ($136 -> $302)
✅ Yet the P/S multiple is unchanged (16.5x)
Illustrates the power of growth
Current pullback looks like it might present some opportunities...
$SE
Opportunity in the making but can still fall further
EV/Rev NTM has halved to 8.3x
Pre Covid : 3-6 range
Mar 20 fall it dropped to 4x
Then with COVID & stimulus it rocketed up nearly 4 times to around 15x
Could easily fall to 6x , another 28%...
@KoyfinCharts
below
$SE Sea Limited Q4 22 results
Impressive, they did what they said
Now profitable
and CFO & FCF positive
My calcs for q cash flows (Q1, Q2, Q3, Q422 in $ M)
CFO -724 -485 -166 +320
Capex -270* -270* -232 -152
FCF -994 -775 -398 +168
(* half of H1)
Cash stable & debt down
$CRWD Crowdstrike
In order to get 20% investment CAGR over next 5 yrs, they need revenue to compound at ~68%
This assumes:
- they hit their 30% FCF mgn target
- year 5 P/FCF of 40x
Rev grew 84% for FY21. Can they do 68% forward for 5 years?
Priced for perfection?
@Beth_Kindig
Wow, Beth has such a deep understanding of the trends & big shifts in tech
Loved her views on Cloud SW, Roku & Unity
Star pres. Beth, thank you🙏
Her pick for 5/10y if mkts closed - $NVDA - Nvidia - could be more valuable than Apple, no worry about dnside
My thoughts on $TWLO 's Segment acq after listening to the conf call:
- Makes sense
- Solving something important - single view of customer
- Buying a leader in a related high growth space
- Raises TAM from $62-79B (27%)
- Accretive to $TWLO - paying lower mult
1/11
$GOOG
Didnt matter if you bought in July '18 at peak P/FCF multiple of 41x
Despite P/FCF contraction to 27x today, you'd have made 21% CAGR (from $1268 to $2680) over 4y
FCF rocketed up from there from negative g
Moral: if the FCF is firing, multiple contraction is ok
@jaminball
‘s top 10 SaaS multiple names are the creme of the crop (see below)
But how do their FCF mgns stack up when taking out Stock Based Comp?
Here’s a table of these 10 names in same order as
@jaminball
‘s table (by NTM Rev multiple)
Comments to follow...
Feb 27, 2020
$BRK.A Berkshire Hathaway 2020 Annual Report is out
Great wisdom going back so many years in the chairman’s letter
Will touch on some parts I found interesting:
Performance
Conglomerates
Apple
Partnerships
Stab at charts
Fixed Assets!
A thread... 😀
1/n
$SE Q1 2021 results
I went through the numbers & listened to the call
All sounds good to me 👍
CEO Forrest Li says pace of digitalization is continuing
Q&A well handled I felt. Tone sounds confident.
Strong growth and healthy cash flows
💎
@CapitalKnowhow
@InvestmentTalkk
That’s a good question, I don’t know if any debt is off balance sheet. Does anyone know?
But on the latest quarter, there’s no “conventional debt” just $1.8B of convertible notes
@KoyfinCharts
vs
@ycharts
Been using these two platforms for 1-2yrs
They’re both good & have helped me to speed up my process
But there are differences
Am going to highlight the pros & cons from my perspective as a technology sector fundamental analyst / investor
Delighted to continue to be rated as an analyst in the Computing & Electronics sector for the 2022 Financial Mail Top Analyst Awards (South Africa)
Thank you to the buy-side analysts & fund managers that voted for me! And for your ongoing support.
...
Outstanding q from
@akramsrazor
If you bought $CRM, one of the most successful SW businesses of all time in 2008 at a 50x Price to Sales multiple, you'd only have returned 8% CAGR over the past 12.75 y
The actual return has been 31% CAGR - because the P/S then was 4x (not 50x)
$SE
➡️ EV/GP now at 50.5x
(Share price $284)
Been in decline since Feb 21
👀 Back to pre-pandemic levels
Low point in March 2020 was about 27x
How low can/will it go?
Thanks again
@KoyfinCharts
for the EV/GP ratio 👍
$MELI - Mercado Libre
The power of compounding from high growth
Compared to pre-pandemic:
- P/S has compressed by ~30% (16 to 11.6)
- Yet share price has doubled ($740-$1480)
💪 Latam e-Commerce powerhouse 💪
$MELI
EV/GP back to where it was pre-pandemic - 22x
Yet GP growth since COVID has rocketed
Unless GP mgn keeps falling a lot this looks like a winner to me
Dec16 GP LTM 612M
Dec 19 1.3B (3y cagr 29%)
Sep 21 2.9B (1.75y cagr 58%!)
Thanks
@KoyfinCharts
for the EV/GP ratio 👍
$SHOP
Rev g declining since 2016 (except for Covid blip)
Now 20%
Hasn’t produced free cash flow besides for Covid blip. Back to negative
Share count continues marching up
They have $4B net cash at least
But how on earth is the Mkt Cap $50B ?
What am I missing ?
$TWLO - Twilio chart storm - Aggressive grower
Sizeable co growing fast -> $2B at 60%
CPaaS expanding into cust experience mgmnt
Some say unprofitable & just buying growth
Let’s analyze some of the numbers
A short thread...
Delighted to continue to be rated as an analyst in the Computing & Electronics sector for the 2021 Financial Mail Top Analyst Awards (South Africa)
A big thank you to the buy-side analysts & fund managers that voted for me & for all your great support over the past year!
@Valuations_
$GOOG is cheaper now on a P/FCF basis than it was in March 2020 (22x vs 25x)
How much are you expecting FCF ps to drop?
FCF ps could drop about 15% to 85 for the rating to be same
Fcasts for EBIT are low to mid teens for next 3y
(I don’t have FCF consensus fcasts)
$MELI Q322 results look good
For 9 months to Sep
GP up 72%
EBIT up 64% (3m to Sep q up 85% 💪)
NI up 145%
FCF up to ~ $1B
Balance sheet strong
They executing well
👌
Keeping $MELI for the longer term 👍
@saxena_puru
What concerns me re $JMIA :
MTN, the largest pan-African mobile operator & leader in Nigeria - recently sold their ~18% stake.
Yes, they’re selling non core assets, but they’re smart & know Africa very well
If this was about to be the next $AMZN, I doubt they’d have sold now
High growth SaaS
Sales & Marketing vs Revenue growth
$NET $CRWD $DDOG $MDB $ZS $SNOW
In the table, I’m looking how S&M/rev has changed since pre-COVID (3y ago). And comparing to rev g
🟢 Interestingly, $ZS is the only one whose rev g has increased, compared to pre-COVID.
@Beth_Kindig
Current Rev forecasts for $NVDA
FY25 (Jan 25) $121B (growth of 99%)
FY26 $168B (38%)
FY27 $194B (15%)
So growth expected to reduce a lot
However
Look at that $168B rev fcast for FY26
At the beginning of this year it was $110B 👀
So fcasts rapidly rising
@KoyfinCharts
Thank you
@MadsC007
&
@mathiasboe
for interviewing me on your podcast
@aktieuniverset
English part with me starts at ~ 18:30
What I do professionally, my journey and some of my approaches, including the importance of studying the CEO
Thank you gents I enjoyed it!
Så er vi klar igen til at kigge på et vingeskudt aktiemarked. GRVY og TTCF har fremlagt regnskaber og DHER er gået i kælderen, det kigger vi naturligvis på. Investor
@IrnestKaplan
er med igennem fra Sydafrika 😊😍
@forwardcap
This is classic
@forwardcap
Unprofessional but what a spectacle!
Found this clip on YouTube where you can listen to him saying some of the above
When you identify a company that is growing fast, being successful & disrupting its industry - led by top class management
Then
It’s a great opportunity when Mr Market brings down its price significantly
Ladies & gentlemen, set your sights...
Opportunities in the making
$FB
Nice 21% CAGR since Jan18 (last 3.75 yrs)
At 33X, the P/FCF rating is the same as in Jan 18
Yet the share price has doubled ($177 to $364)
P/FCF range has been 20-40X, so doesn't look stretched at the moment
Chart from
@KoyfinCharts
$NET Cloudflare starting to look better at $13B mktcap
If they get their $5B Rev tgt in 5y (37% cagr, not easy but doable)
& say they can make $1B FCF
30x mult yields $30B or 2.3x from here
18% cagr. Take off a bit for dilution , 15%
A lot needs to go right but looking better
Better to wait 6 months on new listings
$CPNG traded in a wide range on its first day but conceivable you could have gotten it at $60
It’s halved to $30
Lovely thread on Joel Greenblatt, thank
@KoyfinCharts
Here, I used
@KoyfinCharts
itself (with its wonderful configurable formulas in the watchlist) to work out liquidation value (LV) according to Greenblatt’s formula in your thread.
I added Market Cap to compare to LV
✅ And
In the early 1980s, Joel Greenblatt authored a paper on buying stocks selling below liquidation value and ran some backtests with impressive results.
He named it 'How the Small Investor Can Beat the Market'.
Here are the key takeaways 🧵
Power of compounding
If you grow at 25% a year for 5 years, you get to 3.1x
To do it in 4 years, you need ~30%
In 3 yrs, you need a bit more than 40%
I keep this spreadsheet on my desktop for occasional quick referral when I'm too lazy to fire up the calculator
Hope it helps
@saxena_puru
Outstanding performance
@saxena_puru
9 bagged over past five years. My word, what a run!
Congrats
Thanks for what you always share 🙏
Wishing you all the best for the coming 5 years!
Will be watching and learning...
17
2 photos which show what legendary medical care is & how lucky I was to receive it.
1st is me on day 2
Then being discharged a few days later 🎉
#gratitude
#liveyourlife
#meaning
$CRWD Crowdstrike is a leader in Digital Threat Intelligence Management
SPARK Matrix - March 2022
Many names in this chart I’ve not heard of before
cc
@InvestiAnalyst
@hhhypergrowth
$MSFT Q322 (to March)
Checked results & listened to call
EBIT up 23% yoy (constant currency)
FCF up 17%
They doing v well in Office & Cloud
Nadella says clients not cutting digital transformation spend
Good guidance
CEO & CFO sound upbeat & confident
Thumbs up from me 👍
$NVDA drawdowns over past 22 yrs
Currently 44%
It’s been very volatile
- After 2000, two big drawdowns over 80%
- From 2015 it’s been more “stable”
- 50% in 2019
- Covid crash didn’t reach 40%
Definitely one to watch...
CEO Jensen Huang is formidable
Always fantastic talking to
@MadsC007
&
@mathiasboe
about high growth tech on the
@aktieuniverset
podcast
We spoke about recent fall, P/S ratio & diff. to Dot com
Touched on $ADYEY, $DLO
$NET & $AMZN
$SNOW
Enjoyed it. You guys are great!
Link below 👇
(I start at 29min)
Very pleased to continue to be rated as an analyst in the Computing & Electronics sector for the 2020 FM Analyst Rankings.
Means a lot to me.
A BIG thank you to the institutional asset managers that voted for me & for the great support in the past year!
@RihardJarc
That $INTC tangible book value:
- is generating large losses ($2B over last 6 months)
- producing negative Free Cash Flow of ~$10B per quarter for 2y
I know they’re investing in the future, but if they can’t make it, then achieving tangible book value ($85B) is not too bad!
Growth outdoing multiple compression
$SHOP - sh price up 50% since Jun20 and P/S falling by 1/6
$SNOW - since the peak in Oct20, P/S has halved yet sh price has declined by less (25%)
Delighted to continue to be rated as the top analyst in the Computing & Electronics sector (Technology) for the 2023 Financial Mail Top Analyst Awards (South Africa)
A BIG THANK YOU to the fund managers & buy-side analysts that voted for me! And for your ongoing support.
...
@saxena_puru
It may be cyclical in nature
@saxena_puru
But over the next say 5-10yrs, it does have a heck of a tailwind regarding the switch to EVs
So despite the underlying cyclicality, it should have a secular growth story portion fueling it for some time
Just my view
4 - How does the money flow?
Assume an App Store purchase of 800 Robux for $9.99. Call it $10.
- Conv rate to go in : 0.00125
- buy experiences from dev
- dev keeps 70% ie 560 Robux
- Dev converts back to $ at 0.0035 (set by Roblox)
- dev gets $1.96
I find studying great co's & their CEOs very stimulating
But I think the main thing is to have FUN and ENJOY THE JOURNEY
Being able to connect with & learn from so many like-minded amazing folk here on FinTwit has been truly remarkable!
Thank you all
$SE 2Q20 results were strong and
@MadsC007
did an
excellent video! Thank you!
Thoroughly enjoyed watching it
Loved the platform economics & social aggregator themes
It's clear that you deeply understand this space & $SE
Increased my position
$DDOG $NET $TWLO
Free cash flow (LTM) after Q322 results
$DDOG up there and increasing
$NET continues running on the limiter (below zero) but has big capex too
$TWLO moving in the wrong direction, getting more negative
@KoyfinCharts
below
@ycharts
still not updated with Q3
$SQ - Square EV/GP
It’s halved from a peak of 50x to 25x
Was around 16x pre COVID
How low can it go?
Thanks to
@KoyfinCharts
for giving us EV/GP, which is more sensible for Square than revenue
Incredible multiple contraction in high g tech co’s
From a Sep 21 thread of mine which looked at what IRR one gets assuming various levels of g & multiple contraction over 3, 5 & 7yrs:
I didn’t think we’d reach two thirds mult. contraction in several months !
Let’s explore...
Inspired by Ryan
@investing_city
‘s tweet on high quality co’s with high mgns & good 5y rev g,
I added 5y FCF growth & ROIC
And sorted by 5y total returns
Table from
@ycharts
below
Observations & comments to follow...
Inspired by
@saxena_puru
's great "Sale is now on" chart (shares dn 27-42% over past few wks)
I present "EV/Revenue through the pandemic"
While EV/Rev is down similarly since Feb peaks, it's still UP A LOT from start of pandemic for most
Some observations below...
@saxena_puru
I don’t accuse you of anything
You’ve just been observing market movements and offered your interpretation of what’s going on
You’ve been generous with sharing your ideas and opinions
And it’s helped a lot to contextualise what’s going on for me
Thank you kindly 🙏
$PINS Q2 21
I've reviewed results & listened to Earnings Call
To me, business is doing well despite the user number concerns
TTM Rev g for US & Intnl picking up nicely
See my TTM Rev g charts below & quarterly US & Intnl breakdown
Strong hold for me, maybe even top up...
Defeating the spam bots !
That will be fantastic
Congratulations
@elonmusk
cc :
@saxena_puru
, let’s see how long it takes to get the spam bots removed permanently 🤞
@BahamaBen9
Don’t trust it Ben
I think it’s a little bounce up and then we going down again
I hope I’m wrong and we just go sideways for a while or gently up so I can have a relatively easy December 😂
The $2Trillion club
$MSFT has gone up 5x ($400B -> $2T) in 5 years
38% CAGR
Not bad
All great companies - Tech Titans of today
$MSFT, $AAPL, $GOOG, $AMZN
Cursor in chart below is on Jun 22, 2016 to see market cap then 👇