Ryan Reeves @RyanReeves_ Twitter profile

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Ryan Reeves

2 years

Thanks for the follow! ⬇️ Here's what we offer at Investing City ⬇️ FREE Business Breakdowns newsletter PREMIUM Research service: Dynasty Membership Fund: Infuse Partners EDUCATION The Investing City

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Ryan Reeves

@RyanReeves_

5 years

Costco is a fascinating business. You know all those groceries you buy? Yeah, they basically sell those at breakeven and then make all of their profit from the $60 annual membership fees. Quick [THREAD]

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Ryan Reeves

@RyanReeves_

2 years

I've probably read 1,000 annual reports (10-K's). Here's how to read one efficiently and effectively. [THREAD] ⬇️

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Ryan Reeves

@RyanReeves_

5 years

McDonald's doesn't sell burgers, it sells franchises. It's a real estate company, not a fast-food restaurant. [THREAD]

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Ryan Reeves

@RyanReeves_

2 years

My goodness. Visa just brought in $5.6 billion in free cash flow on $7.8 billion in revenue. That's a 72% FCF margin! For the full-year, FCF margins were 61% on $29 billion in revenue. Just an amazing business model.

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Ryan Reeves

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5 years

End/ So Costco's business model is to sell products for as low a margin as possible to aggregate demand which they can leverage against suppliers and collect cash from membership fees. And I haven't even gone into all the little details like this does:

The Resilience of Costco

Website: https://www.MineSafetyDisclosures.com Twitter: @MineSafety

issuu.com

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Ryan Reeves

@RyanReeves_

7 months

Not relevant, but Duolingo's taco shop does almost $700k in revenue lol

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Ryan Reeves

@RyanReeves_

8 months

How does Reddit spend 55% of revenue on R&D? What are the new features being launched?

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Ryan Reeves

@RyanReeves_

5 years

Amazon it is. The company is infamous for "losing money." But did you know that it has been operating cash flow positive since 2002? [THREAD]

Ryan Reeves

@RyanReeves_

5 years

Which business model should I break down next?

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Ryan Reeves

@RyanReeves_

4 years

Software terms are confusing right?! I'll try my best to explain these concepts: - Bookings - Billings - Revenue - ARR - DBNER - DBGRR - DBNRR - Deferred Revenue - RPO [THREAD]

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Ryan Reeves

@RyanReeves_

4 years

American Express is not like Visa and Mastercard. 💳 The business model is much more like a bank than anything else. 🏦 Business Breakdown [THREAD] 👇🏽

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Ryan Reeves

@RyanReeves_

4 years

If, EVERYDAY, you: - did 10 burpees - read 20 pages of a book - saved $10 That would probably put you in the top quartile for health, knowledge and wealth. Consistency is extremely undervalued.

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Ryan Reeves

@RyanReeves_

5 years

@azharaq Like Yogi Berra said, nobody goes there, it's too crowded

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Ryan Reeves

@RyanReeves_

4 years

Did you know that Coca-Cola makes the majority of its profit from selling its secret-formula of flavoring? Business Breakdown [THREAD]

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Ryan Reeves

@RyanReeves_

5 years

1/ This is the key. The company keeps gross margins as low as possible. We'll cover the second part of the highlighted section a little bit later.

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Ryan Reeves

@RyanReeves_

4 years

Square grew its top-line 64%. Wow, so great! NOT SO FAST. Revenue from Bitcoin grew 7x to $875 million in the quarter. If you exclude Bitcoin entirely (subtract $875 million from this quarter and $125 million from last Q2), guess the growth? Exactly 0% 😱

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Ryan Reeves

@RyanReeves_

5 years

10/ The company has more than 53 million paid members (as of 2019) of which 37% are executive members. This means Costco will haul in about $4.3 billion in membership fees, about 110% of its net income for 2019.

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Ryan Reeves

@RyanReeves_

5 years

Uber is in 700 cities across the world but 5 locations make up 25% of its gross bookings. 1. Los Angeles 2. New York 3. San Francisco 4. London 5. Sao Paulo

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Ryan Reeves

@RyanReeves_

5 years

3/ Off of merchandise, Costco's gross margins are only 11%. So when you buy 5 lbs. of peanut butter for $10, it costs the company $9 typically.

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Ryan Reeves

@RyanReeves_

5 years

2/ In turn, this gives it pricing authority. In other words, you don't even look at the price because you know it's going to be the best.

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Ryan Reeves

@RyanReeves_

1 year

Going back through “Measuring the Moat” by Mauboussin. Here are some helpful things: 1. Industry Map - Important to understand all of the players in an industry and how the whole value chain works.

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Ryan Reeves

@RyanReeves_

5 years

Starting an ongoing meta-[THREAD] to house the business model breakdowns.

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Ryan Reeves

@RyanReeves_

4 years

Walmart went public at $16.5 by selling 300k shares (~$5 million market cap). The stock has split 11 times since 1972. That means the split-adjusted IPO price was $.008 (less than a cent!) That’s a 22% CAGR over nearly HALF A CENTURY.

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Ryan Reeves

@RyanReeves_

3 years

Nvidia just grew 84%...at a $20 billion run-rate...with 35% EBIT margins. Unreal growth at such scale.

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Ryan Reeves

@RyanReeves_

4 years

Broke down a "10k in 10 tweets" for 10 days in a row 1. Square 2. Match 3. Plug Power 4. Carvana 5. Constellation Brands 6. Teladoc 7. Autodesk 8. Wayfair 9. Kinsale Capital 10. Enphase Enjoy this meta-[THREAD]

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Ryan Reeves

@RyanReeves_

3 years

This would be an interesting long-term 10-stock portfolio. -Carvana -Shopify -RedFin -DoorDash -Roblox -Nvidia -Zoom -Peloton -Palantir -Adyen No industry overlap, all long-term focused, founder-led companies. (Technically, RDFN isn't founder-led but might as well be)

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Ryan Reeves

@RyanReeves_

5 years

6/ Now for the second part. The company sells its inventory typically before it needs to pay suppliers. In other words, suppliers do what Costco tells them to do.

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Ryan Reeves

@RyanReeves_

4 years

Twilio did $365 million in quarterly revenue. WhatsApp made up 7% of sales. That means WhatsApp accounted for over $25 million, or a $100 million run-rate. Facebook spends $100 million just for account verification on WhatsApp!

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Ryan Reeves

@RyanReeves_

6 years

Hey @farnamstreet . Here's a collection of the best quotes from hundreds of FS articles. Started as personal project. Been adding for months but now done! Figured others will get value from it. Thanks for your hard work over the past 9 years! Unreal.

The Ultimate Learning Guide via Shane Parrish

I first came across Farnam Street about four years ago and it has consistently been one of the best sources of learning I have found on the…

medium.com

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Ryan Reeves

@RyanReeves_

6 years

Thread of great @mjmauboussin research Introduces MEROI Reversion to the mean Luck vs. Skill Measuring Moats WACC Base Rates

Death, Taxes and Reversion to the Mean

ROIC Patterns: Luck, Persistence, and What to Do About It Hegel was right when he said that we learn from history that man can never learn anything from...

seekingalpha.com

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Ryan Reeves

@RyanReeves_

4 years

Some companies growing faster than 30% with at least 30% free cash flow margins: • Evolution Gaming • MarketAxess • Zoom • ZoomInfo • Futu • The Trade Desk • Etsy • GoodRx • Adyen • Crowdstrike • Facebook • ServiceNow Anything else out there?!

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Ryan Reeves

@RyanReeves_

5 years

9/ Membership fees only make up about 2% of sales but normally a little bit more than 100% of profit.

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Ryan Reeves

@RyanReeves_

2 years

The longer you invest, the more you realize just how good Buffett actually is.

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Ryan Reeves

@RyanReeves_

3 years

Google Search...could be the best business to ever exist. Grew 68% at a $140 billion run-rate with 62% EBIT margins. It just doesn't get any more impressive than that.

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Ryan Reeves

@RyanReeves_

5 years

8/ Now for real kicker. Look at the percentage of net income that comes from membership fees. Look similar?

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Ryan Reeves

@RyanReeves_

5 years

If you're looking for some business model break-downs, you're in luck! 1. Costco 2. Amazon 3. Alphabet 4. Netflix 5. Intuit 6. Transdigm 7. McDonald's 8. Starbucks

Ryan Reeves

@RyanReeves_

5 years

Starting an ongoing meta-[THREAD] to house the business model breakdowns.

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Ryan Reeves

@RyanReeves_

4 months

TSMC predicts there will be one trillion transistors on a chip by 2034. Human ingenuity is amazing!

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Ryan Reeves

@RyanReeves_

5 years

7/ Costco has essentially aggregated demand which it can then leverage against its suppliers in the form of payment terms. See, the DSI and DPO are basically the same. On top of this, Costco collects cash in about 4 days, so that's the extent of the cash conversion cycle.

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Ryan Reeves

@RyanReeves_

4 years

AliPay does more payment volume than Visa and Mastercard...COMBINED! Last year: V ~ $9 trillion MA ~ $7 trillion Combined ~ $16 trillion AliPay ~ $18 trillion

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Ryan Reeves

@RyanReeves_

5 years

4/ Compare this to Target. Gross margins are almost 30%.

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Ryan Reeves

@RyanReeves_

2 years

I really do admire Carvana but the cash it has burned since inception ($12.7 billion) is now greater than its market cap ($11.3 billion).

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Ryan Reeves

@RyanReeves_

4 years

Square's Cash App gross profit grew 168% this year to $1.23 billion. The crazy thing is that if you remove Bitcoin, Cash App gross margins are 88%. What's a digital bank that is doing $1.4 billion in sales, growing 131% with 88% gross margins worth? Cash App is the thesis

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Ryan Reeves

@RyanReeves_

4 years

Took the afternoon to understand the prescription drug market a little better. Here are some ramblings on the value chain... [THREAD] ⬇️

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Ryan Reeves

@RyanReeves_

5 years

5/ Or against Walmart. About 25%

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Ryan Reeves

@RyanReeves_

4 years

Adobe with 26% revenue growth at $15.6 billion run-rate, 37% EBIT margins, 44% FCF margins and 89% gross margins. Decent biz 😜

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Ryan Reeves

@RyanReeves_

2 years

*thinking of a new way to present the income statement* Absolutely no one: Adyen's designers:

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Ryan Reeves

@RyanReeves_

2 years

15/ To recap: 1. Use EDGAR 2. Read the Business section 3. Read the company and industry risks 4. Read Management's Discussion of Results 5. If you're a real digger, look into the footnotes! 6. Keep researching, this is just the start!

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Ryan Reeves

@RyanReeves_

5 years

If you are interested in business models, check this out. This guy breaks down 30 different business models

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Ryan Reeves

@RyanReeves_

5 years

Running [THREAD] of business frameworks w/ thoughts #1 -5: industries #6 -12: company strategy #13 -15: competitive advantages Feel free to add any that I missed! Thanks 😁

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Ryan Reeves

@RyanReeves_

2 years

1/ Visa's network effect is crazy. 4.1 billion of its cards (pre-paid, credit and debit) have been issued and 100 million merchants accept these cards.

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Ryan Reeves

@RyanReeves_

2 months

Buffett's test is so simple. 1) less than 15x earnings in the next 12 months 2) 90% confident it will earn more in 5 years 3) 50% confident it will grow earnings at 7% Guess $ULTA is the latest one Buffett and Combs have been discussing...

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Ryan Reeves

@RyanReeves_

5 years

If you're trying to break into the investing industry, read one 10-K per day. After a year, the number of connections you'll be able to make will blow you away. Investing is all about drawing connections and pattern recognition.

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Ryan Reeves

@RyanReeves_

6 years

All of Richard Feynman’s lectures The internet is incredible.

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Ryan Reeves

@RyanReeves_

5 years

You can click on the logo of any company on this website and get a full breakdown of the business model/investment thesis. (h/t @BluegrassCap )

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Ryan Reeves

@RyanReeves_

3 years

Still crazy that Teladoc bought Livongo for nearly $19 billion and now the combination trades for $15 billion sixteen months later.

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Ryan Reeves

@RyanReeves_

2 years

1/ So why doesn't Netflix produce that much free cash flow? Here's the answer and why it's key to understanding the company ⬇️

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Ryan Reeves

@RyanReeves_

5 years

What are the 3 most important traits of good investors and why? I’ll start: 1) Independent thinker - You need to know the “why” behind your process 2) Obsessive curiosity - It’s competitive, you’ve got to love it 3) Deep humility - Truth doesn’t care about your ego

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Ryan Reeves

@RyanReeves_

3 years

Shopify now has 6x the amount of cash on its balance sheet than its entire market cap when it IPO'd 6 years ago. Cash: $7.8 billion Market Cap at IPO in 2015: $1.3 billion Insane value creation.

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Ryan Reeves

@RyanReeves_

4 years

There are weeks where decades happen

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Ryan Reeves

@RyanReeves_

4 years

1/8 Took on two interns this summer. They just finished 15 weeks of work so I thought I'd share the experience. There's some good stuff in here! 😁 Phase 1 - Training (2 weeks) Phase 2 - Context Building (5 weeks) Phase 3 - Breakdowns (4 weeks) Phase 4 - Deep Dives (4 weeks)

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Ryan Reeves

@RyanReeves_

5 years

Went through nearly all of @bgurley 's blog posts and picked out the best sections. Will be adding to this throughout the day. Enjoy! [THREAD]

Tren Griffin

@trengriffin

5 years

Every year as summer vacation season starts I get asked what books I recommend. Some of the best books require a small effort to assemble. Not everyone is willing to do this work. Example: start with the first @bgurley post from 1996 and read them all:

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Ryan Reeves

@RyanReeves_

3 years

I get that it's easy comps but Google growing 34% with $197 billion in TTM revenue, Facebook growing at 44% with $94 billion TTM, and Apple growing 54% with $325 billion TTM is just bonkers.

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Ryan Reeves

@RyanReeves_

5 years

Peloton's financing is interesting. You can buy a $2,262 exercise bike for 39 monthly payments of $58 at 0% APR. The catch? The content is $39/month. So 39*(39+58) = $3,783 0% APR reduces churn, keeping customers for at least 39 months.

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Ryan Reeves

@RyanReeves_

4 years

Sea's gaming business has 62% EBITDA margins. It's a cash cow that can produce $2 billion in annual free cash that Sea can plow back into Shopee. Tough to compete against.

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Ryan Reeves

@RyanReeves_

4 years

Thinking about doing a series called “10k in 10 tweets” The goal would be to go through a 10k and tweet out only the 10 most valuable things. What companies would you be interested in?

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Ryan Reeves

@RyanReeves_

4 years

It’s fun to study great businesses that aren’t always talked about. Here are a few: $AMT $ANSS $BFAM $CDNS $CHD $CPRT $CSGP $FND $IDXX $MTN $ODFL $POOL $TJX $TSM $VRSK $VRSN $ZTS What are some others you’d add?

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Ryan Reeves

@RyanReeves_

5 years

My notes from the Daily Journal meeting Unattributed quotes are from Munger Short [THREAD]

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Ryan Reeves

@RyanReeves_

3 years

Cash App is at a $2 billion gross profit run-rate. That's almost as much as Shopify!

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Ryan Reeves

@RyanReeves_

10 months

One of my favorite things to do when studying a company is going line by line through each of the financial statements to see if I can articulate the reality of the accounting. If there is a gap in my understanding, that's a great way to know if it's outside of my circle or if

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Ryan Reeves

@RyanReeves_

3 years

7 years ago, AWS did $800 million in Q1 revenue. This quarter, it reported $13.5 billion. That's a 50% CAGR.

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Ryan Reeves

@RyanReeves_

3 years

Looked in my database for the fastest growing/highest FCF margin companies (emphasis on FCF). Here are the 10 I came up with (and the TTM FCF margin): 1.EVO (69%) 2.ADYEN (57%) 3.COIN (52%) 4 DOCS (36%) 5.ABNB (36%) 6.ZI (35%) 7.DLO (34%) 8.CRWD (30%) 9.NVDA (30%) 10.DDOG (24%)

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Ryan Reeves

@RyanReeves_

5 years

Which business model should I break down next?

Amazon

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Netflix

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Nike

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Ryan Reeves

@RyanReeves_

5 years

If you don't have an investing journal, this is a great time to start. Open your Notes app and type out your emotions and the decisions you're making. In future crashes, you can look back and see how you handled it. In good times, you'll remember your real risk tolerance.

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Ryan Reeves

@RyanReeves_

5 years

For the last 6 years, Starbucks has, on average, opened more than 5 stores PER DAY! 😱 No wonder they are on EVERY street corner! [THREAD]

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Ryan Reeves

@RyanReeves_

5 years

What’s the best company not many people know about?

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Ryan Reeves

@RyanReeves_

3 years

When you have the urge to brag about your investment performance, it’s probably time to take some off the table. When you can’t bear to check your brokerage, it’s probably time to buy.

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Ryan Reeves

@RyanReeves_

4 years

What are the best, under-hyped businesses out there? Some that come to mind: - Idexx - CoStar - Copart - Rollins - Zoetis - Ansys - Old Dominion - American Tower What else?

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Ryan Reeves

@RyanReeves_

5 years

[UPDATED] Investment Checklist ✔️📄

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Ryan Reeves

@RyanReeves_

4 years

Robinhood is named after, Robin Hood, a 14th-century character who steals from the rich and gives to the poor. The 21st-century version is a brokerage that prints money for Citadel and censors certain stocks. Reality is often more ironic than fiction.

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Ryan Reeves

@RyanReeves_

1 year

Some good sections from Chris Mayer’s 100 Baggers 1. The main job of an analyst is understanding how the company will create future value.

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Ryan Reeves

@RyanReeves_

5 years

My 14-point investment checklist ✔️📄

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Ryan Reeves

@RyanReeves_

5 years

Overall Take-Rates (data as of last quarter) [If you have more in mind, add them in the comments!]

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Ryan Reeves

@RyanReeves_

5 years

A lot of people might think that Disney makes most of its money through its movies. But Disney's studio entertainment only makes up 17% of the company's overall sales. [THREAD]

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Ryan Reeves

@RyanReeves_

3 years

Searched my database for the highest EBIT margins + 5-year sales CAGR of > 10%. The top 10 (margins/5-year CAGR %): 1.V (66/10) 2.EVO (61/56) 3.ADYEN (59/50) (53/11) 5.MSCI (53/12) 6.MKTX (48/14) 7.MCO (46/12) 8.MSFT (42/13) 9.CPRT (41/19) 10.TSM (41/14)

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Ryan Reeves

@RyanReeves_

3 years

Pinterest spent $1.25 million in capex on $485 million in revenue. Talk about scalable!

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Ryan Reeves

@RyanReeves_

2 years

Evolution Gaming will probably do about $800 million in free cash flow this year. That's up from just $32 million in 2016, good for a 71% six-year CAGR. It's an awesome business.

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Ryan Reeves

@RyanReeves_

1 year

50-60% cash on cash returns for a Topgolf No wonder they’re building them as fast as they can.

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Ryan Reeves

@RyanReeves_

10 months

Don't normally share personal stuff on here but could not ask for a better Christmas gift! Would love some advice on how to be great dad. Thanks in advance and Happy Holidays! 🙏

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Ryan Reeves

@RyanReeves_

4 years

1/ Did you know the US music industry is only about half as big as it was it 2000? Business Breakdown [THREAD] with free full post at the bottom 🔽

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Ryan Reeves

@RyanReeves_

4 years

Microsoft is a beast. Azure grew 48% Grew earnings 30% EBIT margins were 43% 78% incremental EBIT margins Returned nearly $10 billion to shareholders $14 billion in quarterly FCF on $37 billion in revenue

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Ryan Reeves

@RyanReeves_

3 years

Nvidia's data center segment is one of the most impressive I've ever seen. Revenue in FY16: $339 million Revenue in FY22: $10.62 billion CAGR over 6 years: 78% 🤯 To give perspective, over the same period, Shopify's revenue CAGR is 68% and the base was $200 mil vs. $339 mil.

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Ryan Reeves

@RyanReeves_

3 years

Datadog grew revenue 70% this year and sales and marketing costs only grew 40%. That, my friends, is a great sign of operating leverage.

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Ryan Reeves

@RyanReeves_

5 years

Nike takes branding so seriously that it can't be confined to normal opex terminology. Sales and marketing becomes "demand creation expense" 😂

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Ryan Reeves

@RyanReeves_

3 years

Fastest companies to $100 billion in market cap Microsoft: 25 years Cisco: 14 years Google: 8 years Pinduoduo: 5 years Crazy to think that one day a company will reach a $100 billion valuation in less than 5 years. But it's very likely.

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Ryan Reeves

@RyanReeves_

5 years

Check that out. Domino's international franchised stores have 78% EBIT margins and capex accounts for .05% of sales. Goes to show how powerful a franchise business can be.

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Ryan Reeves

@RyanReeves_

5 years

Intuit (creator of TurboTax, Quickbooks, etc.), unsurprisingly, makes all of its profit in a 3-month window. Guess which three months? 😜 Quick [THREAD]

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Ryan Reeves

@RyanReeves_

3 years

Southeast Asia has 2x the population of the US, and its e-commerce market is 1/16th the size. Southeast Asia e-comm penetration: 5% US e-comm penetration: 15%

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Ryan Reeves

@RyanReeves_

2 years

This is amazing -- the price of lithium ion batteries is down 97% over the past ~30 years

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Ryan Reeves

@RyanReeves_

4 years

Crowdstrike's FCF margin for the last 5 years '17 = -111% '18 = -69% '19 = -24% '20 = 3% '21 = 33% Apparently, software scales pretty nicely. Who knew? 😉

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Ryan Reeves

@RyanReeves_

3 years

Over the past four years, Uber has burned $12 billion in free cash flow. Over the same period, Carvana has burned $4 billion. Sort of interesting that physically selling cars and hauling them across the country has been more "capital-light" than a ride-hailing network.

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Ryan Reeves

@RyanReeves_

3 years

Investing is awesome because it's such a great way to learn about the world. You can go from studying the value chain of a credit card or car dealership to trying to understand how our body's immune system works. If learning doesn't feel like work, it's a huge advantage.

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