Found this piece which was doing the rounds on alot of "telegram groups"
Sorry if i have violated any forum rules, i am / was drunk.
Was reading it and thought i could pass on something to the community here
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| lalalala 1.21 MB | 1.21 MB |
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Well, are you gonna share?
pfa attached srry
What is the point of this report? That you should sell the best companies in the world growing 20-100% with long runways for growth and excellent unit economics (which gaap profitability says nothing about) based on TTM EPS multiples and because they now represent a larger percent of an arbitrary index of large cap stocks (and some of this shift in weighting is also because the other 495 stocks have underperformed or gone down significantly)? Or because their market caps (which reflects an NPV of years of revenue and cash flow) is high compared to arbitrarily selected GDPs (which reflects one year of revenue) of various nation-states?
To answer some of their questions: which will double first, Netflix or Disney? Netflix has 70 million U.S. subscribers at $10/month vs. traditional cable bundle at $80-100 per month (aka opportunity to 10x pricing over time at 100% margins) and 100 more million globally, with the deepest library and user experience. Not saying Disney is not a great company, but the cable network cash cows are melting ice cubes and you need to believe that Dis+ offsets those declines over time. I'll take Netflix.
Facebook vs. Exxon/Wells Fargo? One has 3 billion users, is like 20-25x (aka cheaper than both the "value" stocks Exxon and Disney on 2020 and 2021 estimates, and much cheaper on FCF), and makes no money on Whatsapp or Messenger today, so aka the stock is closer to 10x their earnings power in a few years. Is it a bet that they can monetize? Sure, but Exxon is also a bet that oil prices go back to pre-covid levels and I would rather make a bet that the smartest engineers in the world with trillions of data points can make some money from 2 billion people using their platform daily than make a commodity call on oil. Oh, and if FB can never monetize that it is 15x earnings in a few years based on the growth of Instagram and Facebook alone. Meanwhile if oil prices don't go up again, Exxon would be free cash flow negative like their latest quarter aka worth zero in the authors mind. Which one is cheaper again?
Pretty sure Seth Klarman and Warren Buffett are value investors. Seth owns FB and GOOG. Warren owns AMZN and AAPL. I'll take their side on this one
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