⁠App Economy Insights
🛡️ Cybersecurity Earnings Roundup.

AI is transforming the battlefield—who’s leading the charge?

Latest insights on:

🔘 Palo Alto $PANW
🔘 Crowdstrike $CRWD
🔘 Fortinet $FTNT
🔘 Zscaler $ZS
🔘 Cloudflare $NET
https://t.co/smFodvnfEd
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⁠Stock Analysis Compilation
Loomis Sayles on Meta $META US

Thesis: Meta’s unmatched scale and advertising potential create a long-term growth story at a discounted valuation

(Extract from their Q3 letter) https://t.co/FFiDCiZcpr
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⁠Quiver Quantitative
New all-time high for Pelosi's portfolio.

She has made $1.6M in the stock market so far today, per our estimates.

We estimate that she is now worth $272M: https://t.co/qXeBVsSnLZ
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⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $MELI 🧘🏽‍♂️

•NTM P/E Ratio: 49.60x
•1-Year Mean: 48.36x

As you can see, $MELI appears to be trading near fair value

Going forward, investors can receive roughly the same in earnings per share 🧠***

Before we get into valuation, let’s take a look at why $MELI is a great business

BALANCE SHEET✅
•Cash & Short-Term Inv: $6.67B
•Long-Term Debt: $3.04B

$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 20x FFO Interest Coverage

RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.2%
•2023: 25.3%
•LTM: 20.1%

RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•LTM: 42.6%

$MELI has strong and improved return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2018: $1.44B
•2023: $14.47B
•CAGR: 58.64%

FREE CASH FLOW✅
•2018: $133.35M
•2023: $4.63B
•CAGR: 203.29%

NORMALIZED EPS✅
•2018: ($0.82)
•2023: $22.84

SHARE BUYBACKS❌
•2013 Shares Outstanding: 44.53M
•LTM Shares Outstanding: 51.28M

MARGINS🆗➡️✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 7.8%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive roughly the same in EPS

Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 24.80% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than the (24.80%) required growth rate:

2024E: $33.59 (47.1% YoY) *FY Dec

2025E: $45.76 (36.2% YoY)
2026E: $62.50 (36.6% YoY)

$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2026 with $62.50 in EPS & see its CAGR potential assuming different multiples

40x P/E: $2500💵 … ~15.5% CAGR

38x P/E: $2375💵 … ~12.7% CAGR

36x P/E: $2250💵 … ~9.7% CAGR

34x P/E: $2125💵 … ~6.7% CAGR

As you can see, $MELI appears to have attractive return potential IF we assume >38x earnings (a multiple justified by its growth rate & moat)

$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum

Key factors contributing to its promising outlook include 🔑

1. Margin expansion

2. Unparalleled access to Latin America's burgeoning economy

3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things

Those buying $MELI today at $1856💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return

I consider $MELI a strong buy closer to $1,700💵 (~9% below today’s price) where I can reasonably expect ~14% CAGR while assuming a 36x end multiple, ensuring some margin of safety

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Startup Archive
RT @foundertribune: "What important truth do very few people agree with you on?" by Peter Thiel https://t.co/rKleim5OTb
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⁠Startup Archive
"Brilliant thinking is rare, but courage is in even shorter supply than genius." - Peter Thiel

"What important truth do very few people agree with you on?" by Peter Thiel https://t.co/rKleim5OTb - The Founders' Tribune
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⁠Startup Archive
Stack Overflow founder Joel Spolsky breaks down what made Amazon “the best company in the world”

In this 2013 interview, Joel breaks down Jeff Bezos’s process for inventing new companies:

“The Amazon strategy is to constantly try to find the moving parts in the business and break them apart.”

He continues:

“They have 37 businesses and everybody looks at them and says, ‘These are unrelated businesses.’… But this is the new business model: I’ll start with a bookstore, and I’ll just break off every little single piece that I can find, and I’ll make them all compete as if they were independent businesses… This is Jeff Bezos’s mitosis - his system for inventing new companies.”

It is through this process that Amazon has created AWS, Mechanical Turk, Fulfillment, and dozens of other businesses. AWS alone generated almost $100 billion of revenue last year and comprises 17% of Amazon’s total revenue.

Joel contrasts this to the strategies of other tech giants:

“What’s Yahoo’s system for inventing new companies? I don’t know, I’ll buy something really popular - that’s all I can figure out. What’s Microsoft’s? I don’t even know. Google was like, let’s make 20% time and people will do random stuff.”

Video source: @twistartups @jason (2013)
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⁠Startup Archive
RT @mikemcg0: Jeff Bezos's "mitosis" for inventing new companies

Stack Overflow founder Joel Spolsky breaks down what made Amazon “the best company in the world”

In this 2013 interview, Joel breaks down Jeff Bezos’s process for inventing new companies:

“The Amazon strategy is to constantly try to find the moving parts in the business and break them apart.”

He continues:

“They have 37 businesses and everybody looks at them and says, ‘These are unrelated businesses.’… But this is the new business model: I’ll start with a bookstore, and I’ll just break off every little single piece that I can find, and I’ll make them all compete as if they were independent businesses… This is Jeff Bezos’s mitosis - his system for inventing new companies.”

It is through this process that Amazon has created AWS, Mechanical Turk, Fulfillment, and dozens of other businesses. AWS alone generated almost $100 billion of revenue last year and comprises 17% of Amazon’s total revenue.

Joel contrasts this to the strategies of other tech giants:

“What’s Yahoo’s system for inventing new companies? I don’t know, I’ll buy something really popular - that’s all I can figure out. What’s Microsoft’s? I don’t even know. Google was like, let’s make 20% time and people will do random stuff.”

Video source: @twistartups @jason (2013) - Startup Archive
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⁠Stock Analysis Compilation
Horos AM on Noah Holdings $NOAH US

Thesis: Noah’s pivot to shareholder-friendly policies and global expansion marks a turning point for its undervalued stock

(Extract from their Q3 letter) https://t.co/YEUYTuBHHm
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