Offshore
Video
โ The All-In Podcast
RT @theallinpod: Google has a Gemini Problem, and Chamath has a plan to fix it ๐Ÿ“ˆ

On E225, the besties discussed how Google can cut ChatGPT's lead over Gemini without killing its $200B/year search ads business.

@DavidSacks:

"I think the problem that Google has with respect to ChatGPT, is Gemini is not getting the usage, and ChatGPT is just growing like crazy."

"If you look at how these models perform according to the benchmarks, Gemini is actually really good, but they have not caught up on the usage side."

@friedberg:

"Chamath, โ€Šyou're the CEO of Google, you've got a $200B run rate search ad business."

"What's the right integration of Gemini such that you don't massively disrupt the search ad business overnight?"

"Or do you not care and you're just gonna do it? I think that's the conundrum (Google) is dealing with."

@chamath:

"โ€ŠThe more difficult question is, what does the integration look like?"

"They're already inserting Gemini in all kinds of uncomfortable ways."

"So for example, if you use Gmail, or if you use Google Workspace, what happens today is all these random Gemini pop-ups come up all over the place."

"That is an implementation that happened at way too junior a level by people that have no product taste."

"And if you use the products every day, it would be hard for you to disagree with me."

@DavidSacks:

"โ€ŠThe Google homepage, would you replace that with an AI chatbot?"

@chamath:

"โ€ŠNo. Here's what I would do: I would first go to the critical other points that are around, that today do not cannibalize the blue links."

"If you look at the traffic patterns, almost as a Sankey diagram, the real thing you should be looking at here is where are the entry points into Google that then result in a clickable link."

"And what it would show you is that there are certain places that are highly de-optimized today for revenue generating events."

"They happen as a byproduct, but they don't happen as the use case."

"So in that example, you would put Gmail as a critical place, the Google one subscription, and there's like five or six other places."

"That's where I would put Gemini as the front door and start to habituate 300 to 500 million people a week in using that."

"I think then you can figure out over time how much money you can make from all of that, or how it directs derivative revenue, and figure out what to do with Google dot com last."

"But my point is, the experience in Gmail should be done today."

"The experience in YouTube should be done today."

"The experience in Google one should be done today."
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โ Wall St Engine
JPMORGANโ€™S MICHELE SAYS US DOLLAR HAD BECOME A 'CROWDED TRADE'; LARGE INSTITUTIONS DON'T SEE 'SELL AMERICA TRADE
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โ Wall St Engine
TRUMP: US ENVOY TO CHINA TO HANDLE CONSEQUENTIAL, COMPLEX ISSUE
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Offshore
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โ App Economy Insights
RT @EconomyApp: $AMD AMD Q1 FY25:

โ€ข Revenue +36% Y/Y to $7.4B ($320M beat).
โ€ข Gross margin 50% (+3pp Y/Y).
โ€ข Operating margin 11% (+10pp Y/Y).
โ€ข Non-GAAP EPS $0.96 ($0.03).
โ€ข Q2 rev. guidance ~$7.4B ($0.2B beat).

Dr. Lisa Su: "Our second quarter outlook highlights the strength of our differentiated product portfolio and consistent execution, positioning us well for strong growth in 2025."
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: Pepsiโ€™s $PEP FCF | Dividends Paid๐Ÿฅค

2017: $7.06B | $4.47B (63%)
2018: $6.13B | $4.93B
2019: $5.42B | $5.30B
2020: $6.37B | $5.51B
2021: $6.99B | $5.82B
2022: $5.60B | $6.17B
2023: $7.92B | $6.68B
2024: $7.19B | $7.23B (101%)

Dividends as a % of FCF, not what you want to see ๐Ÿ””
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โ Wall St Engine
TRUMP: DON'T KNOW ON TARIFFS EXEMPTIONS, WILL TAKE A LOOK, WANT TO KEEP IT SIMPLE
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โ Wall St Engine
TRUMP: NOT OPEN TO PULLING BACK 145% TARIFFS
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Offshore
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โ Wall St Engine
FED CHAIR POWELL HOLDS RATES UNCHANGED AT 4.5%, AS EXPECTED https://t.co/bGHnLHSuKJ
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Offshore
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โ Wall St Engine
FED: ECONOMY HAS CONTINUED TO EXPAND AT A SOLID PACE DESPITE SWINGS IN NET EXPORTS AFFECTING THE DATA; INFLATION REMAINS SOMEWHAT ELEVATED; RISKS OF HIGHER UNEMPLOYMENT AND HIGHER INFLATION HAVE RISEN https://t.co/x0PeIgJAdN
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โ Wall St Engine
FED: "UNCERTAINTY AROUND THE ECONOMIC OUTLOOK HAS INCREASED FURTHER"
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โ Wall St Engine
CHINAโ€™S PRESIDENT XI: I'M LOOKING FORWARD TO TALKING TIES AND COOPERATION WITH PUTIN
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โ Wall St Engine
TRUMP SAYS CHINA SHOULD REASSESS WHO ASKED FOR A MEETIN
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โ Wall St Engine
ROBINHOOD $HOOD SAID TO PLAN BLOCKCHAIN TO TRADE US ASSETS IN EUROPE
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Offshore
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: A quality valuation analysis on $MELI ๐Ÿง˜๐Ÿฝโ€โ™‚๏ธ

โ€ขNTM P/E Ratio: 44.66x
โ€ข1-Year Mean: 47.97x

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

Going forward, investors can receive ~7% MORE in earnings per share ๐Ÿง ***

Before we get into valuation, letโ€™s take a look at why $MELI is a great business

BALANCE SHEETโœ…
โ€ขCash & Short-Term Inv: $3.70B
โ€ขLong-Term Debt: $2.82B

$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 48x FFO Interest Coverage

RETURN ON CAPITAL๐Ÿ†—โžก๏ธโœ…
โ€ข2019: (4.8%)
โ€ข2020: 3.7%
โ€ข2021: 8.1%
โ€ข2022: 14.7%
โ€ข2023: 25.7%
โ€ข2024: 23.0%

RETURN ON EQUITY๐Ÿ†—โžก๏ธโœ…
โ€ข2019: (14.2%)
โ€ข2020: (0.1%)
โ€ข2021: 5.2%
โ€ข2022: 28.7%
โ€ข2023: 40.3%
โ€ข2024: 51.5%

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

REVENUESโœ…
โ€ข2019: $2.30B
โ€ข2024: $20.78B
โ€ขCAGR: 55.30%

FREE CASH FLOWโœ…
โ€ข2019: $314.29M
โ€ข2024: $7.05B
โ€ขCAGR: 86.32%

NORMALIZED EPSโœ…
โ€ข2019: ($3.71)
โ€ข2024: $37.69

SHARE BUYBACKSโŒ
โ€ข2019 Shares Outstanding: 48.69M
โ€ขLTM Shares Outstanding: 50.70M

MARGINS๐Ÿ†—โžก๏ธโœ…
โ€ขLTM Gross Margins: 52.7%
โ€ขLTM Operating Margins: 12.7%
โ€ขLTM Net Income Margins: 9.2%

***NOW TO VALUATION ๐Ÿง 

As stated above, investors can expect to receive ~7% MORE in EPS

Using Benjamin Grahamโ€™s 2G rule of thumb, $MELI has to grow earnings at a 22.33% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (22.33%) required growth rate:

2025E: $46.91 (24.5% YoY)
2026E: $64.98 (38.5% YoY)
2027E: $84.98 (30.8% YoY)

$MELI has an ok track record of meeting analyst estimates ~2 years out, but letโ€™s assume $MELI ends 2027 with $84.98 in EPS & see its CAGR potential assuming different multiples

40x P/E: $3400๐Ÿ’ต โ€ฆ ~17.6% CAGR

38x P/E: $3230๐Ÿ’ต โ€ฆ ~15.4% CAGR

36x P/E: $3060๐Ÿ’ต โ€ฆ ~13.2% CAGR

34x P/E: $2890๐Ÿ’ต โ€ฆ ~10.9% CAGR

As you can see, $MELI appears to have attractive return potential IF we assume >36x 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 ๐Ÿ”‘

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 $2165๐Ÿ’ต are buying it for a fair price, with little margin of safety โ€” 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 $1945๐Ÿ’ต (~10% below todayโ€™s price) where I can reasonably expect ~12% CAGR while assuming a conservative 32x end multiple, ensuring some margin of safety

#stocks #investing
___

๐ƒ๐ˆ๐’๐‚๐‹๐Ž๐’๐”๐‘๐„โ€ผ๏ธ: ๐“๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐Ž๐“ ๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐ฆ๐ž๐ง๐ญ ๐€๐๐ฏ๐ข๐œ๐ž. ๐๐š๐›๐ฒ๐ฅ๐จ๐ง ๐‚๐š๐ฉ๐ข๐ญ๐š๐ฅยฎ ๐š๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐ž๐ฉ๐ซ๐ž๐ฌ๐ž๐ง๐ญ๐š๐ญ๐ข๐ฏ๐ž๐ฌ ๐ฆ๐š๐ฒ ๐ก๐š๐ฏ๐ž ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ž ๐ฌ๐ž๐œ๐ฎ๐ซ๐ข๐ญ๐ข๐ž๐ฌ ๐๐ข๐ฌ๐œ๐ฎ๐ฌ๐ฌ๐ž๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐ž๐ž๐ญ.

๐“๐ก๐ž ๐ข๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง ๐œ๐จ๐ง๐ญ๐š๐ข๐ง๐ž๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐ž๐ž๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐ž๐ง๐๐ž๐ ๐Ÿ๐จ๐ซ ๐ข๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง๐š๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐ž๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐š๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐›๐ž ๐œ๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐ž๐ ๐š๐ฌ ๐ข๐ง๐ฏ๐ž๐ฌ๐ญ๐ฆ๐ž๐ง๐ญ ๐š๐๐ฏ๐ข๐œ๐ž ๐ญ๐จ ๐ฆ๐ž๐ž๐ญ ๐ญ๐ก๐ž ๐ฌ๐ฉ๐ž๐œ๐ข๐Ÿ๐ข๐œ ๐ง๐ž๐ž๐๐ฌ ๐จ๐Ÿ ๐š๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐š๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐š๐ญ๐ข๐จ๐ง. ๐๐š๐ฌ๐ญ ๐ฉ๐ž๐ซ๐Ÿ๐จ๐ซ๐ฆ๐š๐ง๐œ๐ž ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐š๐ซ๐š๐ง๐ญ๐ž๐ž ๐จ๐Ÿ ๐Ÿ๐ฎ๐ญ๐ฎ๐ซ๐ž ๐ซ๐ž๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.

๐ˆ๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง ๐œ๐จ๐ง๐ญ๐š๐ข๐ง๐ž๐ ๐ข๏ฟฝ[...]