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RT @ArthurMacwaters: Fantastic advice by Palmer
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RT @ArthurMacwaters: Fantastic advice by Palmer
Palmer Luckey explains why founders need to “make themselves obsolete”
“When I started Oculus, I thought I was really good at everything… But I was only the best at a lot of things in our company because I had been negligent in my hiring process.”
For example, Palmer was the best optical engineer in the company, but he realized that wasn’t something to be proud of.
“That was a failure. I failed my company and my investors by making myself a critical dependency for any of our products. And the reality is I’m actually not a very good optical engineer. I was just the best at Oculus.”
Once you start scaling your company, Palmer advises founders:
“You have to make it your goal to make yourself obsolete, even at the things you like doing.. And that was really tough for me at Oculus because I realized I was basically playing house. I was sitting around doing things that way better people could be doing faster, more effectively.”
He continues:
“I give my managers the same mindset. I say, ‘Hey, your job is not to do things. It is to get them done in the best way possible. If that means you do it, then you need to do it… If that means that somebody else needs to get hired to do it, that’s what you need to do—even if you like doing it.’”
Video source: @IMA_Network (2011) tweet
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $GOOG 🧘🏽♂️
•NTM P/E Ratio: 22.47x
•10-Year Mean: 23.65x
•NTM FCF Yield: 3.90%
•10-Year Mean: 4.18%
As you can see, $GOOG appears to be trading near fair value
Going forward, investors can receive ~5% MORE in earnings per share & ~6% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $GOOG is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $93.23B
•Long-Term Debt: $10.88B
$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & 370x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.4%
•2020: 16.2%
•2021: 27.6%
•2022: 26.1%
•2023: 28.1%
•LTM: 31.7%
RETURN ON EQUITY✅
•2019: 18.1%
•2020: 19.0%
•2021: 32.1%
•2022: 23.6%
•2023: 27.4%
•LTM: 32.1%
$GOOG has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $136.82B
•2023: $307.39
•CAGR: 17.57%
FREE CASH FLOW✅
•2018: $22.83B
•2023: $69.50B
•CAGR: 24.93%
NORMALIZED EPS✅
•2018: $2.19
•2023: $5.80
•CAGR: 21.50%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 14.07B
•LTM Shares Outstanding: 12.51B
By reducing its shares outstanding ~11%, $GOOG increased its EPS by ~12.3% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 58.1%
•LTM Operating Margins: 32.1%
•LTM Net Income Margins: 27.7%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~5% MORE in EPS & ~6% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $GOOG has to grow earnings at an 11.24% 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 (11.24%) required growth rate:
2024E: $7.98 (37.5% YoY) *FY Dec
2025E: $8.95 (12.2% YoY)
2026E: $10.19 (13.8% YoY)
2027E: $11.78 (15.6% YoY)
$GOOG has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $GOOG ends 2027 with $11.78 in EPS & see its CAGR potential assuming different multiples
24x P/E: $282.72💵 … ~14.0% CAGR
23x P/E: $270.94💵 … ~12.4% CAGR
22x P/E: $259.16💵 … ~10.7% CAGR
21x P/E: $247.38💵 … ~9.0% CAGR
20x P/E: $235.60💵 … ~7.3% CAGR
As you can see, $GOOG appears to have attractive return potential IF we assume >22x earnings (a multiple below its 5-year & 10-year mean)
At >24x earnings, $GOOG has aggressive CAGR potential & it’s not unreasonable for the business to even trade for ~24x (given its growth rate, moat, balance sheet, & exemplary capital allocation)
Those buying $GOOG today at $193💵 are getting a great business at a more than reasonable price, ensuring a slight margin of safety
Between cloud ☁️ , AI 🤖 , quantum computing ⚛️, $GOOG has a strong growth runway ahead
I consider $GOOG a strong buy with a substantial margin of safety closer to $179💵 where I could conservatively expect double-digit CAGR while assuming a 20x multiple
$GOOGL
___
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 𝐬𝐨𝐮𝐫�[...]
A quality valuation analysis on $GOOG 🧘🏽♂️
•NTM P/E Ratio: 22.47x
•10-Year Mean: 23.65x
•NTM FCF Yield: 3.90%
•10-Year Mean: 4.18%
As you can see, $GOOG appears to be trading near fair value
Going forward, investors can receive ~5% MORE in earnings per share & ~6% LESS in FCF per share 🧠***
Before we get into valuation, let’s take a look at why $GOOG is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $93.23B
•Long-Term Debt: $10.88B
$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & 370x FFO Interest Coverage
RETURN ON CAPITAL✅
•2019: 16.4%
•2020: 16.2%
•2021: 27.6%
•2022: 26.1%
•2023: 28.1%
•LTM: 31.7%
RETURN ON EQUITY✅
•2019: 18.1%
•2020: 19.0%
•2021: 32.1%
•2022: 23.6%
•2023: 27.4%
•LTM: 32.1%
$GOOG has strong return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $136.82B
•2023: $307.39
•CAGR: 17.57%
FREE CASH FLOW✅
•2018: $22.83B
•2023: $69.50B
•CAGR: 24.93%
NORMALIZED EPS✅
•2018: $2.19
•2023: $5.80
•CAGR: 21.50%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 14.07B
•LTM Shares Outstanding: 12.51B
By reducing its shares outstanding ~11%, $GOOG increased its EPS by ~12.3% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 58.1%
•LTM Operating Margins: 32.1%
•LTM Net Income Margins: 27.7%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~5% MORE in EPS & ~6% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $GOOG has to grow earnings at an 11.24% 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 (11.24%) required growth rate:
2024E: $7.98 (37.5% YoY) *FY Dec
2025E: $8.95 (12.2% YoY)
2026E: $10.19 (13.8% YoY)
2027E: $11.78 (15.6% YoY)
$GOOG has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $GOOG ends 2027 with $11.78 in EPS & see its CAGR potential assuming different multiples
24x P/E: $282.72💵 … ~14.0% CAGR
23x P/E: $270.94💵 … ~12.4% CAGR
22x P/E: $259.16💵 … ~10.7% CAGR
21x P/E: $247.38💵 … ~9.0% CAGR
20x P/E: $235.60💵 … ~7.3% CAGR
As you can see, $GOOG appears to have attractive return potential IF we assume >22x earnings (a multiple below its 5-year & 10-year mean)
At >24x earnings, $GOOG has aggressive CAGR potential & it’s not unreasonable for the business to even trade for ~24x (given its growth rate, moat, balance sheet, & exemplary capital allocation)
Those buying $GOOG today at $193💵 are getting a great business at a more than reasonable price, ensuring a slight margin of safety
Between cloud ☁️ , AI 🤖 , quantum computing ⚛️, $GOOG has a strong growth runway ahead
I consider $GOOG a strong buy with a substantial margin of safety closer to $179💵 where I could conservatively expect double-digit CAGR while assuming a 20x multiple
$GOOGL
___
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 𝐬𝐨𝐮𝐫�[...]
Offshore
Dimitry Nakhla | Babylon Capital® A quality valuation analysis on $GOOG 🧘🏽♂️ •NTM P/E Ratio: 22.47x •10-Year Mean: 23.65x •NTM FCF Yield: 3.90% •10-Year Mean: 4.18% As you can see, $GOOG appears to be trading near fair value Going forward, investors…
�𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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Stock Analysis Compilation
Perritt CM on Alliance Entertainment $AENT US
Thesis: Alliance Entertainment's remarkable turnaround story showcases its path from SPAC struggles to operational excellence—discover how this company is set to reclaim growth
(Extract from their article) https://t.co/Ad9wvfUqkI
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Perritt CM on Alliance Entertainment $AENT US
Thesis: Alliance Entertainment's remarkable turnaround story showcases its path from SPAC struggles to operational excellence—discover how this company is set to reclaim growth
(Extract from their article) https://t.co/Ad9wvfUqkI
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Stock Analysis Compilation
RS Investments on FedEx $FDX US
Thesis: FedEx's strategic focus on efficiency and capital discipline charts a path to sustained profitability—explore its long-term potential.
(Extract from their Q3 letter) https://t.co/kgoB9wngIV
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RS Investments on FedEx $FDX US
Thesis: FedEx's strategic focus on efficiency and capital discipline charts a path to sustained profitability—explore its long-term potential.
(Extract from their Q3 letter) https://t.co/kgoB9wngIV
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Parnassus on MercadoLibre $MELI US
Thesis: MercadoLibre leads Latin America's e-commerce and fintech revolution, leveraging its logistics dominance to drive unmatched growth
(Extract from their Q3 letter) https://t.co/reZEDk0hwm
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Parnassus on MercadoLibre $MELI US
Thesis: MercadoLibre leads Latin America's e-commerce and fintech revolution, leveraging its logistics dominance to drive unmatched growth
(Extract from their Q3 letter) https://t.co/reZEDk0hwm
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Stock Analysis Compilation
Orbis on Kasikornbank $KBANK TB
Thesis: Kasikornbank’s balance sheet cleanup and undervaluation create an attractive entry point with potential for strong dividend growth
(Extract from their Q3 letter) https://t.co/p4zizweacQ
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Orbis on Kasikornbank $KBANK TB
Thesis: Kasikornbank’s balance sheet cleanup and undervaluation create an attractive entry point with potential for strong dividend growth
(Extract from their Q3 letter) https://t.co/p4zizweacQ
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Investing visuals
Robinhood $HOOD had a massive run in 2024 and closed the years up +201%
Here's what $HOOD's revenue mix looks like👇 https://t.co/cLE9qZ6xyA
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Robinhood $HOOD had a massive run in 2024 and closed the years up +201%
Here's what $HOOD's revenue mix looks like👇 https://t.co/cLE9qZ6xyA
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Startup Archive
Airbnb founder Brian Chesky on how to design an amazing user experience
“How do you make something for a million people? I don’t know where to start. But if you pick one person, study them, and take their journey, you can actually build something really personal. You can design something and keep iterating until they love it. Don’t stop improving it until that person loves it, and you’re not allowed to move to the second person until the first person loves it. Then you get the second person and keep iterating until they love it. And so on.”
As Brian argues, designing the perfect experience for one person is a much easier place to start than trying to design something for a million people. You can figure out how to scale it later.
“If you can design something really amazing using the hand-crafted part of your brain, then you can reverse-engineer how to industrialize this millions of times over. And what happens is people love your product and they tell everyone else about your product.”
When people truly love your service, they become your marketing department. But counterintuitively, the biggest and best products seem to mostly get started by solving a very specific problem for a very specific user.
Video source: @StanfordGSB (2023)
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Airbnb founder Brian Chesky on how to design an amazing user experience
“How do you make something for a million people? I don’t know where to start. But if you pick one person, study them, and take their journey, you can actually build something really personal. You can design something and keep iterating until they love it. Don’t stop improving it until that person loves it, and you’re not allowed to move to the second person until the first person loves it. Then you get the second person and keep iterating until they love it. And so on.”
As Brian argues, designing the perfect experience for one person is a much easier place to start than trying to design something for a million people. You can figure out how to scale it later.
“If you can design something really amazing using the hand-crafted part of your brain, then you can reverse-engineer how to industrialize this millions of times over. And what happens is people love your product and they tell everyone else about your product.”
When people truly love your service, they become your marketing department. But counterintuitively, the biggest and best products seem to mostly get started by solving a very specific problem for a very specific user.
Video source: @StanfordGSB (2023)
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