App Economy Insights
Microsoft + OpenAI just re-upped the deal.

It clears the way for OpenAI to become a for-profit public benefit corporation.

🔹 $MSFT gets 27% stake (~$135B).
🔹 Rights to OpenAI models through 2032.
🔹 No more right of first refusal for Azure.
🔹 $250B Azure spend locked in. https://t.co/KKRiWynsDT
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Clark Square Capital
Cat's out of the bag now

H/T @ClarkSquareCap for noting this shitco Vera Bradley $VRA is putting its HQ on the market for a sale-leaseback for $30MM, having started the day at <$55MM market cap - up 25% now https://t.co/GIhsSs5Lwk https://t.co/4aVrcVy3fe - AuxReignots
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $NFLX 🧘🏽‍♂️

•NTM P/E Ratio: 35.66x
•3-Year Mean: 34.71x

•NTM FCF Yield: 2.36%
•3-Year Mean: 2.36%

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

Going forward, investors can receive roughly the same in EPS & FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $9.32B
•Long-Term Debt: $14.46B

$NFLX has a strong balance sheet, an A S&P Credit Rating, & 13x FFO Interest Coverage

RETURN ON CAPITAL✅
•2020: 15.5%
•2021: 18.2%
•2022: 14.9%
•2023: 18.5%
•2024: 24.3%
•LTM: 29.4%

$NFLX has strong returns on capital, highlighting the financial efficiency of the business

REVENUES✅
•2020: $25.00B
•2025E: $45.07B
•CAGR: 12.51%

FREE CASH FLOW✅
•2020: $1.93B
•2025E: $9.08B
•CAGR: 36.30%

NORMALIZED EPS✅
•2020: $6.08
•2025E: $25.37
•CAGR: 33.07%

SHARE BUYBACKS🆗
•2020 Shares Outstanding: 440.92M
•LTM Shares Outstanding: 426.15M

By reducing its shares outstanding by 3%, $NFLX increased its EPS by 3.1% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 48.1%
•LTM Operating Margins: 29.1%
•LTM Net Income Margins: 24.0%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive roughly the same in EPS & FCF per share

Using Benjamin Graham’s 2G rule of thumb, $NFLX has to grow earnings at a 17.83% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be just greater than the (17.83%) required growth rate:

2025E: $25.37 (28% YoY) *FY Dec

2026E: $32.40 (27% YoY)
2027E: $39.38 (22% YoY)
2028E: $46.25 (17% YoY)

$NFLX has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $NFLX ends 2028 with $46.25 in EPS & see its CAGR potential assuming different multiples

36x P/E: $1655💵 … ~13.9% CAGR

34x P/E: $1572💵 … ~11.8% CAGR

32x P/E: $1480💵 … ~9.7% CAGR

30x P/E: $1387💵 … ~7.5% CAGR

As you can see, $NFLX appears to have attractive return potential if we assume >34x earnings multiple

Given its growth trajectory and quality, a >34x multiple may not be unreasonable, especially as $NFLX continues to unlock long-term potential in APAC and EMEA

Today, at $1100💵 $NFLX appears to be a fair consideration for investment

Yet at >34x, the margin of safety is slim

At $960💵 $NFLX offers a decent margin of safety, supporting a 12% CAGR at a 30x multiple
___

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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Quiver Quantitative
The House has now been out on recess since September 19th.

They've been in session for just 20 days over the last four months.

They've made a combined $25M in salary.

Representative Massie has said that the Speaker is trying to avoid a vote on the Epstein resolution.
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Quiver Quantitative
BREAKING: Senator Josh Hawley has introduced a bipartisan bill to regulate AI chatbots.

"This is a new frontier that will be a nightmare for the American people, unless Congress does its job"

- @HawleyMO https://t.co/SvvUg7SlBN
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Quiver Quantitative
Senator Josh Hawley: Congress hasn't regulated AI because they are bought and paid for by big tech companies https://t.co/hsy3etlopJ
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Quiver Quantitative
JUST IN: A Polymarket trader just bet almost $20K that the Israel-Hamas ceasefire will be cancelled this year.

Odds have risen to 44%, after Netanyahu announced new strikes in the Gaza Strip. https://t.co/5wo8YHdflc
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Quiver Quantitative
JUST IN: Nvidia, $NVDA, has announced a partnership with Palantir, $PLTR.
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Clark Square Capital
Looking forward to this one!

G’day everyone!

@joekraymond has agreed to do what I believe will be his first-ever interview (we just need to finalize the exact format for compliance reasons).

If you’re not familiar with Joe, he is, in my view, the best at publishing case studies on some of the most obscure micro-cap winners.

Based on word on the street, the depth of his research, and his thoughtful commentary, it's hard not to be convinced he’s a great investor.

So if you have any good questions about his background, investing style, or the historical winners he’s analyzed, drop them below and I’ll try to include the most relevant ones. - Mikro Kap David
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Investing visuals
JUST IN: $PLTR partners with $NVDA:

Jensen: "This is probably the single most important enterprise stack in the world, the Palantir Ontology."

Woah. https://t.co/Qqe99bWXaS

$PLTR visualized:

• How they make money
• Sentiment
• Geography
• Business segments
• Financials
• Cash
• Margins
• Valuation
• Short thesis

Let's dive in! 🧵👇 https://t.co/fVexfaExCC - Investing visuals
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