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App Economy Insights
Three signals in Big Tech this week:

โ˜ข๏ธ Meta is going nuclear $META
๐Ÿ“ฑ Apple picks Gemini for Siri $AAPL
โš™๏ธ TSMC bets $56B to power it all $TSM

Full story with visuals ๐Ÿ‘‡
https://t.co/2aKzq7IkxZ
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God of Prompt
RT @godofprompt: RICHARD FEYNMANโ€™S WHOLE LEARNING PHILOSOPHYโ€ฆ PACKED INTO ONE PROMPT

I spent days engineering a meta-prompt that teaches you any topic using Feynmanโ€™s exact approach:

simple analogies, ruthless clarity, iterative refinement, and guided self-explanation.

It feels like having a Nobel-level tutor inside ChatGPT and Claude๐Ÿ‘‡
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Moon Dev
MASSIVE ETH SHORT IDENTIFIED

$80,000,000 short just entered the market

get him boys https://t.co/tGcdM6Elcs
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Clark Square Capital
RT @ClarkSquareCap: Every day in liquidation nation https://t.co/Je7ZPOtNMq
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Quiver Quantitative
A new account on Polymarket has bet $14K on Rick Rieder being the next fed chair.

They will win $180K if correct. https://t.co/wh34ZLs5wv
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Offshore
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Startup Archive
Vinod Khosla: โ€œAn investor is an employee you canโ€™t fireโ€

Sam Altman asks Vinod how founders who want to build significant companies that will be around for decades should think about their investors.

Vinod believes that money is the smaller part of what you get from an investor:

โ€œAdvice and the right approach is the much more important part.โ€

He warns that investors who are happy with 3x their money may want to sell before you do. People who care about your vision wonโ€™t, and theyโ€™ll be much more tolerant when things inevitably go wrong.

To figure out if an investor will care about your vision, you have to talk to other foundersโ€”especially founders with a large vision who had hiccups along the way.

โ€œWhen things go wrong along an ambitious path is when you can actually judge an investor. I think an investor is an employee you canโ€™t fire, and thatโ€™s how you should think about it.โ€

He continues:

โ€œMost investors are negative value add to a company thatโ€™s trying to be ambitious if theyโ€™re just trying to get to liquidity as soon as possible.โ€

When a founder comes to Vinod with an ambitious vision, he tries to help them think through the steps to get there and how to thoughtfully discover the risks on the path to that vision.

Sam Altman adds:

โ€œThe only recipe Iโ€™ve ever seen work for making really impactful companies is both a giant vision and a good step one, two, and three. You have to have both, and neither without the other will work.โ€

Video source: @ycombinator (2019)
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Clark Square Capital
RT @TheAppInvestor: $GRVY - Ragnarok New World, day 2 - still #1 in TW cf picture. Taiwan is a top 5 worldwide market for mobile revenue, and one where Ragnarok IP shines since 2022.

Game is cross-platform ,there's likely revenue on PC (was the case for Origin too). https://t.co/4Fpx9Xvu3h
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Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: A quality valuation analysis on $NOW ๐Ÿง˜๐Ÿฝโ€โ™‚๏ธ

โ€ขNTM P/E Ratio: 52.28x
โ€ข3-Year Mean: 34.73x

โ€ขNTM FCF Yield: 3.61%
โ€ข10-Year Mean: 2.49%

As you can see, $NOW appears to be trading below fair value

Going forward, investors can expect to receive ~50% MORE in earnings per share & ~45% MORE in FCF per share๐Ÿง ***

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

BALANCE SHEETโœ…
โ€ขCash & Equivalents: $5.41B
โ€ขLong-Term Debt: $1.49B

$NOW has a strong balance sheet, an A S&P Credit Rating & 210x FFO Interest Coverage Ratio

RETURN ON CAPITALโŒโžก๏ธโœ…
โ€ข2021: 4.3%
โ€ข2022: 5.2%
โ€ข2023: 8.1%
โ€ข2024: 11.8%
โ€ขLTM: 13.3%

RETURN ON EQUITYโŒโžก๏ธโœ…
โ€ข2021: 7.0%
โ€ข2022: 7.4%
โ€ข2023: 27.3%
โ€ข2024: 16.5%
โ€ขLTM: 16.8%

$NOW return metrics are improving & trending in the right direction โ€” a sign the business is becoming more efficient

REVENUEโœ…
โ€ข2020: $4.52B
โ€ข2025E: $13.24B
โ€ขCAGR: 23.97%

FREE CASH FLOWโœ…
โ€ข2020: $1.37B
โ€ข2025E: 26.79%

NORMALIZED EPSโœ…
โ€ข2020: $0.93
โ€ข2025E: $3.48
โ€ขCAGR: 30.20%

SHARE BUYBACKSโŒ
โ€ข2019 Shares Outstanding: 986.12M
โ€ขLTM Shares Outstanding: 1.05B

MARGINS๐Ÿ†— / โœ…
โ€ขLTM Gross Margins: 78.1%
โ€ขLTM Operating Margins: 14.4%
โ€ขLTM Net Income Margins: 13.7%

SGA is $NOW largest expense eating ~41% of LTM revenue, something to keep an eye on

***NOW TO VALUATION ๐Ÿง 

As stated above, investors can expect to receive ~50% MORE in EPS & ~45% MORE in FCF per share

Using Benjamin Grahamโ€™s 2G rule of thumb, $NOW has to grow earnings at a 17.37% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be slightly less (16.84%) than the (17.37%) required growth rate:

2025E: $3.48 (25% YoY) *FY Dec

2026E: $4.08 (17% YoY)
2027E: $4.89 (20% YoY)
2028E: $5.57 (14% YoY)

$NOW has an excellent track record of meeting analyst estimates ~2 years out, so letโ€™s assume $NOW ends 2028 with $5.57 in EPS & see its CAGR potential assuming different multiples

34x P/E: $189๐Ÿ’ต โ€ฆ ~12.2% CAGR

33x P/E: $184๐Ÿ’ต โ€ฆ ~11.1% CAGR

32x P/E: $178๐Ÿ’ต โ€ฆ ~9.9% CAGR

31x P/E: $173๐Ÿ’ต โ€ฆ ~8.8% CAGR

30x P/E: $167๐Ÿ’ต โ€ฆ ~7.6% CAGR

29x P/E: $161๐Ÿ’ต โ€ฆ ~6.4% CAGR

As you can see, weโ€™d have to assume a >34x multiple for $NOW to have attractive return potential

At 32x earnings $NOW has ok CAGR potential

Given its -40% drawdown, $NOW appears to be fairly valued today at $135๐Ÿ’ต

Yes, $NOW is the workflow operating system for large enterprises, automating & governing critical work across IT, HR, security, & customer service

Once embedded, it becomes deeply integrated into how the organization runs, creating high switching costs & powerful long-term expansion

With AI layered onto these workflows, $NOW can increasingly automate & execute work end-to-end

Yet, todayโ€™s price offers little margin of safety

I consider $NOW a strong consideration with a decent margin of safety at $110๐Ÿ’ต, where I can reasonably expect ~13% CAGR while assuming a more conservative 28x
___

๐ƒ๐ˆ๐’๐‚๐‹๐Ž๐’๐”๐‘๐„โ€ผ๏ธ

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

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จ๐ฅ๐ 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€๐ง๐ฒ ๐จ๐ฉ๐ข๐ง๐ข๐จ๐ง๐ฌ ๐ž๐ฑ๐ฉ๐ซ๐ž๐ฌ๐ฌ๐ž๐ ๐š๐ซ๐ž ๐š๐ฌ ๐จ๐Ÿ ๐ญ๐ก๐ž ๐๐š๐ญ๐ž ๐จ๐Ÿ ๐ฉ๐ฎ๐›๐ฅ๐ข๐œ๐š๐ญ๐ข๐จ๐ง ๐š๐ง๐ ๐ฌ๐ฎ๐›๐ฃ๐ž๐œ๐ญ ๐ญ๐จ ๐œ๐ก๐š๐ง๐ ๐ž ๐ฐ๐ข๐ญ๐ก๐จ๐ฎ๐ญ ๐ง๐จ๐ญ๐ข๐œ๐ž.

๐ˆ๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง ๐ก๐š๐ฌ ๐›๐ž๐ž๐ง ๐จ๐›๐ญ๐š๐ข๐ง๐ž๐ ๐Ÿ๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐œ๐ž๐ฌ ๐›๐ž๐ฅ๐ข๐ž๐ฏ๐ž๐ ๐ญ๐จ ๐›๐ž ๐ซ๐ž๐ฅ๐ข๐š๐›๐ฅ๐ž ๐›๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐š๐ซ๐š๐ง๐ญ๐ž๐ž๐ ๐š๐ฌ ๐ญ๐จ ๐š๐œ๐œ๐ฎ๐ซ๐š๐œ๐ฒ ๐จ๐ซ ๐œ๐จ๐ฆ๐ฉ๐ฅ๐ž๐ญ๐ž๐ง๐ž๐ฌ๐ฌ. ๐๐š๐ฌ๐ญ ๐ฉ๐ž๐ซ๐Ÿ๐จ๏ฟฝ[...]