Fountainheadinvesting

Fountainhead Investing

  • Objective Analysis: Research On High Quality Companies With Sustainable Moats
  • Tech Focused: 60% Allocated To AI, Semiconductors, Technology

5 Star Tech Analyst Focused On Excellent Companies With Sustainable Moats

Category: Technology

Categories
AI Market Outlook Stocks Technology

Risk Management And Portfolio Strategy

Selling Overpriced Stocks and Moving to cash

I sold 15-25% of several stocks on Friday, 02/21/2025 as a de-risking exercise in the wake of weakening economic indicators, which I wrote about in this article.

Here’s the list and you can see them in the Trade Alerts Section as well.

ARISTA NETWORKS (ANET) $101

ADVANTEST CORP SPON ADR (ATEYY) $63

AMAZON INC (AMZN) $218

APPLIED MATERIALS INC COM (AMAT) $174

APPLOVIN CORP COM CL A (APP) $430

ARM HOLDINGS PLC (ARM) $147

BROADCOM INC COM (AVGO) $222

DOORDASH (DASH) $201.65

DUOLINGO INC CL A COM (DUOL) $410

DUTCH BROS INC CL A (BROS) $80

GITLAB INC CLASS A-COM (GTLB) $65.75

KLAVIYO INC (KVYO) $42.75

MICRON TECHNOLOGY INC (MU) $101

NETFLIX (NFLX) $1,012

SAMSARA INC (IOT) $54.25

SPOTIFY TECHNOLOGY S.A. COM (SPOT) $626

Earnings alone won’t save this market from a correction

Earnings season for Q4-2024 is mostly over except for Nvidia (NVDA), which reports on 02/26.  M-7, and overall earnings were mostly lackluster and while most beat sandbagged estimates as always, the beats were nothing to write home about.

Instead, there was a lot of pressure for Q4 earnings to outperform to trump bearish indicators such as stubborn inflation, high valuations, tariff uncertainty, the likelihood of no interest cuts in 2025, difficult housing markets with 7% mortgage rates, weakening consumer sentiment, and so on….

Analysts, according to FactSet are still forecasting an estimated $268-$275 in 2025 S&P 500 earnings (about 11.5% growth), but this number seems more and more likely to either come in at the lower end or be revised lower as the year progresses. Second – the two-year back-to-back gains of 23% are a historical anomaly so I have to keep that in mind of a likely down year or a flat to 7-8% gain from already high levels.

Against all that is the $320Bn in Capex from the hyperscalers (That’s real money, not an economic survey or estimate  – therefore the strongest catalyst ), which is extremely good for the AI industry and a very strong and vocal belief in the fundamentals – longer term we are on solid footing, and the AI story is just beginning, there are a lot of benefits to reap.

Active Risk Manangment

In short – a balancing act, which means there has to be active risk management. And especially when almost all the economic indicators came worse than expected, with sticky inflation and slower growth – stagflation. The Michigan survey of inflation expectations is followed closely by the Feds, and the weakening PMIs coincide with Walmart’s lower guidance. The reports have a lot of meat and don’t paint a pretty picture.

I’m not selling/trading the index or the stalwarts like Apple (AAPL), and Alphabet (GOOG) – there will be a flight to quality, thus not recommended. Even with a correction I don’t see the S&P 500 falling beyond 5,600-5,780. 5,780 was the Nov 5th election day level, that’s just 3.8% lower, not worth it.

My portfolio is tech-centric, and sometimes the drops in those are between 20% and 30% – AppLovin (APP), Palantir (PLTR), and Duolingo (DUOL) are examples, plus they’ve performed far better than expectations so taking some off is a great de-risking strategy for me.

Categories
Industry Stocks Technology

Confluent’s Excellent Quarter Is A Major Inflection Point

Confluent Data Streaming

02/11/2025

Confluent (CFLT) $37 – Still worth buying.

I’ve owned it for over two years but will pyramid (add smaller quantities on a large base) it further.

Why is this company still worth investing in after a 20% post-earning bump?

Four important catalysts

Databricks partnership: The partnership with Databricka, which is much better known and valued increases brand awareness and opens a lot of new opportunities and doors.

This could accelerate growth from the current 22-23%.

Strong customer base: 90% of its revenues are coming from 100K + ARR clients.

The $1Mn+cohort saw the highest growth, and Confluent managed a net ARR of 117%, indicating strong upselling.

A changing data processing market: The entire batch processing model could be up for grabs – customers moving at the speed of light and willing to pay for the latest technology could be a huge TAM. 

This is a paradigm shift, which Confluent has been trying to build into for a decade. 2025 might be that inflection year, with all the AI build-outs and use cases that are likely to need live processing – Confluent is the leader in that field. To be sure it’s not going to throw data processing models into obsolescence, why would you spend money on data that doesn’t need to be processed in real-time, but could take a large chunk of that market?

Snowflake acquiring RedPanda: Snowflake is reportedly trying to buy streaming competitor RedPanda for about 40x sales: While it’s not an obvious comparison, Red Panda is supposedly less than 10% of Confluent’s revenues but growing at 200-300%. But it’s the synergy with the larger data provider that’s getting it a massive price tag – Snowflake would love to have this arrow in its quiver of data tools.

Confluent is best positioned to take advantage of the possible shift from batch processing to processing in data streaming; its founders invented Apache Kafka, the open-source model for data streaming. And while its own invention is available for free – managing and maintaining it at scale needs the paid version. Over the years with the focus on Confluent Cloud, Confluent gets 90% of its $1Bn revenue from customers over $100K in annual revenue. 

Confluent has the cash the tech chops and the focus – sure Apache Kafka is open source and many cloud service providers like AWS and Microsoft also provide enough competition, but no one has the product breadth that Confluent does.

I would not be surprised if Confluent’s multiple expands from the current 8x sales after this earnings call.

Here are the details of the December 2024, 4th quarter earnings:

  • Q4 Non-GAAP EPS of $0.09 beat by $0.03.
  • Revenue of $261.2Mn (+22.5% Y/Y) beat by $4.32Mn.
  • Q4 subscription revenue of $251Mn up 24% YoY
  • Confluent Cloud revenue of $138Mn up 38% YoY
  • 2024 subscription revenue of $922Mn up 26% YoY
  • Confluent Cloud revenue of $492Mn up 41%YoY
  • 1,381 customers with $100,000 or greater in ARR, up 12% YoY.
  • 194 customers with $1Mn or greater in ARR, 23% YoY.

Financial Outlook

Q1 2025 OutlookFY 2025 Outlook
Subscription Revenue$253-$254 million$1.117-$1.121 billion
Non-GAAP Operating Margin~3%~6%
Non-GAAP Net Income Per Diluted Share$0.06-$0.07 vs. consensus of $0.06~$0.35 vs. consensus of $0.35

Categories
Cloud Service Providers Industry Semiconductors Stocks Technology

Marvell’s Investment Case Got Stronger With Hyperscaler Capex

Marvell Custom Silicon

Marvell Technology (MRVL) $114

I missed buying this in the low 90s, waiting to see if their transformation to an AI chip company was complete. Having a cyclical past, with non-performing business segments made me hesitate, besides far too many promises have been made in the AI space only for investors to be disappointed.

Marvel has been walking the talk, Q3 results in Dec 2024 were exemplary, and guidance even better.

Hyperscaler demand

With a planned Capex of $105Bn for 2025, Amazon confirmed on their earnings call that the focus will continue on custom silicon and inferencing. Amazon and Marvell have a five-year, “multi-generational” agreement for Marvell to provide Amazon Web Services with the Trainium and Inferentia chips and other data center equipment. Since the deal is “multi-generational,” Marvell will continue to supply the released Trainium2 5nm (Trn2) while also supplying the newly-announced Trainium3 (Trn3) on the 3nm process node expected to ship at the end of 2025. Amazon is an investor in Anthropic with plans to build a supercomputing system with “hundreds of thousands” of Trainium2 chips called Project Rainier. The DeepSeek aftermath does suggest a further democratization of AI, as inference starts gaining prominence from 2026.

Critically, like other hyperscalers Microsoft, Meta, and Alphabet, Amazon announced a high Capex (Capital Expenditure) plan of $105Bn for 2025, 27% higher than 2024, which itself was 57% higher than the previous year, for AI cloud and datacenter buildout. It was the last of the big four to confirm that massive AI spending was very much on the cards for 2025.

Here’s the scorecard for 2025 Capex, totaling over $320Bn. A few months back, estimates were swirling for $250 to $275. Goldman had circulated $300Bn in total Capex for the year, and these four have already planned more.

Amazon $105Bn
Microsoft $80Bn
Alphabet $75Bn
Meta $60 to $65Bn
Total $320Bn

The earnings call discussed DeepSeek R1 and the lower AI cost structure that it may presage, with the possibility of lower revenue for AI cloud services.

“We have never seen that to be the case,” Amazon CEO Andy Jassy said on the call. “What happens is companies will spend a lot less per unit of infrastructure, and that is very, very useful for their businesses. But then they get excited about what else they could build that they always thought was cost prohibitive before, and they usually end up spending a lot more in total on technology once you make the per unit cost less.”
Amazon plans to spend heavily on custom silicon and focus on inference as well besides buying Blackwells by the truckload.

Q3-FY2025

Marvell reported impressive Q3 results that beat revenue estimates by 4% and adjusted EPS estimates by 5.5%, led by strong AI demand. FQ3 revenue accelerated to 6.9% YoY and 19.1% QoQ growth to $1.52 billion, helped by a stronger-than-expected ramp of the AI custom silicon business.

For the next quarter, management expects revenue to grow to 26.2% YoY and 18.7% QoQ to $1.8 billion at the midpoint. The Q4 guide beats revenue estimates by 9.1% and adjusted EPS estimates by 13.5%. Management expects to significantly exceed the full-year AI revenue target of $1.5 billion and indicated that it could easily beat the FY2026 AI revenue target of $2.5 billion.

Marvell has other segments, which account for 27% of the business that are not performing as well, but they’re going full steam ahead to focus on the custom silicon business and expect total data center to exceed 73% of revenue in the future.

  • Adjusted operating margin – 29.7% V 29.8% last year, and better than the management guide of 28.9%.
  • Management guidance for Q4 is even higher at 33%.
  • Adjusted net income – $373 Mn or 24.6% of revenue compared to $354.1 Mn or 25% of revenue last year.
  • Management has also committed to GAAP profitability in Q4, and continued improvements.

Custom Silicon – There are estimates of a TAM (Total Addressable Market) of $42 billion for custom silicon by CY2028, of which Marvell could take 20% market share or $8Bn of the custom silicon AI opportunity, I suspect we will see a new forecast when the company can more openly talk about an official announcement. On the networking side, the TAM is another $31 billion.

“Oppenheimer analyst Rick Schafer thinks that each of Marvell’s four custom chips could achieve $1 billion in sales next year. Production is already ramping up on the Trainium chip for Amazon, along with the Axion chip for the Google unit of Alphabet. Another Amazon chip, the Inferentia, should start production in 2025. Toward the end of next year, deliveries will begin on Microsoft’s Maia-2, which Schafer hopes will achieve the largest sales of all.”

Key weaknesses and challenges

Marvell carries $4Bn in legacy debt, which will weigh on its valuation.

The stock is already up 70% in the past year, and is volatile – it dropped $26 from $126 after the DeepSeek and tariffs scare.

Custom silicon, ASICs (Application Specific Integrated Circuits) have strong competition from the likes of Broadcom and everyone is chasing market leader Nvidia. Custom silicon as the name suggests is not widely used like an Nvidia GPU and will encounter more difficult sales cycles and buying programs.

Drops in AI buying from data center giants will hurt Marvell.

Over 50% of Marvell’s revenue comes from China, and it could become a victim of a trade war.

Valuation: The stock is selling for a P/E of 43, with earnings growth of 80% in FY2025 and 30% after that for the next two years – that is reasonable. It has a P/S ratio of 12.6, with growth of 25%. It’s a bit expensive on the sales metric, but with AI taking an even larger share of the revenue pie, this multiple could increase.

Categories
AI Stocks Technology

UiPath: The Path Forward Is Getting Smoother

  • UiPath’s competitive edge lies in its AI integration, SAP partnership and industry-agnostic automation solutions, making it a strong contender in RPA despite generative AI threats.
  • Recent struggles were due to sales execution issues, and competition, but the company shows signs of recovery with strategic changes and a focus on large clients and collaborations.
  • Founder Daniel Dines’ return as CEO, workforce reductions, and strategic partnerships, especially with SAP, are pivotal in steering UiPath back on track.
  • Despite current challenges, UiPath’s strong cash position, cost-saving measures, and promising AI Agentic capabilities make it a worthwhile investment with limited downside risk.

UiPath’s (PATH) updated financial forecast and current valuation do make a great case for investment as a GARP, now that it’s likely to grow only in the mid-teens, valued at just 5X sales, and 25x adjusted earnings. Besides, cash flow is almost double the adjusted operating income, so that too is a plus. I own some and plan to accumulate on declines.

Here’s the complete article on Seeking Alpha.

Categories
Ad Tech Stocks Technology

Roblox (RBLX) $58, A Solid But Overpriced Company

Roblox (RBLX) is a market leader for gaming apps and the short report from The Hindenburg. alleging irregularities in engagement metrics had a negligible impact on its share price.

In October 2024, Roblox shares dropped 9% after Hindenburg’s short thesis but quickly recovered, closing only 2% lower, highlighting investor resilience. The stock, which was coasting in the low forties then, has gained almost 50% since then to $58 today.

I believe it is a solid company. Although it is overpriced, it is worth considering as an investment if the price drops below $50.

Positives

Market Leader: Roblox is the number one grossing app for the iPad across the App Store, and regularly among the top 10 apps for the iPhone, across categories, according to data collected by Refinitiv. 

Not gaming the market: Roblox also showed strong App Store momentum across some of the biggest gaming markets in the world, including North America, Europe, and SEA. I believe these gross numbers are extremely difficult if not impossible to fudge, instead it supports Roblox’s strong commercial value and future prospects.

Good quarterly numbers and guidance: Roblox’s booking in Q2 grew around 22% YoY, to $955Mn, and it guided to $1-$1.025Bn for Q3.

Partnering with Shopify: The commercial integration partnership with Shopify also helps Roblox further build out its virtual market, with better monetization opportunities.

Wall Street likes it: Ken Gawrelski, an analyst from Wells Fargo, maintained a Buy rating on Roblox, raising the price target to $58.00. He observes that the company’s strong engagement trends continue to outperform expectations, with a significant increase in concurrent users and app downloads, indicating robust user growth. These factors contribute to a raised third-quarter total bookings growth forecast, which is now expected to surpass the company’s guidance and the consensus estimates. 

Great monetization tools: Roblox’s expansion of monetization tools, and strength in in-game spending is a significant competitive advantage for driving long-term developer and user engagement on the platform. Shopify and other initiatives are expected to enable developers to better monetize their offerings. 

The trend is their friend: The strategic shift towards direct response advertising, including new partnerships and live commerce testing, indicates that Roblox can make the most of the new opportunities in digital advertising. 

These initiatives give me confidence in the company’s sustainable long-term revenue growth.

Negatives

Hindenburg’s biggest grouse was the possibility of fudging and overstating user growth and engagement numbers, which though denied strongly by the company and discarded by analysts could create doubts about the valuation in the future.

Revenue growth forecasts for the next 3 years is around 16-18% and with the stock selling at 7.5x sales, it is expensive and a quarterly miss could lead to a large drop. Even the positive Wells Fargo analyst had a price target of $58, we’re already crossed that level.

It is loss-making on a GAAP basis with heavy stock-based compensation, which likely sets a cap on its valuation. That said cash flow is strong – around 19% of revenue.

Overall, Hindenburg didn’t make an impact, Roblox is performing well but I would be very careful about the price and get it lower to make a meaningful return.

Categories
AI Cloud Service Providers Technology

Alphabet (GOOG) $165, Beset By Legal Issues Could Stay Range-Bound

An interesting article in the Wall Street Journal discusses Google’s anti-trust case in more detail. Quoting from the article:

“Some of the DOJ’s proposals were expected, such as the divestiture of the Chrome browser and a ban on payments to Apple AAPL in exchange for default or preferred placement of Google’s search engine on Apple’s devices”, which are minor and something Google could take in its stride.

But the government’s proposal of “Restoring Competition Through Syndication And Data Access”, could be more harmful in the long run.

Restoring competition through access, which involves Google providing its search index—essentially the massive database it has about all sites on the web—to rivals and potential rivals at a “marginal cost.”, in my opinion, is stripping Google of its IP, and competitive advantages, which it has built through decades of human and monetary capital. It is draconian and a massive overreach. It gets worse, if the government has its way, Google would also have to give those same parties full access to user and advertising data at no charge for 10 years.

For now, it’s a wish list, a starting point of a high ask, which I’m sure the government expects to be whittled down to something less harmful and gives it some bragging rights.

Points to consider

  1. This could harm/scare other tech giants.
  2. The Turney Act makes this government agnostic, it guarantees judicial oversights for antitrust actions.
  3. Alphabet has significant and solid resources and defensible arguments to fight this, mainly the 2 decades of resources put into building this moat.
  4. The stock is likely to stay range-bound or sideways because of the legal issues, where most investors would likely be cautious, even though this morning itself there have been strong buy calls from analysts.

I’m definitely going to hold on. While it is bad news that the DOJ is recommending that Google be forced to sell Chrome, it’s not written in stone, and there’s a small likelihood of it actually happening.

Here are several aspects to consider.

The Chrome divestiture is not devastating: Chrome, if divested could be valued at an estimated $20Bn, according to Bloomberg Intelligence, about 1% of Alphabet’s market cap of $2Tr, so it’s relatively less harmful.

All Roads Lead To Google Search: Even if the spinoff did happen, that doesn’t mean users would ditch Google’s search engine for rivals such as Bing and Safari, which account for less than 15% of the overall market.

The judge is unlikely to take up the recommendation: There is also the possibility the breakup doesn’t happen. Judge Amit Mehta, who will address Google’s illegal monopolization, could follow precedent.

“I think it’s unlikely because Judge Mehta is a very by-the-book kind of judge, and while breakups are a possible remedy under the antitrust laws, they have been generally disfavored over the last 40 years,” said Rebecca Haw Allensworth, a professor and associate dean for research at Vanderbilt Law School, in an email Monday. “He is very interested in following precedent, as was clear from his merits opinion in August, and the most relevant precedent here is Microsoft.”

The chances of an appeal are very strong: In June 2000, a judge ordered the breakup of Microsoft but that decision was later reversed on appeal. Google has stated that would appeal vigorously.

One of the analysts I follow had a fair point about some of Google’s “predatory or abusive” tactics on their ad-tech platforms, for which there are guidelines/rules that can be enforced for specific violations. But to get into a “European” mindset about regulating companies just because they have strong competitive advantages/moats is completely wrong, in my opinion. If Google didn’t pay Apple $20Bn to be its default search engine, Apple users would still prefer Google Search to Safari or Bing – this was in the court documents. Penalizing them (Google) is a massive overreach.

Google built this from scratch with tons of human and financial capital, at a time when there were several larger search engines in a fledgling, growing internet. The iPhone explosion came later. I would be very surprised if the government succeeds in destroying Alphabet.

Here is a sum of the parts valuation, which based on these estimates gives Google a higher valuation than its current market cap of $2.1Tr

Here are the WSJ and Barrons’ articles.

Categories
Stocks Technology

Shopify (SHOP) $113 Phenomenal Q3 -24 Results And Guidance

Source:The Realtime Report

11/12/2024

Shopify’s (SHOP) $113 phenomenal results and guidance propels the stock 25% higher to $113 by mid-morning.

I bought and recommended Shopify on 8/8 and 7/19 for around $66 and $63. I also recommended it on Seeking Alpha in July.

Even with the post-earnings bump, which has taken it to $113, I still think it would be worth buying once the euphoria settles. This company is firing on all cylinders and should continue growing for the next 3-5 years.

Shopify excelled on several metrics for the third quarter ended Sep 30th, 2024:

Gross merchandise volume rose 24% to $69.72 billion, beating the consensus estimate of $67.78 billion.

Its revenue rose 26% YoY to $2.16 billion, beating expectations by $50Mn, which was the sixth consecutive quarter of greater than 25% revenue growth for the e-commerce company, excluding logistics.

Monthly recurring revenue rose 28% to $175 million vs. the consensus estimate of $173.6 million. Monthly recurring revenue is a higher-margin subscription revenue business used by larger clients for more features and modules and multi-channel operations. This is Shopify’s growth catalyst for the future, and they’re focused on building and scaling this to differentiate from competitors.

Operating income was up 132% to $283 million, and free cash flow grew 53% to $421 million.

“We have grown free cash flow margin sequentially each quarter this year, consistent with what we delivered last year. These results demonstrate the durability of our business, our multiple avenues for growth, and continued discipline of balancing both future growth investment and operational leverage,” highlighted CFO Jeff Hoffmeister.

The biggest reason behind the 25% jump is the guidance and improving profitability, confirming my earlier thesis that Shopify’s strong focus on providing a rich, multi-channel platform is allowing it to gain market share from plain vanilla, single-feature vendors. Shopify’s management had cited client wins from SalesForce (CRM) earlier as testimonials of its progress.

Guidance

Looking ahead, Shopify sees Q4 revenue growing at a mid-to-high-twenties percentage rate on a year-over-year basis, which is a higher implied rate than the implied guidance. The earlier guidance was 23% so that is quite a large improvement.

Operating Profit Margin will continue to improve, as operating expense as a percentage of revenues decreases to 32% to 33% from an earlier average of 35%.

Free cash flow margin to be similar to Q4 2023 — Around 19.5%, another solid improvement from the previous year.

I plan to buy on declines and hold for the long term of 3-5 years.

Categories
Stocks Technology

Lyft Is A Great Bargain At $17

I added more Lyft, Inc. (LYFT) shares this morning at $17.50 following their excellent Q3-2024 results. I had first recommended Lyft last month at $13.50

Lyft demonstrated remarkable growth in the third quarter of 2024, posting significant gains in operational metrics and financial performance. The rideshare giant reported record-breaking numbers in active riders and total rides, while substantially improving its financial position through increased revenue and robust cash flow generation.

These are its major strengths

Excellent revenue, EBITDA, and Cash Flow growth 

  • Gross Bookings: Reached $4.1 billion, marking a 16% year-over-year increase
  • Revenue: Hit $1.5 billion, showing substantial growth of 32% year-over-year
  • Net Loss: Posted $(12.4) million, including a $36.4 million restructuring charge
  • Adjusted EBITDA: Achieved $107.3 million, up from $92.0 million in Q3’23
  • Free Cash Flow: Generated $242.8 million, a significant improvement from $(30.0) million in Q3’23

Solid Operational Achievements

The company set new records in its core operational metrics:

  • Reached 24.4 million Active Riders (9% YoY growth)
  • Delivered 217 million Rides (16% YoY growth)
  • Maintained strong driver engagement with record driver hours

Strategic Initiatives In Autonomous Vehicles

Lyft announced significant partnerships in the autonomous vehicle space, positioning itself for future growth:

  • Formed alliances with Mobileye, May Mobility, and Nexar
  • Plans to launch autonomous vehicle service in Atlanta by 2025

Strategic Partnership with DoorDash

  • Established collaboration with DoorDash, the leading U.S. local delivery platform
  • Introduced exclusive benefits for DashPass members using Lyft services

Lyft has several weaknesses and challenges too.

  • Secondary player to Uber (UBER) in the rideshare market, with only a 30% market share compared to Uber’s 70%.
  • Doesn’t have the secondary revenue stream of Uber Eats to absorb fixed costs
  • Smaller market share and geographic footprint
  • Limited brand recognition internationally
  • Heavy reliance on incentives to attract/retain drivers and riders
  • High customer acquisition costs
  • Competitive pressure on pricing

Wall Street seems to like it as well


“We think the strong after-hours move is deserved,” Sanderson adds, and think the results will ease concern about Lyft’s ability to grow profitably. “But management’s 15% multi-year [gross bookings] target will still be a debate, as will the company’s position for autonomous vehicles.”

“Efficiencies are driving EBITDA ahead of expectations, and the profitability of the rides business model shined, even through increased investment into rider/demand-based incentives,” Morgan Stanley’s Nowak added, raising his FY25/26 adjusted EBITDA estimates by 9% and 2%, respectively, contributing to a higher price target of $18 from $16, previously.

BofA Securities also lifted its price target, now at $19, as the company has “seemingly limited incremental share losses, focusing on core customers and commuters that are still growing order frequency.”

“We have a Buy rating on Lyft as tailwinds from mobility/transportation recovery in urban areas are outweighing risk factors like driver wage inflation, inflation’s impact on consumer travel, and competition risk from Uber and new autonomous entrants,” BofA’s Michael McGovern and Justin Post said in their research note.

Conclusion – Continuing to accumulate for 3-5 years.


Lyft has a long way to go, but the first and second quarters of adjusted operating profits in a row and strong cash flow generation suggest that it is a serious competitor to Uber.

I had recommended and started buying Lyft in October at around $13-$14, calling it an attractive GARP (Growth At A Reasonable Price), and a very reasonable valuation compared to Uber, which is unlikely to have a monopoly in the ride-sharing market.

Lyft deserves a seat at the table and with excellent Q3 results and raised guidance it looks even more compelling. Sure, there was a massive bump from $14 to $17. post earnings but the valuation is still attractive at 1.1x sales for 12-15% sales growth and at 17x earnings for a 15-17% grower.

Categories
Technology

Understanding Apple’s Antitrust Case: Bernstein’s Analysis and Market Implications

Apple (AAPL)

I don’t believe there is any reason to panic, I agree with Bernstein’s reasoning below.

It will take years and the outcome will be limited.

Apple (NASDAQ:AAPL) was sued by the U.S. Justice Department in a landmark antitrust case amid concerns about monopolization in the smartphone market, something Apple has vehemently denied.

While the case is likely to play out in the judicial system for years, investment firm Bernstein does not believe it will have much of a financial impact on the tech giant.

“While the DoJ’s charges are focused on iPhone, we do not see likely remediation as materially impacting Apple financially or undermining the iPhone franchise: worst case, Apple pays a fine, and loosens restrictions for competition across the iOS platform, which we believe will have limited impact on iPhone user retention or on Services revenues,” analyst Toni Sacconaghi wrote in a note to clients.

Sacconaghi believes any outcome is likely to take some time, likely between three and five years, given historical precedent from Microsoft (MSFT) and Google (GOOG) (GOOGL). And while it may not undermine Apple’s iPhone franchise, it could result in competitors having access to Apple’s APIs and ecosystem, level the playing field for future devices and result in some “regulatory overhang” for the stock.

“We think the DoJ creates some regulatory overhang on the stock, but see limited to no impact over the next several years,” Sacconaghi added.

Categories
Technology

Samsara (IOT) Stock Review: A Hold for Now at $35.86

source:samsara

Samsara $35.86 (IOT)

Hold for now, 15x sales 26% growth, no adjusted operating profits, but the promise of expansion of fleets and other business benefiting from AI/LLM’s more computing power should help the best IoT in the business. Pure play should be a moat.

Copy from the earnings report about the future growth prospects.