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Providing deep competitive advantage, strategy based equity research. Not investment advice.
Dealing With Analysts
$SNOW executive Michael Scarpelli has a way of putting analysts in their place. Here are my favorite responses from the call.
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Clearing Up Analysts Mistakes for $SNOW
This needs to be cleared up for $SNOW. Many people are claiming that they missed their operating margins by 66%. Analysts are comparing GAAP results to non-GAAP guidance. Snowflake reaffirmed its year-long operating income guidance and raised its FCF guidance by 1%.

Other analysts are comparing $SNOW product revenue to total revenue guidance and claiming they missed. Snowflake actually beat total revenue guidance by ~2%.
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FANG Multiples
Below are the FAMG NTM EV/EBITDA multiples since 2007. Either consensus estimates still have a long way to fall or long-term investors are getting a deal on $FB $AMZN $MSFT and $GOOG.

The current avg FANG NTM EV/EBITDA is 12.9 while 2007-2021 avg is 14.9.
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I think $AMZN is a good candidate for the acceleration/deceleration trade (in addition to being a good long-term investment). In the 2nd half of 2022, sell-side consensus estimates expect Sales and EBITDA to accelerate.

During $V technology conference they stated the consumer still seems “quite healthy”. They also mentioned that e-commerce is starting to lap tougher comps. As these comps alleviate, $AMZN should see an acceleration in EBITDA.

Amazon also has been investing heavily in its business throughout the pandemic. I believe this pace of investment is unsustainable and they will be able to back off on many of their expenses.

Amazon’s management agrees with me and has started backing off on investments. As Amazon backs off, margins should expand allowing both EBITDA and FCF to accelerate.
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$SNAP Management Warns They Will Miss
Is this a $SNAP problem or an industry problem?
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A disappointing news release as a shareholder. Ad dollars drying up. Snap has excelled in figuring out a way to better monetize its user base through its discovery shows and competitive ad landscape, but with brands pulling back their ad spend, Snap suffers. I work in digital media and see it first hand through our usage of the platform. I remain excited about their future as they continue to have significant R&D towards AR/VR and make encouraging strides there, while also maintaining a strong grip on the younger age demos relative to other social platforms...However, holding this from $20s -> sub $10 -> >$80 and now back under $20 again has been an insanely volatile journey. $SNAP has been one of my largest holdings through the ups...and now through the downs.
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Economic Clues
$WMT and $TGT earnings calls are great for analyzing overall trends for the economy. They sell a wide variety of items and provide color around which trends are strong or weak. I analyzed their earnings calls and below are my findings.

Both Target and Walmart have seen strength in the consumer. Despite all the macro issues, customers are still willing to spend.

More specifically, consumers are spending heavily on groceries. Some consumers have switched to private labels, but overall spending has been strong in this category as well.

Both Target and Walmart have reiterated how supply chains are a mess. Supply chains are affecting their margins. Rising fuel costs are another component hindering supply chains as well.

Target mentioned they have seen a rapid slowdown in apparel, home and hardlines. They are seeing a large spending shift from goods to services.

Walmart mentioned that they were over-staffed in Q1. This is contrary to a lot of economic data suggesting many job openings for few available employees.

Lastly, Walmart and Target both seem to be investing heavily in distribution. Target expects CAPEX to grow from 3.5bn to between 4-5bn. Walmart discussed plans to automate much of its supply chain.
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Excess Inventory in Retail
Both $WMT and $TGT reported having too much inventory which is a deflationary pressure. If these two companies are experiencing excess inventory, it is a safe assumption that most of retail has the same problem as well.

Target earnings call

Walmart earnings call
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