Weekend Investor: The Week That Was

I hope you had a wonderful week!

Earnings season hit peak fervor this week and my head is still spinning. Here are the keys you need to see this week.

In case you missed it

Here’s some of the content I put out this week. Enjoy!

• Dropbox Spotlight: This may seem like a boring company to spotlight, but the more I learned about Dropbox the more I liked it. There’s a lot in the article, but one fact that stood out is “90% of Dropbox revenue comes through the self-serve channel”. Gotta love that from a SaaS business.

• Coinbase’s $800 million cash machine: If you haven’t heard about how Coinbase makes money on USDC, this is worth a watch.

• Is online gambling sustainable? DraftKings reported earnings and I questioned whether the company can ever make money.

• Sunrun’s big lie: Sunrun uses incredibly optimistic assumptions to convince investors it’s actually generating value. Rising interest rates have exposed one flaw in that model, but it may take 20 years to expose the bigger lie.

Earnings bonanza

Here were a few highlights from the week.

• Celsius: Revenue nearly doubled, which is astounding for a beverage company. A partnership with Pepsi’s distribution arm looks like it’s paying off. In other news, I may have contributed meaningfully to the improved results.

• Paypal: Generated $5.1 billion of free cash flow in the past year and the market couldn’t care less. Growth is modest but this is an incredibly profitable company. I just wonder if it’s a value trap?

• Lucid: Without a bailout from the Saudi investment fund, I don’t see how the company survives.

• Rivian: Rivian has a better chance at survival than Lucid, but it’s also on a tightrope. There were signs of life, but the production ramp is slow and I’m not certain there’s demand for all of the vehicles Rivian plans on making in the next few years.

• Opendoor: iBuying is a high-risk business. Opendoor is learning on the fly, but Q1 results were a step in the right direction.

• Blink Charging: Generating electricity is profitable. Building EVs can be profitable. But delivering electricity through an industry-standard plug to an EV is not profitable. And I can’t imagine it ever will be.

• Wynn Resorts: Beginning to print money in Macau and it appears the market doesn’t care. I do!

• Disney: There’s too much to unpack in a few sentences but if you follow Disney I recommend asking if you think the company is well-positioned for the media business of 2030. If it is, it’s a buy. If it’s now, well, don’t buy it.

• Topgolf Callaway: I love Topgolf’s growth and unit economics. But a company like this in growth mode can report weak profits because of the cost that goes into building and ramping up new locations. But with 11 new locations being built this year, I still like the future for the worst ticker on the market.

• Axon: Amazing results but the stock sold off because the backlog didn’t grow very much. The natural lumpiness of the business could be to blame, but this is what happens when stocks get expensive. There’s little margin for error and even a blowout isn’t good enough sometimes.

• Matterport: Great tech, losing money, but 5 years of cash runway. I really don’t know what to think about this stock.

Google’s AI Day

It seems that Google has gotten its act together in AI after all. The company announced a number of AI advances for products and some new use cases for users.

What I took from the announcement is that Google is leaning into the touchpoints it already has with consumers. That’s the right move for an established company.

What I wonder now is if any NEW companies will be able to generate value in AI or will every new use case be so easily replicable that we just further entrench big tech.

Cruising ahead

If you read my breakdown of Cruise, you know I’m incredibly excited about the future of this company.

A big question surrounding Cruise is how quickly will the company scale operations. In fall 2022, Cruise only had commercial operations in San Francisco, but it started operations in Austin, TX and Phoenix, AZ late last year and will start driving in Houston and Dallas soon.

Happy Mother’s Day!

Happy Mother’s Day to all of the moms out there! We all appreciate you.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.

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