#CotD - $EQIX
I'm writing about 5 digital infra cos in 5 days.
1: Equinix is a global Data Center leader. It epitomizes the compelling nature of digital infra, like those in the $BYTE Index.
• Huge Growing TAM
• Global
• High-Quality Assets
• Growth & Profitablty
🧵👇👇 1/x
Huge Growing TAM:
Using data requires either internet access (off-premises) or local storage (your device, local server).
Off-premises data comes from Data Centers (video, SaaS, cloud, social). EQIX is a huge Data Center owner, selling into the inexorable digitization trend. 2/
Global:
$EQIX is one of the largest Data Center cos, w/ 230 DCs globally.
It's a "1 stop shop" for enterprises that want to deploy cloud anywhere. Other DCs may focus on "hyperscale" cloud providers (FAANG). EQIX has HCPs but also a broader enterprise focus, w/ >10k clients.
3/
High-Quality Assets
Since its founding, $EQIX invested >$30B of capital.
Its DCs knit together the internet: once in an EQIX DC, customers often "interconnect" w/ other networks & clouds inside the same DC, improving customer performance & stickiness. 95% of rev is recurring. 4/
Consistent Growth & Profitability
$EQIX has grown revenue 500x since its 2000 IPO, increasing rev each yr.
Its adj EBITDA margin % is highly consistent (👇), as the economic profile of new Data Centers remains attractive.
It deploys capital via dividends, new build, & M&A. 5/
Summary:
Data Centers knit together the internet. The data we live on comes from DCs and $EQIX is one of the largest DC owners globally, growing alongside data consumption.
At 24x EBITDA, it's a "4 cap" w/ growth as far as the eye can see, recurring revenues, & strong assets. 6/
Note: I never intend Tweets as investment advice. This is simply a basic, high-level overview of what Equinix does and how one might begin to look at the business.
Mrs. B founded Nebraska Furniture Mart in 1937 with $500 of savings, selling 90% to Warren Buffett’s $BRK 50 years later for $55 million.
Even at 94-years old, she continued to work 70 hour weeks, pricing rugs and carpets from memory. 🧵👇
“We like managers who are in love with their business…who feel like I do - I want to tap dance when I get to the office,” is how Buffett answered Adam Smith’s question about the Berkshire Hathaway culture. 1/x
Mrs B barely spoke English when she started NFM; she sought a $75 business loan and was denied.
50 years later, what did she think of the doubters?
“I still hate them. Anybody who does you dirty, you should never forgive and forget.” ☠️
- Rose Blumkin at 94 years young
Mrs. B had uncommon sense:
“God blessed me: anything I do, I make money.”
Mrs. B’s daughter on growing up:
“The customer was God - that came first and we came next,” she laughingly shared.
Most people assume it makes its money as a crypto exchange.
True...sort of.
Its rev comes as much from interest income on its cash balances + its share of $USDC's cash ($COIN owns a share of USDC owner, Circle) as from transactions.
Worrisome.
🧵👇
2. Interest Income is Lower Quality
Even as $COIN's core transaction revenue has declined by nearly HALF, its interest income has skyrocketed with rising rates.
In Q2 2022, interest was 5% of revenue; in Q2 2023, it was 35%...
3. Stablecoin Revenue
...in Q3, interest income hit nearly 40% !!! of revenue.
(With $COIN restructuring its deal with Circle, Coinbase's share of $USDC interest income is now categorized as "Stablecoin Revenue.")
I expect $COIN just achieved peak interest income.
Today, Enovix, a science project battery company, posted a long letter trying to stop a reporter from investigating it. The letter culminates by calling me "ringleader" of a short group that coordinates trades.
False.
One might ask, "why is $ENVX so afraid of inspection?"
🧵👇
2/ There really are some $ENVX "ringleaders" on Twitter, but they are insanely bullish. They're also bullies: Marc Cohodes and Greg Reyes. They lie, distort, attack, and malign anyone who questions Enovix.
They claim to have a special relationship with ENVX Chairman, TJ Rodgers.
3/ As we will see, these are odd bedfellows.
Both are cruel, manipulative, and bullying. They constantly allude to having the inside skinny on Enovix while pumping it to their legions of followers.
They coordinate and attack all skeptics and do so in retrogressive ways.
The @SECGov crypto enforcement team has been busy af...
...today it sued $COIN, after suing Binance and @cz_binance yesterday.
Gary, I can only summarize lawsuits so fast...
Let's dig in.
🧵👇
1. The Dog that Didn't Bark
As you can see in the below image, in yesterday's Binance suit, Binance founder @cz_binance himself was listed as a formal defendant in the SEC complaint.
In the $COIN lawsuit, no individual is included.
Coinbase CEO Brian Armstrong just exhaled...
2. This suit is less "sexy" than the @binance suit (linked at the end of this thread).
While Binance and FTX looked like companies that lacked controls and were run haphazardly, the Coinbase suit is more about the technicalities of "registering" and "what is a Security?"