another great interview of @danielgross and @natfriedman by @benthompson

Some notes from the interview:

on Japan:

"...We’ve been puzzled by why TSMC’s margins aren’t better for a little while. Why are they not taking more of the margin? And I think you just said it, they’ve been through so many rounds of boom and bust and they’ve outlived a lot of people who made the wrong moves."

...I find a really interesting mispriced thing in the world might be Japan, the entire country.

...if you’re trying to consolidate all your bets on semiconductors, Japan’s a pretty interesting geography, because I think they’re going to have all these components at the end of the day, in basically one single country.

...What I sort of wonder is in a world where, if AI really happens, maybe the 2030s are the decade of Japan, if they really are able to manufacture all of these components that have to get offshore from Taiwan for various reasons." "Don't bet against Zuck"

So I got my Ray-Ban Meta Smart glasses today. Based on my first impressions, here’s what I think about it.



By far the best aspect of the glass is integration with Spotify and audio quality.

Unless you stand really close to each other, sound is not quite perceptible to others even though it is quite crisp to you.

90% probability that I have already bought my last AirPods.

$AMZN 3Q'23 Update

Imagine opening Amazon’s earnings report 5 years from now and what do you think you might hope you paid more attention to? It’s very unlikely to be AWS topline growth rate this (or any) quarter. If I have to guess, it’s the shipping+ fulfillment costs related developments that you would find more consequential 5 years from now.

I’ll explain why but let’s first take a look at some numbers quickly before going back to that discussion.

Thread on $META follow-up call and some more thoughts on the quarter Meta's DAU/MAU is at all-time high. Consumers vote with their time whereas "Intellectual Yet Idiot" class remains busy dissecting "surveillance capitalism"

chart h/t @east_cap

$META 3Q'23 Update

Meta had a terrific third quarter which makes the after-hours reaction (down ~3%) tad bit surprising, but perhaps understandable given the wider range of scenarios for advertising going forward.

Here are my highlights from tonight’s call. Since 4Q’19, Meta added 880 Mn Daily Active Users/People (DAU/DAP) to its Family of Apps (FOA) properties.

Given Snap currently has 406 mn DAU, this means Meta added two “Snap” (and then some) in less than four years!!

$GOOG 3Q'23 Update

While Google Service segment did just fine, Google Cloud’s pace of deceleration in topline was a bit disappointing.

Here are my highlights from the call tonight. After four consecutive quarters of single digit growth, Google returned to double digit growth this quarter.

Both Search and YouTube grew by double digit, but Google cloud’s topline growth came down from ~28% last quarter to 22.5% this quarter.

1/4 Last year, I lamented how even if you knew in 2017 that Meta's aggregated revenue and FCF for the "next" 5 years were underestimated by analysts by $50 Bn and $40 Bn respectively, you would actually make 0% over 5 years. 2/4 What I didn't know when I posted this in June 2022 was the stock would go down another 50% before it bottomed.

I knew almost anything is possible in the market, but I had a much more visceral understanding of that when Meta hit $90.

Thread on $ADYEN/ $ADYEY

Lots of pushback on my back-of-the-envelope math on Adyen. While I don't expect those pushbacks to evaporate, here's my more detailed and granular math on Adyen. Let's start with TPV.

To keep things simple, I looked at $V and $MA reported txn volume and assumed it as Adyen's "TAM". It's a pretty good approximation although obviously not perfect.

"perfect is the enemy of good"

If personalized ads is simply banned in the EU, it may not be worth showing any ads at all.

Given such context, it is hard to rule out that Meta may go full subscription mode in the EU in not-so-distant future.

Let's imagine Meta's Armageddon scenario: behavioral ad is banned. The bad news is building world class digital ad infrastructure, especially post-ATT and GDPR was one of the key moats for Meta.

Isn't it also bad for Meta because people will simply not pay to use social media? I'm little skeptical about this claim.

$AMZN 2Q'23

This was perhaps the best Amazon earnings call from my recent memory, especially on Amazon Retail. Not surprising that the stock was +8% in after hours.

Here are my highlights from tonight’s call. Revenue

3P, subscription, and AWS grew by mid to high teen while ad segment increased by 20%+

The mix-shift from product to services in Amazon continues as services mix increased from ~40% in 2018 to ~60% in 2023.

Let’s start more segment level discussion with AWS.

One of my counterintuitive beliefs is *almost* every active investor deeply underestimates how challenging active investing is. Almost nobody is immune from this.

Why? because there is a profound dichotomy between an active investors' lived reality and the actual reality. Let me explain both qualitatively and quantitatively.

$GOOG 2Q'23 Update

“With 15 products that each serve half billion people and 6 that serve over 2 billion each, we have so many opportunities to deliver on our mission.”

Here are my highlights from Alphabet’s call tonight. Topline grew +9% FXN. While Google Services revenue growth was flat in 1Q’23, it was +5.5% in 2Q’23, with growth re-accelerating in every component of Google Services.

Google Cloud maintained its momentum with ~28% YoY growth (same as it was in 1Q’23).

$PYPL thread

I received quite a few questions on my assumptions related to PYPL's numbers, along with some decent pushbacks. In this thread, I will elaborate my numbers in more granular detail.

Let's start. I initially segmented PYPL in two segments: a) button, and b) ex-button

Many suggested it's a bit simplistic and runs the risk of missing important nuances. I agree. I just wanted to do some quick and dirty math, but let's get into the weeds here.

my notes on why I bought $PYPL today. initial Deep Dive on $PYPL

mbi-deepdives.com/pypl/

Notes from $IAC shareholder letter

Joey Levin starts with the valuation math. Thankfully, instead of making it just pedagogical exercise, he bought back ~3.5% of shares outstanding in 1Q'23 at ~$50.86/share. $MGM bought back ~$0.5 Bn shares which increased IAC's ownership from 16% to 18%.

Moreover, IAC bought more Turo shares for $104 Mn, raising their stake to 31%+ warrant to buy another 10%.

When WSJ published "The Facebook Files" a couple of years ago, this particular slide caught my attention. A recent conversation resurfaced this slide in my mind.

In many ways, $META has been "lucky" in facing competition from Snapchat and TikTok. Let me explain. Meta launched "News Feed" in 2006. Despite vociferous criticism from the users at the time, Feed (as it's later renamed) has been the most scaled profitable "real estate" in social networking industry.

$AMZN 1Q'23

An Analyst asked:

“Does the company ever think about breaking out all the big investments so that we have more clarity on the retail margin structure?”

@ajassy provided a word salad in response. The lack of disclosure to the owners is increasingly distasteful. twitter.com/i/web/status/1… Revenue

Overall revenue was +9.4% YoY (+11% FXN)

While the low margin 1P segment is flat for last two years, everything else is doing just fine.

Let me spend more time on dissecting AWS which remains a key focus for investors.

Some more incrementally positive and negative data points from $META follow-up call.

Let's start with negative.

While some started speculating whether we reached peak RL quarterly losses, the answer is probably no. Meta expects RL losses to increase in 2024 too. Now positives:

"our growth rate in Q1 exited a bit higher because of lapping the onset of the Russia-Ukraine war."

$META 1Q'23 Update

“There are two major technological waves driving our road map: a huge AI wave today, and a building metaverse wave for the future.”

Mark Zuckerberg (1Q’23 Earnings Call)

Here are my notes from tonight’s earnings. twitter.com/i/web/status/1… When Facebook’s DAU declined in 4Q’21 and MAU declined in 2Q’22 for the first time in its history, some feared (hoped?) for Facebook’s gradual decline to irrelevance. Facebook added 37 mn DAU (now >2 Bn) and 26 MAU last quarter.

~3 Bn people now use one of Meta’s apps daily.

$GOOG 1Q'23 Update

Google Search is still growing, but YouTube ads was down YoY for three consecutive quarters now.

Thankfully, Google Cloud maintained the momentum with +28% topline growth. twitter.com/i/web/status/1… The big news in this quarter is Google Cloud became profitable for the first time.

But there are some caveats:

$SPOT 1Q'23 Update

Over the last 6 months, Spotify stock has doubled. The business, however, remains largely work-in-progress with users accelerating but operating efficiency yet to reflect in the financials.

Here are my notes from today’s earnings. Spotify experienced its largest two MAU growth (mn) quarters in its history for two consecutive quarters.

Management mentioned they’re seeing an acceleration in MAU retention, higher DAU/MAU, and lower churn. MAU was 15 mn ahead of guidance!