#78 - Hold The Line or Hold The Squads Bag, Facebook Earnings, and the Roblox S-1
In this week's episode of Reformed Millennials, we're talking about the consequences to misunderstanding the players inside of the game you are playing, the winners and losers in the Game Stop saga and Facebook’s fire flame earnings.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
Every major index finished higher on Tuesday.
The Nasdaq and Dow Jones Industrial Average both advanced over 1.5%.
Every sector also settled in positive territory.
Financials flew 2.42% as they break out to all time highs - as mentioned on the podcast.
Consumer discretionary and industrials both gained 2.12%.
The cryptos crept higher. Ethereum broke above 1500 for the first time ever while Bitcoin bounced 6%.
Emerging markets gapped up and gained 1.3%. iShares India 50 ETF $INDY closed at a new all-time high.
Shut up RM - let’s talk about how GME longs are losing their shirts.
📈Hold The Line and Hold My Bag📉
I'm sorry to inform those that are holding the equity or out of the money calls in AMC and GME - but you didn't take on Wallstreet and win.
You just bailed them out.
Silver Lake (SL) thanks you for taking their 710mm in AMC stock off their hands. SL never thought they would get the price WSB paid for the investment they made back in April. They were down 200mm on the position, now they're up well over 100mm.
Citadel would like to thank you for the mint they made arbitraging the complete disregard for bid and ask spreads, ignoring duration and implied volatility all in the name of "owning the suits" for Dave Portnose.
Diamond Hands? Todd Marchant?
📬FACEBOOK With Record Quarter📊
Everyone knows I love $FB. Heres some notes on their 4Q’20 earnings
Daily Active users were up +11% YoY; Monthly Active Users up +12%; Family DAP +15%
Revenue +33% YoY; Ad revenue +31%
Europe +35%, North America +31%, APAC +29%, RoW +25%
Number of impressions +25%, avg price/ad +5% (first-time in a long time)
Other revenue reached $886 mn, up 156% driven by Quest 2
Operating margin +46% (+400 bps)
Free Cash Flow (FCF) $9.4 Bn, up ~90% YoY (what?!)
FCF margin +33.6%, up by ~1,000 bps (what?!)
Four themes in 2021:
Commerce Tools for SMBs and
Building the next computing platform
600 mn people are part of at least one FB group. There were 1million groups removed last year alone because of policy violation.
Zuck is bringing the heat against Timmy $AAPL. This level of candor is usually not reserved for earnings calls, but I think he’s a little more than annoyed with the latest tantrum related to WhatsApp.
Zuck identified $AAPL as major competitor in 3 of the 4 core themes.
I wonder whether he is also trying to teach the regulator the lens thorough which they should view competitive dynamics.
“when you hear people argue that we shouldn't be doing these things or that we should go back to the old days of untargeted television ads, I think that what they're really arguing for is a regression where only the largest companies have this capacity." (Image 5)
Zuck is excited with VR. He wants it to succeed so that $FB can control its own destiny:
“This is going to unlock the types of social experiences that I have dreamed about building since I was a kid. And it's what we're building towards at Facebook Reality Labs.”
😈BIG TECH Earnings Round-Up🙀
Amazon had itself a quarter as the company crushed Wall Street’s estimates, topping $100B in revenue for the first time ever. 💸
Here are the numbers:
EPS: $14.09 vs $7.23 est
Revenue: $125.56B, +38% YoY
The most interesting part of the call wasn’t earnings, though— it was announced that CEO and Founder Jeff Bezos will step down and transition to executive chair. 🤭 He will be replaced by AWS CEO Andy Jassy. Initiate the buy back?
Amazon is what it is because of invention. We do crazy things together and then make them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.
$AMZN was up 1% after hours.
Alphabet, Google’s parent company, posted record quarterly numbers, but its cloud business struggled.
Check out the info:
EPS: $22.30 vs $15.90 est.
Revenue: $56.90B, +23% YoY
$GOOG was trading above $2000 after hours.
Alibaba reported earnings early this morning. The company’s cloud division was profitable for the first time in Q3. ☁️
Here are the stats:
EPS: $3.38 vs $3.22 est.
Revenue: $33.88B, +46% YoY
Alibaba CEO Daniel Zhang said:
Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology.
$BABA dropped 3.8%.
🤖 Roblox S-1👾
After a two month delay, social gaming platform Roblox is headed to the public markets. It looks like time well-spent with the company using the interlude to raising $520 million in private capital. That new funding valued the business at $29.5 billion, a far cry from the $8 billion to 10 billion at which Roblox was expected to price its offering.
That enthusiasm may be well-founded. Roblox grew revenue 58% year-over-year, logging $588.7 million in their original filing. Bookings expanded a staggering 171% over the same period. Perhaps more important are the company's bright prospects in China and the unique cultural apparatus that powers the platform.
🌊Best Links of The Week☔
Ford and Google, 2023’s Power Couple - Ford and Google just announced a partnership in 2023 to bring Google’s AI, machine learning, and data expertise to Ford and Lincoln vehicles. 🤭 🤯
How to understand options and derivatives - an info graphic here
Cannabis! We’ve written often that fast money bought US cannabis into the election but smart money was and remains focused on the killer fundamentals. That’s where we land, not that we’re smart: we’re here for expanding TAM + eastern seaboard adoption; the fed arbs of SAFE / Cap markets / 280E are gravy.
Today Uber announced its acquisition of Drizly, the alcohol delivery service, in a deal worth over $1.1B. Cheers to that. 🍻
It’s official, CFB fans. The NCAA franchise is baaaaaack! 🎉 EA Sports announced today that the first edition since NCAA 2014 would be released at a later date, but no specifics were given.
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