The hottest Valuation Substack posts right now

And their main takeaways
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Why are tech companies more sensitive to interest rates?

Entry Level Investing • 16 implied HN points • 12 Mar 24
💰 Finance Investing Valuation Tech Companies
  1. Tech companies, especially high-growth but unprofitable ones, are highly impacted by interest rates during investing.
  2. The value of tech companies is largely based on future projections, making them sensitive to discount rates which determine present value.
  3. In a market with expensive capital, tech companies' future profits are heavily discounted, while in a market with cheap capital, their value can increase significantly.

Back to Earth or Temporary Setback? Revisiting the FANGAM Stocks

Musings on Markets • 59 implied HN points • 12 Feb 22
💰 Finance Investing Stock Market Valuation Financial Analysis Market Trends
  1. The FANGAM stocks have been key players in the US stock market, but their recent performance has been mixed. Companies like Netflix and Facebook saw big drops, while Amazon and Google surprised with strong results.
  2. Valuations of these companies suggest that Facebook is the most undervalued, as it struggles with its story and user numbers. In contrast, Netflix appears overvalued as it grapples with slowing growth and high content costs.
  3. Companies like Microsoft and Apple managed to stay out of controversies and continued to grow. Microsoft's recent acquisition of Activision shows its ambition, while Apple is benefiting from being seen as a privacy protector.

The Haves and the Havents: Interlude

Carefree Sketches • 19 implied HN points • 22 Jul 22
📖 Philosophy Love Valuation Understanding Human nature
  1. When we say 'I like you' to someone, it involves a certain conceit and value judgment based on rational parameters.
  2. Liking someone involves weighing various values such as amenity, rank, purpose, and affinity, and assigning them a value.
  3. Contrasting 'I like you' with 'I love you,' love is seen as irrational, residing in the heart, while liking is a more reasoned and intellectual process.
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Clouded Judgement 5.19.23

Clouded Judgement • 13 implied HN points • 19 May 23
💼 Business Software Stocks Earnings Valuation Metrics
  1. Cloud software companies saw a boost in stock prices, but operating performance is not as positive.
  2. Companies added less new ARR in Q1 '23 compared to the previous year, indicating a headwind in new bookings.
  3. Median revenue growth rate declined in Q1 '23, along with net retention rates, CAC payback periods, but FCF margins showed improvement.

Clouded Judgement 5.26.23

Clouded Judgement • 12 implied HN points • 26 May 23
💼 Business Finance Software Earnings Valuation Metrics
  1. Snowflake reported weakening consumption trends in April/May compared to Feb/March.
  2. The change in data retention policies by customers was a big factor in consumption weakness for Snowflake.
  3. Snowflake's report raises questions about the anticipated acceleration in consumption software and highlights the volatility of consumption models.

Tesla's Trillion Dollar Moment: A Valuation Revisit!

Musings on Markets • 19 implied HN points • 09 Nov 21
💰 Finance Valuation Investing Market Trends Corporate strategy Automotive Industry
  1. Tesla is primarily an automobile company, but it's unique because it has expanded its story beyond just cars. Despite the different angles like batteries and tech, cars are still at its core.
  2. Tesla is not like other car companies. It has higher profit margins and less capital investment, helping it grow quickly while spending less, a big change compared to traditional car makers.
  3. External factors like climate policies and the rise of electric cars have helped Tesla thrive. Its strong leadership under Elon Musk also significantly influences how people view the company.

Clouded Judgement 6.23.23 - Atlas Consumption and Q1 Earnings Trends

Clouded Judgement • 10 implied HN points • 23 Jun 23
💰 Finance Software Metrics Valuation
  1. MongoDB Atlas consumption trends showed a drop in Q2 of last year but picked up in Q1 and may continue. Monitoring this trend is key.
  2. Quarterly metrics trends like growth, net retention, sales efficiency, and FCF margins have been fluctuating in the recent quarters.
  3. Valuation metrics like EV/NTM revenue multiples and growth rates are important for understanding the relative valuation of software companies.

Aswath Damodaran's Narrative and Numbers

Joe Tourville • 4 implied HN points • 31 May 23
💰 Finance Valuation Investment Narrative Numbers Corporate
  1. Investors often make the mistake of favoring either storytelling or data in corporate valuation instead of blending both.
  2. Compelling narratives can drive corporate value while numbers provide grounding and empirical evidence.
  3. Narrative-based valuation by Aswath Damodaran emphasizes the marriage of narratives and numbers for a more comprehensive view of a company's worth.

A Do-it-yourself (DIY) Valuation of Tesla: Of Investment Regrets and Disagreements!

Musings on Markets • 19 implied HN points • 07 Feb 20
💰 Finance Investing Valuation Market Analysis Financial Modeling Stock Market
  1. Value of Tesla can change based on different factors like growth, profitability, investment, and risk. Each of these areas can greatly influence how much the company might be worth in the future.
  2. Investors should research and make their own estimates for Tesla's future. It's important to look at company performance and market trends to form a realistic view.
  3. Disagreements about Tesla's value are normal and part of investing. Investors should stick to their own valuations and beliefs without getting swayed by market noise.

IPO Lessons for Public Market Investors

Musings on Markets • 19 implied HN points • 11 Oct 19
💰 Finance Investing Market Analysis Stock Performance Valuation
  1. IPOs are more about pricing than true value. Investors often focus on trends and momentum rather than the real financial health of the company.
  2. Estimating how much to pay for a new public company can be tricky. Many lack a solid peer comparison and only have past funding rounds to guide them.
  3. Many young companies have unstable share counts, which can lead to major miscalculations in their market value. Always double-check the number of shares when valuing an IPO.

Clouded Judgement 1.19.24 - The Bar for Going Public

Clouded Judgement • 2 HN points • 19 Jan 24
💼 Business Finance Metrics Investing Market Analysis Valuation
  1. The bar for going public is set very high, with companies needing impressive metrics like $200m ARR, 50% YoY growth, and over 120% net retention.
  2. New IPOs face challenges like concentrated ownership, lower liquidity, high stock dilution, and the need to build trust with public market investors.
  3. Startups aiming to go public should focus on metrics attractive to public market investors, including understanding stock compensation and equity dilution.

January 2019 Data Update 5: Hurdle Rates and Costs of Financing

Musings on Markets • 19 implied HN points • 24 Jan 19
💰 Finance Corporate Finance Investment Analysis Risk management Valuation
  1. Hurdle rates are important because they help companies decide whether to invest in a project. They reflect the risks involved and the expected returns for different funding sources.
  2. Businesses face various types of risks like business, financial leverage, country, and currency risks. Understanding these risks helps in accurately calculating the cost of capital.
  3. It's crucial to maintain consistency in currency analysis, adjusting for inflation and risk, as it affects investment evaluations. Choosing a currency should not change the project's perceived risk or outcome.

January 2019 Data Update 4: The Many Faces of Risk!

Musings on Markets • 19 implied HN points • 21 Jan 19
💰 Finance Investing Risk Analysis Market Trends Portfolio Management Valuation
  1. Investing in stocks comes with various risks. It's important to see risk as a spectrum rather than just something that is present or absent in investments.
  2. Different types of risks can affect a company, and it's crucial to understand where these risks come from. Making smart investment choices often involves tackling the risks that seem the hardest.
  3. The way you measure risk matters and depends on how you invest. You might choose different metrics for assessing risk based on whether you're a long-term investor or a short-term trader.

January 2019 Data Update 3: Playing the Numbers Game!

Musings on Markets • 19 implied HN points • 09 Jan 19
💰 Finance Market Analysis Data Trends Valuation Investment strategy Risk Assessment
  1. In 2019, a lot of companies around the world are included in the data analysis, and their classifications are based on geography and industry. This helps in understanding market trends more clearly.
  2. The U.S. firms are still the largest in terms of market value, but the emerging markets have a significant number of companies, highlighting diverse risks and opportunities.
  3. When analyzing financial data, it's important to remember that the numbers can change and may take time to update, so always verify information and be aware of timing issues.

Investing Whiplash: Looking for Closure with Apple and Amazon!

Musings on Markets • 19 implied HN points • 03 Dec 18
💰 Finance Investing Market Analysis Valuation Risk management Behavioral Finance
  1. When investing, it's smart to set rules to avoid emotional decisions, like using limit orders to fight against personal biases.
  2. Intrinsic value of stocks can change over time, influenced by both company performance and broader market conditions.
  3. Investors should be flexible in their strategies, being willing to sell sooner if prices align with their valuations, even if it means not holding forever.

Share Count Confusion: Dilution, Employee Options and Multiple Share Classes!

Musings on Markets • 19 implied HN points • 26 Jul 18
💰 Finance Valuation Equity Options Capital Markets Corporate Governance
  1. Young companies often face expected dilution, which means they will need to issue more shares to raise money. This can affect their value per share, as more shares mean the value is spread thinner.
  2. Stock-based compensation (SBC) can complicate valuations because it adds shares into the mix, affecting overall value. It's important to account for both past options and future grants to get a clear picture of share value.
  3. When companies have different types of shares that carry different voting rights, it can create confusion in valuations. Each share type must be valued separately to accurately determine their worth.

Stock-based Employee Compensation: Value and Pricing Effects

Musings on Markets • 19 implied HN points • 13 Feb 14
💰 Finance Financial Analysis Corporate Finance Accounting Valuation
  1. Stock-based compensation is an expense that affects a company's earnings. It should be counted and not ignored because it represents a real cost to the business.
  2. Adjusting financial metrics like profits to remove stock-based compensation can be misleading. It can make a company look more profitable than it really is, especially when comparing with others that don’t do the same.
  3. The way companies handle stock-based compensation can impact their valuation. Analysts need to account for this properly to get an accurate picture of a company's worth.

The Nvidia Surge

Spilled Coffee • 0 implied HN points • 14 Feb 24
💰 Finance Stock Market Investing Companies Earnings Valuation
  1. Nvidia is experiencing an incredible surge in its stock price, reaching historic levels of growth which are uncommon for a company of its size.
  2. Nvidia has surpassed major companies in market value and stock performance, becoming one of the top companies globally.
  3. Despite the impressive growth, there are concerns about Nvidia's future, such as competition, supply chain risks, and the hype surrounding AI driving its valuation.

Dropsuite

Nihar’s Thoughts on Stocks • 0 implied HN points • 27 Mar 23
💰 Finance Investing Market Analysis Valuation Competition Risks
  1. Dropsuite is a fast-growing company offering online backup services for SMBs through MSPs.
  2. The market undervalues Dropsuite due to misconceptions about its business model and differentiation in the online backup market.
  3. Dropsuite has a clear path to profitability and potential market cap growth by 2028, but faces risks from distributor concentration and competitive market dynamics.

Trade Alert 1/8/24

Business Breakdowns • 0 implied HN points • 09 Jan 24
💰 Finance Investing Banking Technology Growth Valuation
  1. The company Nu Holdings has shown remarkable growth, appealing to an underbanked market.
  2. Nubank's strong moat is based on being a low-cost producer, driving customer satisfaction.
  3. When considering Nubank's valuation, the potential for growth in revenue and market share projections can offer significant returns over time.

Deep dive on Axon ($AXON)

Jonah’s Growth Stocks • 0 implied HN points • 22 Jan 24
💰 Finance Stocks Investment Earnings Valuation Risks
  1. Axon, formerly known as Taser, is a company worth paying attention to in the investment world.
  2. Paid subscribers of Jonah's Growth Stock Deep Dives get in-depth analysis on stocks and access to investment portfolios.
  3. Detailed information on Axon, such as stock performance, market cap, and financial reports, is available for those interested in investing.

Deep dive on Spotify ($SPOT)

Jonah’s Growth Stocks • 0 implied HN points • 21 Jan 24
💰 Finance Stocks Investment Company analysis Earnings Reports Valuation
  1. Jonah's Growth Stock Deep Dives offers detailed insights for paid subscribers on Spotify and other investment opportunities.
  2. Spotify ($SPOT) had an IPO in April 2018 with varying stock prices and market performance.
  3. Deep dive content on Spotify covers aspects like business model, competitive advantages, risks, and valuation, aimed at aiding investment decisions.

Deep dive on Toast ($TOST)

Jonah’s Growth Stocks • 0 implied HN points • 20 Jan 24
💰 Finance Stocks Investing Earnings Valuation Business
  1. Paid subscribers to Jonah's Growth Stock Deep Dives get detailed insights and access to investment portfolio updates.
  2. Toast ($TOST) is a company based in Boston, Massachusetts, with details on its IPO, stock price, market cap, and more.
  3. The post covers an outline with sections like Company Background, Opportunity, Competitive Advantages, Valuation, and more for paid subscribers.

Part 1: Deep dive writeup on Albemarle ($ALB)

Jonah’s Growth Stocks • 0 implied HN points • 12 Feb 23
💰 Finance Investment Stocks Trading Earnings Valuation
  1. Albemarle (ALB) is a company expected to show strong revenue and earnings growth due to the increasing demand for lithium from the EV industry.
  2. ALB is considered undervalued, trading at a low multiple of earnings despite the positive growth projections.
  3. Analysts are cautious about ALB's future performance, but if EV adoption remains strong, the stock could outperform.

Improving valuations through better governance

Klement on Investing • 0 implied HN points • 19 Feb 24
💼 Business Governance Valuation Liquidity Corporate Governance
  1. Improving share liquidity may not be the best way to increase company valuations. Focus on improving corporate governance instead.
  2. Increasing share liquidity by reducing the bid-ask spread can lead to a significant increase in company valuation, compared to measures like larger boards or institutional ownership.
  3. Improving corporate governance, measured by indices like ISS Board Quality scores, can have a more significant impact on increasing company valuations than just focusing on liquidity.

Vol. 4, No. 5 — r/IPO

Valuabl • 0 implied HN points • 01 Mar 24
💰 Finance Investment Market Stocks IPO Valuation
  1. Reddit is going public with an IPO, but details are vague - be cautious as expected valuation seems high
  2. Investors interested in Reddit's IPO should consider their portfolio and the offer price before deciding to buy shares
  3. Reddit has a successful platform and valuable data, but potential investors should be wary of the frothy expected valuation typical of IPOs

Are US technology stocks in a new bubble?

Global Markets Investor • 0 implied HN points • 04 Apr 24
💰 Finance Stock Market Investing Valuation Tech Stocks
  1. The analysis of US technology stocks being in a bubble is crucial as historical data showed the tech sector's previous dramatic drop, which took over 15 years to recover from, making it a significant risk for investors.
  2. The current market scenario, with factors like Quantitative Easing and heavy government intervention, makes a complete repeat of the past bubble unlikely. However, even a 20-30% drop could be painful for investors, given the high levels of capital at risk.
  3. US households now hold nearly 50% of equities in their portfolios, similar to the levels seen in the early 2000s, raising concerns about the amount of capital exposed. Examining historical measures and leading indicators will be key to determine if US tech stocks are overvalued or in a bubble.

A Brief Primer on Auction Theory

Something to Consider • 0 implied HN points • 13 Jun 24
💼 Business Economics Marketing Auctions Valuation Market design
  1. There are different types of auctions like first price, second price, and ascending auctions. Each works a bit differently, but they all aim to find out who values an item the most.
  2. In certain situations, second price auctions can encourage honest bidding because bidders don't need to worry about overbidding. This can lead to better outcomes for both the seller and the buyers.
  3. Assumptions about what buyers and sellers know can change what type of auction works best. If buyers are unsure about their own values, for example, an ascending auction may be more beneficial.

A DIY (Do-It-Yourself) Valuation of Zomato

Musings on Markets • 0 implied HN points • 03 Aug 21
💰 Finance Valuation Investment Market Analysis Company analysis Financial Metrics
  1. Valuation is more about common sense than expertise. Anyone can learn to value a company by understanding the basics and using a straightforward approach.
  2. Investing requires personal responsibility. You should make your own decisions based on your evaluation rather than just following what others say or do.
  3. Gather diverse opinions and stay open to feedback. Engaging with different viewpoints can improve your understanding and lead to better investment decisions.

The Price-Value Feedback Loop: A Look at GME and AMC!

Musings on Markets • 0 implied HN points • 03 Feb 21
💰 Finance Investing Stock Market Valuation Economic Theory Corporate Finance
  1. The stock price and a company's value can be very different. Price is about what buyers are willing to pay, while value is about the company's actual worth based on its profits and risks.
  2. When a company's stock price goes up or down, it can create a feedback loop that affects its overall value. For example, higher stock prices can make it easier for a company to get loans or attract employees.
  3. Issuing new shares when the price is high can bring in cash, but it's a bit of a gamble because it can also lower the stock price if not managed carefully. It's all about finding the right balance.