You know, I was trying to wait until Friday to summarize the
earnings week and go over them, but then Microsoft and Meta
reported and it's just too good to wait.
I can't wait until tomorrow. We have to talk about these two
companies. Microsoft and Meta's report,
they were just incredible. Incredible doesn't even describe
it. These weren't just solid
reports. These were step changes in the
direction of the businesses. Meta posted again their
astronomical beats on the top and bottom line.
It's at the point now where it's like the Breaking Bad meme.
You can't keep getting away with this.
Well, Mark Zuckerberg keeps doing it.
Every single earnings quarter he seems to post groundbreaking
earnings results way above expectations.
And now Meta is at all time highs.
Then we have Microsoft with Satya Nadella posting numbers
that are unthinkable. These are literally unthinkable
numbers just a couple years ago. And here we have them growing
cloud faster and faster. The AI revolution is real and
these companies are showing it, and we're going to be going
through all of it. I can't wait to jump into this
report, look over the numbers and the commentary.
We had time to look over the earnings calls and really dig in
and see what's going on. And we have a few other
companies I have to throw in today.
S&P Global, my largest holding, or at least one of them,
reported earnings today. It was pretty good.
We'll be talking about it. We have FICO, which is on its
long trend downwards. Fico's being decimated.
It's down below $1500 per share. I'll be sharing the clip of the
CEO addressing one of the problems that company's facing.
And then we have MasterCard and Spotify, two other ones we'll be
talking about briefly as well. So we have a lot to jump into.
First of all, let's go ahead and jump into Microsoft.
We have this one here, and just at a quick glance, it's up 4
1/2%. Now.
There is some fade going on here.
It was originally up like 8%. We faded down to 4 1/2%.
It's moderating a little bit, but I think that Microsoft
deserves to be up 4 1/2% at least after this report.
And that is with knowing that this company trades at a 35 Ford
PE. So it's already an expensive
company. My opinion, it deserves to be
expensive. It deserves to be more expensive
than it is today. This is, I'll go over it, but
this is an incredible, incredible report.
When we look at Microsoft in terms of my position and
ownership of this company, I've been bullish on Microsoft for a
long period of time. And, and just as a side note, we
reached record highs in the portfolio today.
We're finally up to 911 thousand, $363,000 in gains,
record highs mostly due to MasterCard, Microsoft and S&P
Global. But if we look specifically at
Microsoft, we can see this position in this passive income
portfolio. It's an $87,000 position, 44,700
of that being gains. So the performance weighted
return is 2 and a 250%. That's because I've owned it for
years and on a performance internal return it's been really
high returns. I've added more to the holding
recently at a price of around 23240 and it's since doubled
over, doubled since then. So this one overall, even with
my most recent additions has doubled in price.
And that's just in the passive income portfolio.
If we look at the story fund, my secondary portfolio, this one is
now at all time highs as well. So both portfolios record highs
today. Love seeing this type of thing.
It's what we should see in bull markets and Microsoft has played
a key role. This one is again another
$27,000 position, 14,000 of that being gains.
So it's another one in both portfolios.
It it's wild the returns that I've had with this company and
it's really incredible because Microsoft has always been one of
the biggest, one of the most known companies, but it's still
been one of the best risk reward companies in the market.
If we look at the combined portfolio here and the
unrealized gains from this stock, keep in mind this does
not count dividends. So this is the gains without
dividends is $56,700 in Microsoft, just an incredible,
incredible performer. Now it's the fourth largest
holding in the portfolio, making up roughly 9%.
Now again, if we look at this most recent report of Microsoft,
what did this company do this so special?
You're not really going to see it in just the revenue segment
chart. You see a little bit of it.
The company's growing 15% year over year.
Now already when we look at Microsoft, 15% revenue growth is
already good. That's good growth for a company
this size. We're talking about a $4
trillion company growing revenue 15% year over year.
That's already incredible. That beats out a lot of smaller
startup companies. But then you look at what is
actually growing in the company. We have the Qualtrim summary of
the earnings transcript, and we have here Microsoft Cloud and AI
scale. Microsoft Cloud annual revenue
surpassed 168 billion, up 23%, driven by rapid innovation and
adoption of AI products. Now, here's where Microsoft gets
a little bit confusing. There's Microsoft Cloud and then
there's Azure, and those are two different things.
A lot of people kind of intermingle those or they use
them interchangeably. They're not the same.
Microsoft Cloud is like every single cloud product.
It's just like Microsoft Excel. It's everything that's hosted in
the cloud that uses one of their clouds.
That's Microsoft cloud. But then you have Azure.
This is Microsoft's actual cloud offering.
This is more directly relatable to something like Google Cloud
or like AWS. Azure's annual revenue exceeded
75 billion, up 34% with constant currency market share gains and
global data center expansion over 400 data centers in 70
regions. What?
Excuse me, is this something where they're like manipulating
the data? I had to do a double take when I
saw these numbers growing 34% and at a $75 billion annual
rate. When we again compare this to
Google Cloud, and I'm very bullish on Google, I'm a bullish
on all these cloud companies. But if we compare this to Google
Cloud, we have search, YouTube ads, let's cross all of those
out, then we have Google Cloud. Google Cloud is at a run rate of
$50 billion. So it's actually relatively
close to Microsoft, 50 billion versus 75.
But Google Cloud grew by 32% last quarter, quarter over
quarter. Azure, which is at a $75 billion
run rate, you're at 34%. So it's bigger and growing
faster. That's usually not a recipe that
happens. You usually get one or the
other. Usually you're a lot bigger, but
you grow a little bit slower because of the law of large
numbers. But what Microsoft is showing is
that even though they're bigger, they are growing faster.
And to pull that off, you have to have an advantage.
You have to have very specific advantages, which of course
Microsoft has their advantage is that Microsoft is doing a lot of
integrations from local on premise to cloud.
They're doing migrations rather where they're taking a lot of
their customers that they already have because everybody
uses Microsoft products and they're saying, hey, our cloud
offering works really well with our our Microsoft products
simply upload to the cloud. Those migrations have speed up
this year as well as all of their AI tooling.
So Microsoft has this very unique, very good dynamic
working with the company that Google's tried to mimic, but is
having a harder time mimicking and AWS simply doesn't have.
Now again, to give this some perspective, if we go back to
Google, Google Cloud is at $50 billion, growing 31%.
Microsoft is at 75, growing at 34%.
And then we compare this to Amazon.
A lot of people are saying Go, Microsoft has a better cloud
business than Amazon because Amazon's growing a lot slower.
AWS will probably post growth of 17 to 18%, maybe a little bit
faster if we get lucky. But AWS is growing around 18%.
And again, that's a lot slower than Microsoft or Google.
But AWS is at a $112 billion run rate, $112 billion when they
report later today. AWS could be bigger than both
Microsoft Azure and Google Cloud combined.
So even though they're growing slower, AWS is substantially
bigger, and I don't think that gets highlighted enough.
So it is true that Microsoft is growing super fast, faster than
Google, a lot faster than Amazon.
But Amazon does have a massive cloud.
They mention here that Microsoft is scaling data center capacity
faster than competitors, so they're actually building out
new data centers at a faster rate.
It says in competitors. I wonder which competitors
they're talking about. They have to be talking about
Google and Amazon right? Every Azure region is now AI 1st
and supports liquid cooling for greater infrastructure
flexibility, continued improvement in efficiency and
performance, 90% more inference tokens for the same GPU via
software optimization. So again, the most important
thing in this report, the very top thing outlined, is Microsoft
Cloud and AI scaling. The reason that the company's up
so much today is because of the monumental acceleration in
Microsoft Azure. The fact that they're growing at
a 34% rate is incredible. It does make the company deserve
a higher multiple. Now on top of that, there's a
lot of other things. The cloud isn't growing in
isolation. It basically powers every other
tool from Microsoft. You have AI, platform, data and
developer ecosystem. Introduction of Microsoft's
sovereign cloud to address specific data residency.
Microsoft Fabric revenue rose 55% with over 25,000 customers.
Azure Data Bricks, Snowflake, Azure Cosmos DB, Azure Postgres
SQL showed strong adoption and support for open AI workloads.
Azure AI Foundry is gaining traffic, offering tools for
redesigning, customizing, and managing AI agents at scale.
Foundry now has 14,000 customers with 80% of the Fortune 500
using it. Foundry serves over 500 trillion
AI tokens per year, a sevenfold increase indicating widespread
platform use. So when Satya Nadella talked
about no longer being a software company, but now being an AI
engine that powers AI for the rest of the world, this is what
we're talking about. They are are basically like a
Microsoft can now be looked at as like you get into your
toolbox and you have all these various tools, but they are the
toolbox for artificial intelligence for the rest of the
world. That's the type of company
they're transforming to. We go to Copilot in the
application layer. Copilot Suite has over 100
million monthly active users, a commercial and consumer with 800
million users engaged in AI features across Microsoft
products. So copilot alone has 100 million
active users. If we look at this, we can go
back to Microsoft here on the insights page and one of the
KPIs we track in Qualtrum here with Microsoft is the 365
consumer subscribers. Now, if you're not aware of what
this is, this is the amount of people using their whole like
suite of software, the 365 suite.
But within this suite is Copilot O, the 100 million users of
Copilot are part of the scope of the 347,000,000 using 365
consumer subscribers. We have Microsoft 365.
Copilot adoption is accelerating with significant seat growth and
notable enterprise wins. Barclays, UBS, Adobe.
Copilot Studio enables customers to create and tune their own AI
agents. With three million agents
created in the past year, this is directly competitive towards
Salesforce. Salesforce has the agentic
technology as well. GitHub Copilot continues rapid
growth with 20 million users and enterprise customers count up
75% quarter over quarter. Used by 90% of the Fortune 100
in healthcare, Dragon Copilot usage increase by 7X in business
applications. Dynamic 365 is seeing share
gains across industries. How can you read through any of
this and be slightly pessimistic about this company?
They have like 100 different tools, all of them being used in
growing amounts, gaining market share against competitors.
You have consumer business, LinkedIn and Xbox.
We're getting off of the cloud and copilot here at Microsoft
has a wonderful social media company.
Linkedin's one of the best that you can get economically
speaking. AI features and agents are being
deployed across hiring and sales on LinkedIn.
The gaming business, you have 500 million monthly active
users, strong performance in Xbox and PlayStation publishing
Call of Duty Black Black Ops 6 reached 50 million players and
Minecraft saw record active usage in revenue helped by the
Minecraft movie movie. So we have good growth in the
other various segments. These aren't as core to
Microsoft. Another thing that they
mentioned on the earnings call is that Xbox, what is it called
the Xbox membership that you can get the Game Pass that's also
seeing strong growth. So they're again getting more
subscribers, more of this residual type of revenue in
every business line. Microsoft launched over 100 new
security features in the past year, expanded capabilities in
Microsoft Sentinel and Tread, Defender and PureView.
I've talked to employees of people from places like
Crowdstrike and they list Microsoft as one of their
biggest competitors. So even just security focused
enterprise cloud application companies view Microsoft is one
of their biggest competitors. What we're seeing here is
incredible fundamental business performance with every segment
of the company growing hundreds of various products, all of them
growing and taking market share. And then to encapsulate all of
that, the cloud is outgrowing even its gigantic competitors.
Overall, the report was better than solid.
It was incredible. This is a report where you can
try to look through it with a fine tooth comb and find
something to criticize, but if you do that, you're missing the
bigger picture. This is a massive, ingrained
tech company deeply embedded in every single company in the
world, but now it's embedded itself even more by powering the
rest of the world with artificial intelligence.
Microsoft is not going away for a long period of time.
This company will far outlive me.
And over that time period, I think it's going to continue
generating enormous amounts of wealth even at the share price
that it's currently at. I refuse to trim this one.
I just refuse to trim it. When I see a company that's this
fundamentally strong, it's hard for me to find any weakness in
it. So as of now, Microsoft is
lifting My Portfolio, becoming a bigger and bigger position, and
I continue to hold. Now moving on, of course, we had
Meta also report their earnings. They're up even more today, up
12% on the day. Now Qualtrm notes here that Meta
Platform shares are trading higher after the company
reported better than expected Q2 financial results and issued Q3
sales guidance above estimates. So there's the quick summary.
Meta beat on both this quarter's results and they beat on their
expectations of guidance. And this is one of those things
where Mark Zuckerberg just keeps doing it.
He keeps doing this thing where he beats the earnings estimates
by like 2030%, even 50% or more. These incredible earnings beats.
For example, if we just pull this up on Qualtrim, we look at
the the dot plot chart here we look at the earnings over time.
This shows that they beat. Then if we show the estimates,
you can get an idea of this. It was $7.14.
Sorry, the estimates were for $5.88 and they came in at $7.14.
It's incredible. How do they beat by that much?
The estimates were for 44.8 billion and they came in with
47.5. The analysts aren't even close
and they haven't been close for a while.
Look at the last couple of quarters.
They weren't close this quarter. The analysts weren't close last
quarter or the one before or the one before.
They're a little bit closer in Q3 of 2024, but still just shy.
Meta is outperforming the analyst estimates by huge margin
quarter after quarter after quarter.
So the the stock of course is going to have incredible
performance when you have that type of outperformance every
single quarter of expectations. Now we can take a look at some
of the financial performance metrics here and they're pretty
staggering. Q2 revenue reached 47.5 billion,
up 22% year over year. So Meta is still growing at that
rate over 20%. When a company can continue to
grow above 20% year over year, it's hard for anything else to
go that wrong. It really the other metrics have
to be terrible for you to grow 20% for a long period of time
and to have bad performance. The top line revenue growth
gives so much wiggle room for everything else.
If you're growing 20%, it's difficult for margins to go
down. It's difficult for you to have
other troubles in the business, especially when you have 1/2
decent business or at least a great one like Meta.
So a company of this quality growing 22% is huge.
Operating income was 20.4 billion with 43% margin.
Net income was 18 billion. These are massive numbers.
Expense was 27 billion, up 12%. So the expenses are growing far
slower than the top line revenue.
When we look at some of the more business metrics of the company,
one thing that's always impressed me is how they're able
to get so many people using their platforms, keep them on
their platforms and then kind of cross sell them to their other
platforms. So people using Instagram are
going to be using Reels or Facebook or you know, all all
the different properties they have on each platform.
Even going out to things like Threads.
They're getting more people to use different, different
platforms. They have Meta reached over 3.4
billion daily active users across his families.
A family of apps reporting strong engagement across
Facebook, Instagram and WhatsApp.
If we look at this number over time, the family daily active
people metric, this is what we're looking at here is up
6.42%. Now that is strong growth when
you keep in mind that this is from 3.43 billion people to 3.48
billion. So they added on hundreds of
millions of people in the last quarter.
Incredible to see that continue growing.
Time spent increased due to AI driven improvements with
Facebook up 5%, Instagram up 6% in the quarter.
They're still keeping people on their platforms for longer
periods of time. Instagram video time and
Facebook video time both increased by 20% year over year
globally and in the US, respectively.
So they're growing much faster in video across all their
platforms than any other any other form factor.
You can look at that as a competitor to YouTube.
I I certainly think it is, But I also just think that video is by
far the most intriguing and engaging way to consume content.
It's more engaging than just audio.
Even Spotify says that video is more engaging than the audio on
their platform. Whenever someone uploads a video
podcast, they have higher engagement levels.
Mark Zuckerberg noted that he believes we're getting closer to
super intelligence, meaning that the artificial intelligence has
begun to self improve internally, with initial use
cases seen for autonomous AI agents enhancing product
algorithms. So basically the whole idea of
super intelligence is it's like a a system that improves itself
with no feedback from humans. It's self reinforcing, self
improving all by itself. That's super intelligence
because when you do that for long enough periods of time and
it compounds over time, theoretically that means that
computers could far outweigh human intelligence and do it in
a self reinforcing way. That's what Mark Zuckerberg is
going for here. He's hired this team of really
smart people that they're paying hundreds, millions of dollars, a
small team to continue making these improvements.
So Meta's become a little bit like Google where they're now
doing a lot of experimental stuff.
They're doing more labs and kind of becoming a researchers and
scientists along with just a business and that's been really
successful for Google. I think it will work for Meta as
well. Generative AI and AD creation is
increasingly contributing to ad revenue.
New models deployed and AD rankings and retrieval systems.
Introduction of ad placements and threads feed and WhatsApp
updates tab with plans to gradually increase ad supply.
Business messaging and Click to message revenue continue to
grow, especially in the US over 40% year over year growth for
Click to message content recommendation and original
content. Continued optimization of
recommended algorithms with LLMS, including Llama, driving
significant improvements, especially on threads.
So what they're doing here is they highlighted that they're
trying to surface smaller, newer content creators that are
actually creating good content, because a lot of them just get
lost in a sea of content. And they're using LLMS to
determine that this is fresh content.
It needs to be shown to other people, and they're growing a
little bit that way. They have focused effort on
promoting original content. And then one of the notable
things about the shift with Meta is that they remain focused on
leveraging a small, talent dense team for frontier AI research
contrasted with the larger scale teams used for incremental
product enhancements across its platform.
So for AI, Mark Zuckerberg is convinced that that a few amount
of really small smart people is better than a large amount of
mediocre people. He thinks that if you can just
pay the right people, buy the right team, that it can make
more gains in AI than just hiring endless amounts of
people. The primary focus over the near
medium term is not immediate monetization of generative AI,
but ramping user engagement and product quality.
Monetization will follow as products and scale matures.
I think that's the right approach as well.
Meta's investment cadence is directly tied to business
opportunity and return expectations, focusing on
sustained profitability growth over time, even if investment
cycles occasionally surpass short term margins.
So they are in this for the long term.
Now let me be clear about one thing here with Meta.
The company deserves to be moving up today.
It deserves to trade at the 29 PE ratio it now trades at.
Expectations should be higher moved up for Meta because how
much they have proven Wall Street wrong again and again.
Now I'm of the opinion that right now Meta is a a great
company. I would be fine having this one
in My Portfolio. But I look in compare and
contrast the opportunity of Meta and Google and I just think that
Google is such a good opportunity for me.
When I I look at putting in incremental money into the
market, I look at Google trading at an 18 to 19 PE ratio and Meta
trading at a 29. And even if Meta has some unique
things about it that Google doesn't have, Google has a lot
of unique things about it that Meta doesn't have.
And both of these companies had incredible earnings reports.
They're growing quickly. Google Cloud is not slacking.
And this company is full stack integrated from creating cloud
infrastructure, artificial intelligence models all the way
to distribution. They already have the AI
research labs as well. So in my opinion, even though
Meta is incredibly strong and I see it as a great company, I'd
be fine holding in My Portfolio, when I'm looking at new
incremental cash flows, I'd probably choose Google over
Meta. Now outside of Microsoft and
Meta, there's still a lot of important companies that
reported earnings. One of them is S&P Global.
This one just reported today, the stock is reacting by around
up 4 1/2% and it says that S&P Global shares are trading higher
after the company reported better than expected Q2
financial results and raised its financial year 2025 adjusted
earnings per share guidance above estimates.
So they be on the top and bottom line and they're raising their
guidance. This is something that's very
common for this company. Now when I look at S&P Global,
this is around a 13% weighted position, $38,000 in gains.
It's moving up quite nicely this year.
I don't have too much to say other than this one is what I
expected, which is business as usual when we look at the
revenue segments of this company.
One of the major things that could help this company is
interest rates dropping. If interest rates do go down,
which I think they eventually will, it'll help out every
segment of this company. The indices, you have more
investments going, more trading, the market intelligence, you
have more interest in investment.
When interest rates drop, you have the rating business.
All that global debt. When interest rates drop, it
helps out global debt. All of that is benefited by
interest rates dropping. Now, that's not something that
you need to bet on. So if you're invested in S&P
Global, you're not just sitting around waiting for interest
rates to drop because the company will do fine even if
that doesn't happen. But it can be viewed as an extra
catalyst for this company. Overall, the report is strong.
Business as usual, continue to growth for company.
I'll continue to hold. One company that's having a lot
more trouble that recently reported and it continues to
fall is FICO. It's down another 6.7% on the
day, down to $1400 per share. Now it seems like a a high share
price, but if we look just this year, FICO was trading at $2200,
so it went from 2200. Now it's down nearly 30% on the
year, down 50% from its highs. It's down to $1400 per share.
Qualtrum has a note here noting the reason why it's saying that
Fair Isaac shares are trading lower after the FHFA director.
Poult yesterday said Fannie and Freddie will allow lenders to
use Vantage 4 Point O Score with no current requirement to build
new infrastructure. Multiple analysts lowered their
price targets on the stock. So what's going on is FICO was
one of the ones that was the sole approved to do credit
ratings and now they're just expanding it, allowing Vantage
Score. Now theoretically, this helps
out Vantage Score owners like we have, for example, Equifax here.
This is a company that I own and this could theoretically help
them out, but it's not a huge business segment.
So if Vantage Score grows, that's good for Equifax.
It's another business line, but it's not like the biggest thing
going on with the company. So this hurts FICO a lot more
than it helps Equifax. But either way, as an Equifax
owner, I'm not concerned about this at all.
It doesn't affect me. This really only effects FICO.
Now. Why has FICO become such a
target for regulators? Why are they wanting to adopt so
much competition and allow Vanish Score to compete directly
with them? Well, part of it is that FICO
raised prices rather aggressively over a short period
of time. They went from like a dollar a
score to around 5 or 6 bucks a score over just a short amount
of time. And even though the amounts are
small, it looks huge in terms of percentages.
Imagine if for just a second the dollar 50 hot dog combo at
Costco suddenly went to like $8 in a single year.
You you just be Jarred by it. People say what's going on?
It was $1.50 and now it's $8 in a single year.
I mean the people would be furious about it.
Normally looking at a hot dog combo and seeing that it's for 8
bucks may not raise any eyebrows, but the rapid price
increase is what raised eyebrows for FICO.
And this is what the CEO is trying to address.
So he's kind of on a media tour here doing PR damage control
over their price increases. And this is one of the most
interesting conversations because the CEO directly
addresses the price increase comments.
Look, the difference between a penny and five cents is 500%.
It sounds terrible in percentage terms, but let's face it, we're
talking about the price of a FICO sport being in the in the
neighborhood of a cup of coffee, and we're talking about $6000 of
closing costs. Hundreds of dollars in other
fees, hundreds of dollars in title insurance fees, for
example. So $4.95.
Frankly, I think it's a bargain. I cannot.
We could give it away for free and it wouldn't change anyone's
costs. Now the CEO of FICO is correct
and he makes a strong point. Going from a penny to 5 pennies
is a 500% increase, but it's still only 5 pennies.
So looking at the change in percentage terms gives you the
impression that it's this huge change when it's really just 5
pennies. And that's how he's trying to
portray this, that even though they increase the price a lot,
it's still dirt cheap, so it's not that big of a deal.
What I think he misses is simply optics.
He's the CEO of the company. He should be concerned not just
about what's real reality, but what perception is.
I, I have a phrase, it's one in business that my dad has always
told me that in terms of business, perception is reality.
How people perceive something becomes their reality of the
situation. So even if FICO is offering
great value, even if it's true that penny to $0.05 is only
$0.05 in all, it's still a 500% increase.
They still went from less than a dollar to now $5 per score in
just a couple of years. And that's going to raise
eyebrows. That's going to frustrate
people. People look at the increase in
price, Regulators look at that, and they believe that you're a
monopoly extracting toll, monopoly price increases.
Now, if you took the approach of trying to have a better optics,
better perception with regulators, he would have
increased prices on a slower cadence over a longer period of
time, Still fast, but not so aggressively in such a short
amount of time. So my big criticism of the CEO
is basically that even though he might be mathematically correct,
even though FICO represents a very small portion of total
closing costs, even though most consumers aren't really
concerned with it, he played the game wrong.
They are in a dominant monopolistic position, and he
extracted too much pricing power too quickly.
That forced regulators to look at the the situation and now
they're responding aggressively, allowing for more competition in
scoring. So part of this I do feel is a a
misstep by FICO leadership, an unnecessary one where they
guided the business for the short term, not for the long
term. You can raise prices above
inflation and still have a great business for a very long period
of time. So to me, this was a strategic
perception PR mistake. It's causing a nightmare
scenario in the company where the stock is down 28% from just
the beginning of this year. It's now down 10% over the
trailing one year. Now this doesn't mean the
business is bad or that things are going to keep getting worse
for FICO. I believe we'll find some
support eventually, but right now the situation is dicey.
It seems like regulators are really determined to put
pressure on FICO for as long as that's happening.
I feel like this one's a little bit too difficult right now.
I'm going to wait and see if things settle down, see if
there's a little bit more clarity in the situation.
If we look at the total portfolio here, MasterCard is
the second largest position. And I know I don't talk about it
that often because it's just so it's, it's just so steady and
usual and predictable and it's such an easy investment that
there's nothing to really discuss.
It's a great company that constantly compounds, has super
high margin, it's super profitable, that continues
growing at a high rate. And there's not much else to the
thesis. It's a 12% position.
I'm currently in the green by $36,000 on it.
When I look at MasterCard, it was another quarter of business
as usual. We already saw from Visa that
things were going to be good. They were good for MasterCard,
even above expectations. When we look at some of the
metrics here, they're truly just staggering.
Here's what the revenue growth looks like over time, another
15% growth quarter. So MasterCard is a fast growing
business. Everything looks on track with
the business. Free cash flow is growing as
usual. Free cash flow per share is
growing super fast. We have earnings per share also
growing 13 to 15% range. Strong growth there over time
and incredibly consistent. Then you have the earnings call
where they continually note that the business is incredibly good,
but they're not seeing a lot of consumer issues or signs of a
recession or the fears that people have.
On top of that, they're embracing stablecoin and helping
with doing transactions and different things involved with
it. O they're fully embracing the
fintech wave. They're not running away from
it. Now lastly we get to Spotify,
which in my predictions I noted that this one would probably
post great earnings results, but yet it would fade away anyway.
And that's what happened with this stock.
Spotify posted earlier this week.
The stock was around $700.00 when they posted and then it
fell down to around 6:30. So it did the same thing roughly
that Netflix did. They posted a really strong
earnings report, but the stock traded down anyway.
And that's because if they show any slight weaknesses at all,
any softness and guidance whatsoever when your stock
trading at this valuation, investors are going to sell with
any signs of weakness. Now, in my opinion, when I look
at Spotify, it's a company that I've wanted to own for a long
period of time. So I'm very much wanting to get
a stake in equity ownership in this business.
I think they're going to be around for a very long period of
time. It's like a Netflix, it's going
to be around for another 50 years.
They're going to generate a lot of profits.
They have a huge platform. They have more and more monthly
active users. When we look at the data here,
they have 696,000,000 now. So they're basically at 700
million total monthly active users.
When we look at this more specifically, the premium users,
they have 276,000,000 and then AD supported, they have 433
million. And both of these are great,
whether you're AD supported or premium, both of them are
profitable for Spotify. So their user base continues to
grow over time. And I think they're going to get
to that billion mark. They're going to get to a
billion users. So the long term of Spotify
looks great. The problem that I struggle with
is an entry point. I've looked for better entry
points and it's very difficult to find a decent one in this
company. I think I'll start looking if
the stock gets below $500 per share.
That's at the only the only point where I can really look at
it and believe it's worth it with the multiples it trades at
'cause it's already at a 54 PE ratio.
So Spotify had another great report.
They grew their membership base. They're headed towards that
billion user mark. They're growing in free cash
flow and earnings. They're also gaining market
share in video along with Meta and other companies.
So they're growing that out as well.
It's one that I wanna own, but I just can't do it right now.
I'd rather buy something like Google or some other cheaper
company. That's going to be a look at the
earnings report so far. Make sure you subscribe to the
channel to see my reaction to Amazons and Apples.