Kelvestor.com

Plant-based meat launched with a lot of excitement. However, the initial hype has faded. In the past two years, the popular vegan meat company Beyond Meat has seen its growth stall.

As a consumer, I find it hard to justify buying plant-based meat. It's more expensive and doesn't taste the same as real meat.

If the price point decreases, it will aid mass consumer adoption.

What do you think?

When Snowflake reported its quarter as a listed company, its product revenue was $148.5 million.

Many years later, in its recent quarter (Q1 2025), its product revenue was $789.6 million.

Despite that, its share price fell from $240 to $133.92. A 44.2% decline.

At the end of the day, valuation matters.

Today, Snow trades at a more reasonable EV/Sales of 11.4x based on Public Comps.

(This should not be construed as investment advice.)

sources:

https://publiccomps.com/tickers?items=High+Growth+SaaS

https://investors.snowflake.com/news/news-details/2024/Snowflake-Reports-Financial-Results-for-the-First-Quarter-of-Fiscal-2025/default.aspx

When Snowflake reported its quarter as a listed company, its product revenue was $148.5 million.

Many years later, in its recent quarter (Q1 2025), its product revenue was $789.6 million.

Despite that, its share price fell from $240 to $133.92. A 44.2% decline.

At the end of the day, valuation matters.

Today, Snow trades at a more reasonable EV/Sales of 11.4x based on Public Comps.

(This should not be construed as investment advice.)

sources:

https://publiccomps.com/tickers?items=High+Growth+SaaS

https://investors.snowflake.com/news/news-details/2024/Snowflake-Reports-Financial-Results-for-the-First-Quarter-of-Fiscal-2025/default.aspx

Snowflake Reports Financial Results for the First Quarter of Fiscal 2025 Product revenue of $789.6 million in the first quarter, representing 34% year-over-year growth Net revenue retention rate of 128% 485 customers with trailing 12-month product revenue greater than $1 million 709 Forbes Global 2000 customers Remaining performance obligations of $5.0 billion, represent...

[10 Investing Pointers from 2023]

1. Within the dynamic landscape of the stock market, the prevailing trend over the long term remains bullish. Notably, the NASDAQ and S&P 500 have experienced robust gains, soaring by 44.52% and 24.73%, respectively.

2. When your portfolio seems to be weathering a storm of losses, resist the urge to flee. Paradoxically, such challenging times often present the ideal opportunity to strategically reshape your holdings for a resilient recovery.

3. Amid economic uncertainties, mission-critical companies demonstrate resilience. Crowdstrike, a cybersecurity stalwart, exemplifies this by registering an impressive 147.21% surge in value this year, setting it apart from its counterparts.

4. Strategic investing involves sidestepping companies entangled in intense competition. MercadoLibre in Latin America, enjoying a dominant market position, witnessed a 90.23% surge in share price, contrasting sharply with Sea, contending with competitors like Lazada, Tokopedia, Amazon, and TikTok, resulting in a 23.56% dip.

5. Financial markets can recover very quickly. Despite expectations for sustained high-interest rates, the 10-year treasury yield unexpectedly retreated from 5% to 3.87%, subsequently improving stock valuations.

6. Rather than relying on sensationalized news, anchor your decisions in facts. Meta, facing media skepticism amid the TikTok surge, defied critics with a staggering 183.8% stock price surge. Similarly, Alphabet, grappling with competitors like OpenAI, rebounded with the Gemini AI model and stable market share in Search, propelling its shares by 56.8% this year.

7. Assess a company's cash runway by scrutinizing its balance sheet. WeWork's demise, rooted in an inability to settle debts, underscores the importance of financial health. A seemingly cheap stock is futile if it's headed for oblivion.

8. Each portfolio is unique, reflecting distinct risk tolerances. Resist envy and concentrate on your financial journey. A well-constructed portfolio considers your risk appetite, ensures diversification, adheres to sound fundamentals, and evaluates companies' valuations.

9. Growth is the linchpin for any invested company. A consistent track record of sales and profit growth is the catalyst propelling a company's share price skyward.

10. The bedrock of successful investing remains unchanged. Opt for fundamentally sound companies led by purpose-driven, mission-centric management, trading at favorable valuations. Target those operating in expansive markets, capable of generating returns on capital, and reinvesting for sustained profitability.

Grab's Q2 2023 Breakdown

What do you think of Grab's performance? Are you a happy user of Grab?

(image 1) For platform-based businesses like Etsy, Shopee, or Grab, it's crucial to observe robust Gross Merchandise Growth (GMV) and rising Spending per User.

For Q2 2023:

- GMV increased by 4%.
- Spending per user (GMV per MTU) fell by 3%.
- Revenue surged by 77%, mainly due to reductions in partner and consumer incentives, effectively increasing net charges to partners and customers.

Remember, this revenue spike is probably not lasting, as it's likely a one-time event resulting from Grab cutting back its incentives.

GMV growth remains the preferred metric.

(image 2)

Grab also pulled forward its adjusted EBITDA breakeven schedule by one quarter!

This is probably the single biggest result for its share price to pop!

(image 3)

This might be more complicated to understand. Take your time to digest.

There are 4 segments to Grab namely
- Deliveries
- Mobility
- Financial Services
- Enterprise and new initiatives

These 4 segments contributed 172mil of adjusted EBITDA. That's good, right?

But wait!

Take a look at its regional corporate costs. That's $192m!

Putting on the hats of an investor and consumer, I don't like it at all.

Why is this cost so high? If the management paid themselves less, perhaps, the company could be more profitable. Is the company bloated in its management structure?

(source: https://investors.grab.com/node/8166/pdf)

Here is my quick work on Grab's valuations. It could be totally wrong and it should not be relied upon.

Assume $600M per quarter (generous) and multiply by 4 = $2,400M of revenue per year

Assume a 10% adjusted EBITDA (again, very generous)

Assume a 15x price multiple

Valuation = $2,400 x 10% x 15x = $3.6B enterprise value

Current enterprise value from Morningstar = $10.65B.

A simplistic valuation of Price-to-Sales comparison shows elevated valuations for Grab too.

Grab: 7.3
Uber: 2.61
Delivery Hero: 1.05
DoorDash: 3.95
Lyft: 0.92

(data from TradingView)

Share your thoughts in the comment section!

Hour Glass and Watches of Switzerland Stock Dropped 5% and 20% respectively -- What Happened? Hidden Lesson Below.

I spoke about the risk of investing in retail reseller businesses.

Back in 2009, Dickson Concept lost its Polo Ralph Lauren license -- causing its earnings and share price to plunge greatly.

The reseller model is inherently vulnerable because, rather than owning the brand, resellers essentially bolster a brand's image and reach by leveraging their own resources.

Should a reseller excel, there's a risk the brand owner might reclaim the license unless the reseller contributes considerable revenue or offers a unique value the brand owner cannot replicate on their own.

Conversely, underperformance can result in the non-renewal of a license.

To put it succinctly, resellers often find their fates aren't entirely in their own hands. This scenario isn't exclusive to retail; pharmaceutical companies can lose patent protection, or a business might see major clients move away.

Let's examine the business models of Hour Glass and Watches of Switzerland. As resellers, they source their products from prestigious brands like Rolex, Patek Philippe, and Jaeger-LeCoultre, relying on consistent deliveries from these brands.

Recently, Rolex expanded its business model by acquiring Bucherer, a Swiss retailer with over 100 stores globally—half the size of Watches of Switzerland.

This development has alarmed many in the watch retail sector. There's growing concern about whether Rolex might prioritize supplying Bucherer over other retailers, potentially impacting their profitability.

Though Rolex has stated that Bucherer will operate autonomously, it remains to be seen how this acquisition might influence the global watch retail landscape.

S&P 500's performance YTD

It rallied with unbelievable strength, we are just 5 - 6% away from the previous high! Back then, the interest rate was near 0%. Today, it is 5%.

I'm looking at Apple and Microsoft's P/E ratio, wonder if anyone feels both companies are slightly overvalued -- given after considering its growth potential?

I spoke to a highly intelligent investor and he shared: "On the internet, many people or investors think they're smarter than Jeff Bezos or Elon Musk -- asking them to do this or that, trying to sound smarter than them. Do these investors really think Elon Musk doesn't know his thing? In fact, have those investors managed billions -- if not millions in income statements to their statements to be taken seriously?"

Amazon.com, Tesla, Costco, Monster Beverage, Public Bank, HDFC Bank—these investments have proven to be life-changing, propelling ordinary investors towards wealth.

It is essential to avoid the misconception that a small company alone is the key to financial prosperity. Small companies carry risk and luck often plays a role in such successes too.

In fact, the smaller the company, the smaller the portion of your portfolio that should be allocated towards it.

For instance, consider the scenario where a company is poised to become a 100x bagger. Even with a conservative allocation of 2%, the potential returns would amount to 200%. Conversely, if the investment were to falter, the losses would be comparatively minimal.

Fred Liu recently shared an article called "Charlie Silk's 150 bagger," which narrates the fascinating story of how Cook Data transformed into Blockbuster.

The article imparts valuable insights, including the following:

Patience is crucial to reap the rewards of investment. The most substantial gains often materialize in the third or fourth year. One can strategically take profits when valuations are high and reinvest when valuations become more favorable.

It is important to disregard negative comments from so-called "experts" as long as the company continues to perform well.

Look for consistent and exceptional performance over several years, showcasing sustained growth.

Pay attention to the volume reflected in stock charts. Heavy sell-offs tend to persist until the volume subsides. Conversely, a significant volume in an upward direction suggests larger market interest.

Understand valuations and have the discernment to recognize when prices become inflated, taking contrarian actions by securing profits.

To read more, follow this link:https://img1.wsimg.com/blobby/go/7bd3274c-929e-4406-9ab5-3a037aacd637/downloads/1c4q6pslr_386934.pdf

img1.wsimg.com

Picked up what are Iceberg orders recently.

Iceberg orders are large single orders that have been divided into smaller limit orders, usually through the use of an automated program, for the purpose of hiding the actual order quantity.

The term "iceberg" comes from the fact that the visible lots are just the "tip of the iceberg" given the greater number of limit orders ready to be placed. They are also sometimes referred to as reserve orders.

INTEREST RATES STABILIZE IN JUNE.

Recently, Jerome Powell, the head of the Federal Reserve, chose to take a break from a series of ongoing interest rate hikes. This temporary halt follows ten successive increases, a strategy that was intended to tackle high inflation.

This choice to suspend rate hikes doesn't necessarily indicate a forthcoming decline in interest rates. Rather, the Federal Reserve is stepping back for a moment to analyze the effects of previous rate hikes on inflation and the wider economy.

The Federal Reserve's 18 policy makers project a further half-point rise in their key interest rate this year, reaching roughly 5.6%. These predictions show a stronger commitment to tighten monetary policy than many market observers had anticipated.

(This seems to be a communication strategy to keep market optimism in check and prevent runaway inflation. But whether the FOMC will follow through remains uncertain in my view.)

So, when might interest rate reductions occur?

Powell suggests, "A rate cut would be fitting when we see a substantial decrease in inflation. However, that's still a few years away." He continues, "As everyone can see, none of the committee members predicted a rate cut for this year. In fact, I don't think it's likely at all."

Build Your Assets

While cash certainly offers flexibility, its value is eroding alarmingly fast. Since the establishment of the Federal Reserve in 1913, the US dollar has lost 96% of its value due to excessive money printing and inflation.

The US has been unable to maintain a balanced fiscal budget, habitually increasing its debt ceiling each year. Imagine it like an individual perpetually maxing out their credit card, then repeatedly returning to the bank to ask for an increased limit. It's the epitome of fiscal irresponsibility.

From 2010, the US debt ceiling catapulted from $14.3 trillion to a staggering $31.4 trillion. With the US Congress planning to 'suspend' the debt ceiling until 2025, the government is effectively writing a blank check for its own spending.

This suggests the devaluation of the dollar is set to persist.

So, how can we shield ourselves from this monetary onslaught? The answer lies in asset acquisition.

A house now will still be a house in the future which holds value. It will just cost more because the value of money continues to drop. The value of a house is dependent on interest rate, growth of population and country prospects, etc. If chosen well, a house will either hold its value or grow modestly -- unlike the value of money.

Similarly, when you invest in stocks, you're purchasing equity in a company. The company's ability to innovate, adjust to inflation, generate profit, and improve free cash flow presents an opportunity for value multiplication for investors.

Despite any disappointment or frustration over the recent bear market, equities persist as the most lucrative asset amidst the world's money-printing spree.

This period of financial turbulence should excite us because assets are being mispriced due to fears. I know that the courage to invest in reputable companies during such times will yield rewarding returns in the future.

While we're in a world of problems, I hope you all share my optimistic perspective on this topic!

Note: Always ensure you have a sufficient safety net in the form of savings and emergency funds prior to investing.