TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why Digital Ocean? We're pretty big Amazon bulls cause of AWS, so when we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating growth by growing dollar retention rates and ARPUs...we had to learn more. Strikes us at the type of business that could be a 5 to 10-bagger over the next year or two. </p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why Digital Ocean? We're pretty big Amazon bulls cause of AWS, so when we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating growth by growing dollar retention rates and ARPUs...we had to learn more. Strikes us at the type of business that could be a 5 to 10-bagger over the next year or two. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>Alphabet is showing absolutely no signs of slowing down as it reported yet another all-around beat with a phenomenal performance of Google Services.</li><li>With digital advertising expenditure rising, the company generated $57 billion from Google Service, a staggering 63.1% growth.</li><li>YouTube’s performance was the highlight of the quarter as its ad revenues rose 83.7% and also, YouTube shorts surpassed 15 billion daily views.</li></ul>

Alphabet is showing absolutely no signs of slowing down as it reported yet another all-around beat with a phenomenal performance of Google Services.With digital advertising expenditure rising, the company generated $57 billion from Google Service, a staggering 63.1% growth.YouTube’s performance was the highlight of the quarter as its ad revenues rose 83.7% and also, YouTube shorts surpassed 15 billion daily views.

<p>The headline for Amazon’s quarter was that its revenue growth decelerated 1700bps to 24% YoY , and appears set to decelerate another 1000bps in 3Q. Tough comps people. Tough comps.</p><p>The company has to invest more and more money to keep up with demand…historically, these are the times you invest in Amazon, when its going through capacity buildouts…its just never happened before that Amazon has had ongoing investment cycles for multiple years. In the end…the absolute size and profitability of the business will be larger. It might just take 2-3 quarters to prove out.</p><p>In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. AWS on a $59B runrate, growing 37% (500bps acceleration QoQ), Advertising on a $32B runrate, growing 87% (1400bps acceleration). We value these two businesses at ~2T….which is 30% ahead of the current market cap. We think retail is also worth ~$1T, which is what get us to our $3T valuation, which equates to $6,000 a share. </p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

The headline for Amazon’s quarter was that its revenue growth decelerated 1700bps to 24% YoY , and appears set to decelerate another 1000bps in 3Q. Tough comps people. Tough comps.The company has to invest more and more money to keep up with demand…historically, these are the times you invest in Amazon, when its going through capacity buildouts…its just never happened before that Amazon has had ongoing investment cycles for multiple years. In the end…the absolute size and profitability of the business will be larger. It might just take 2-3 quarters to prove out.In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. AWS on a $59B runrate, growing 37% (500bps acceleration QoQ), Advertising on a $32B runrate, growing 87% (1400bps acceleration). We value these two businesses at ~2T….which is 30% ahead of the current market cap. We think retail is also worth ~$1T, which is what get us to our $3T valuation, which equates to $6,000 a share. Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Amazon 2Q21: Pay Attention to AWS and Advertising

Meta Platforms (Facebook) / Equity Bottom-Up

<p>We think Facebook was unfairly punished for its earnings last week...it "underperformed" Google's 2Q21 results because its "overperformed" in 2Q20...and that was due to the nature of its auction model, which shifted from brand advertising to direct response last year. Apple tracking headwinds aside, we think Facebook is very appealing at 22x forward earnings, and would be buyers below $350.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We think Facebook was unfairly punished for its earnings last week...it "underperformed" Google's 2Q21 results because its "overperformed" in 2Q20...and that was due to the nature of its auction model, which shifted from brand advertising to direct response last year. Apple tracking headwinds aside, we think Facebook is very appealing at 22x forward earnings, and would be buyers below $350.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Facebook 2Q21: “Significant Deceleration?” Cmon.

<p>We were wildly impressed by Google's quarter. Microsoft continues to chug along...our takeaway from the two is Amazon is primed for a monster print on Thursday...retail advertising is on fire right now, while GCP and Azure showed almost no deceleration QoQ.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

We were wildly impressed by Google's quarter. Microsoft continues to chug along...our takeaway from the two is Amazon is primed for a monster print on Thursday...retail advertising is on fire right now, while GCP and Azure showed almost no deceleration QoQ.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

TMT Megacap Earnings Observations: Google & Microsoft

United States

Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

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Alphabet (GOOGL US)

Recent IPO Insights: Digital Ocean

Why Digital Ocean? When we heard there was this mini-AWS that the developer community swears by, had 30%+ EBITDA margins, was accelerating net...

Aaron Gabin

Alphabet Inc - Investment Thesis

Alphabet is showing absolutely no signs of slowing down as it reported yet another all-around beat with a phenomenal performance of Google...

Baptista Research

Amazon 2Q21: Pay Attention to AWS and Advertising

Retail decelerated ALOT. In the meantime, its higher margin AWS and Advertising businesses are ACCELERATING. We value these two businesses at...

Aaron Gabin

Facebook 2Q21: “Significant Deceleration?” Cmon.

We think Facebook was unfairly punished for its earnings last week...it "underperformed" Google's 2Q21 results because its "overperformed" in 2Q20....

Aaron Gabin

TMT Megacap Earnings Observations: Google & Microsoft

We were wildly impressed by Google's quarter. Microsoft continues to chug along...our takeaway from the two is Amazon is primed for a monster print...

Aaron Gabin

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