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

Meta Platforms (Facebook) / Equity Bottom-Up

<ul>
<li>Optically weak earnings and guidance due to FX and macro headwinds aren't as bad as it seems... Meta's ad business grew faster QoQ than Google's Search.</li>
<li>Zuckerberg downplayed the social graph as core to Meta's LT competitive advantage. AI is the future.</li>
<li>At $160, we think Meta is preposterously undervalued. 2023 revenue acceleration and margin expansion means the stock is trading 9x forward P/E ex-cash. </li>
</ul>


Optically weak earnings and guidance due to FX and macro headwinds aren't as bad as it seems... Meta's ad business grew faster QoQ than Google's Search.
Zuckerberg downplayed the social graph as core to Meta's LT competitive advantage. AI is the future.
At $160, we think Meta is preposterously undervalued. 2023 revenue acceleration and margin expansion means the stock is trading 9x forward P/E ex-cash. 


Facebook 2Q22: Network Effects Are Yesterday’s News, AI Is the Future

<ul>
<li>Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business. </li>
<li>Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.</li>
<li>The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.</li>
</ul>


Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business. 
Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.
The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.


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.

<ul>
<li>This is our first report on social media giant, Snap.</li>
<li>Its user base increased by 18% year over year to 332 million daily active users in the last quarter and its revenue increased by 38% year over year to $1.06 billion.</li>
<li>The management recently launched Snapchat+, a paid version of the widely used social media platform offering exclusive and experimental features.</li>
</ul>


This is our first report on social media giant, Snap.
Its user base increased by 18% year over year to 332 million daily active users in the last quarter and its revenue increased by 38% year over year to $1.06 billion.
The management recently launched Snapchat+, a paid version of the widely used social media platform offering exclusive and experimental features.


Snap Inc.: Initiation of Coverage – The Snapchat+ Launch

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

<ul>
<li>This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.</li>
<li>The key judgement is whether a slowdown is temporary or the beginning of a trend.  These shorts tend to have high valuations and betas.  Multiple compression accelerates the stock’s decline.</li>
<li>Today we are flagging Repligen, Snap, Dynatrace Inc, Intuitive Surgical</li>
</ul>


This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.
The key judgement is whether a slowdown is temporary or the beginning of a trend.  These shorts tend to have high valuations and betas.  Multiple compression accelerates the stock’s decline.
Today we are flagging Repligen, Snap, Dynatrace Inc, Intuitive Surgical


Breaking Growth Short Candidates: Repligen, Snap, Dynatrace, Intuitive Surgical

<ul>
<li>Snapchat's guidedown resulting in a 30% drawdown is fantastical.  6x sales is now 4x sales, near alltime lows.</li>
<li>Was guide down worth 30% drawdown given already valuation compression and  volatility of Snap guidance? Sour grapes here.</li>
<li>Of course macro deteriorated. Who is doing Snap's forecasting? We think forecasting easier to fix than LT competitive moat. We'd buy SNAP...but buy FB first!</li>
</ul>


Snapchat's guidedown resulting in a 30% drawdown is fantastical.  6x sales is now 4x sales, near alltime lows.
Was guide down worth 30% drawdown given already valuation compression and  volatility of Snap guidance? Sour grapes here.
Of course macro deteriorated. Who is doing Snap's forecasting? We think forecasting easier to fix than LT competitive moat. We'd buy SNAP...but buy FB first!


Snapchat Guidedown: Overdone, But Buy FB/AMZN First

United States

Snap Inc. provides technology and social media services. The Company develops mobile camera application products and services that allow users to send and receive photos, drawings, text, and videos. Snap serves customers worldwide.

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Snap (SNAP US)

Facebook 2Q22: Network Effects Are Yesterday’s News, AI Is the Future

Macro clouds and Reels monetization headwinds will dissipate in 2023, providing an excellent entry point post earnings at $160, which by our math...

Aaron Gabin

Snap 2Q22: Why We Buy Meta

Snap caught 14 downgrades. Astonishing, but deserved for a management team that has no handle on its business. Snap still has a healthy user base...

Aaron Gabin

Snap Inc.: Initiation of Coverage – The Snapchat+ Launch

This is our first report on social media giant, Snap. Its user base increased by 18% year over year to 332 million daily active users in the last...

Baptista Research

Breaking Growth Short Candidates: Repligen, Snap, Dynatrace, Intuitive Surgical

Breaking Growth stocks combine declining fundamentals with a multiple compression. This week we flag: Repligen, Snap, Dynatrace, Intuitive Surgical

Eric Fernandez, CFA

Snapchat Guidedown: Overdone, But Buy FB/AMZN First

Snapchat guidedown costs 30% on its already massacred share price. We think this is overdone. SNAP has a bad history of volatile financial...

Aaron Gabin

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