m0xt

I believe maybe five companies will keep winning their market for the next 5+ years. AppLovin is one of them, and I keep ADDING.

Every podcast I hear with AppLovin people makes me want more exposure to this team. I'm becoming a real believer in lean, sharp teams full of top talent with great leadership. In the AI era, I think that's the biggest edge a company can have.

For some context, AppLovin runs on about 900 people, and only about 400 of them run the core ad business and the back office. That team brought in about $6.8B of revenue over the last 12 months, roughly $7.5M per employee, and kept about $4.4B of it as profit. That's close to $5M of profit per person.

I think revenue or profit per employee will become one of the most important metrics going forward. It shows how fast a company can adapt to this new world, and it's more critical than ever.

Of course, the market itself needs to keep growing. But the real question is who wins share in that market, and why.

AppLovin reaches over a billion people every day inside mobile games. That's an insane audience. Gamers aren't going to stop playing because of AI. There will always be gamers, and nobody knows that market better than this team.

Now they're taking the same engine into e-commerce.

I understand why people are nervous. But I think the market is pricing AppLovin like a mature gaming ad network, while one of the leanest teams in tech is going after a much bigger market. And I'm highly confident they will succeed eventually.

AppLovin reports on Wednesday. At $228.50, it trades at about 11.5x next year's expected earnings. Analysts expect AppLovin to grow earnings about 27% next year at an 84% EBITDA margin. No such company exists!

For some context, the slowdown is already in the numbers. Revenue growth went from 59% in Q1 to 53% in Q2, the Q3 guide implies about 47%, and the Street expects about 36% in Q4. At least 8 firms cut their price targets in October, including UBS from $790 to $414.

So what am I actually watching?

First, Q3 revenue. The guide is $2.055B to $2.085B, and analysts already sit near the top. At or above $2.085B tells me the July model upgrade worked and Q2 was just a timing issue due to a slower model upgrade.

Second: profits. Management’s adjusted EBITDA outlook is $1.71B to $1.74B. If they hit $1.74B or higher, the bigger compute bill is not just covered, but it probably adds extra profit. They might also push more work toward open source models instead of closed ones, which is exactly what their CTO suggested on that podcast two months ago.

The third one matters most: the Q4 revenue guide. The Street expects about $2.25B. Q4 is when online stores spend the most, and AppLovin doesn't break out e-commerce, so the guide is where it shows up. Above $2.25B with management crediting e-commerce is a clear win. Below about $2.20B, and the bears have a point.

Options are pricing a move of about 17% either way. That's a huuuge move, so be prepared.

I understand why people are nervous. BofA says it's hard to pay a premium for AppLovin without a durable reacceleration, and that's fair. But at 11.5x, there is no premium. It just needs a guide that shows growth holding up.

I’m fine sitting on this stock a while longer until the quality catches up and the growing market share shows up in the price.

They’re now leaning into sharing more wins from their platform, and nothing sells better than your customers’ success stories.

APP sits in my Milk Road top five. Peek at my full portfolio here: link.milkroad.com/Martin

Applying the same multiple just to Helios would put Galaxy's residual value at $10B.

The current market cap is $5.2B. One of these numbers is wrong.

The bears said UBER was about to get run over by robotaxis. Uber just put up ANOTHER quarter that says otherwise.

Q3 bookings came in at $59.8B, up 20% from a year ago. Delivery grew even faster, up 22% to $28.5B, and grocery and retail are still growing about 40% a year, now a $15B run-rate business on their own. Adjusted EPS was $0.88, up 35%.

And the cash keeps piling up. Free cash flow was $2.5B in the quarter and a record $10.4B over the last twelve months. Uber bought back $750M of its own stock, up from $510M in Q2.

For some context, the market prices Uber at about 13 to 14 times its free cash flow. That's the price you put on a business people expect to shrink. This one is guiding to another 18% to 22% bookings growth next quarter.

So what about robotaxis? If Waymo and Tesla were starting a price war, margins would fall. They went up, from 7.6% to about 8% of bookings.

Plus, here is an important comment from Uber's CFO.

He said Waymo and Tesla cars in the new markets they launched this year do "low teens" trips per day, while cars on Uber's network do "high 20s."

Robotaxis make more money on Uber's app, which is why Uber expects about 700 fully driverless cars on its network by year-end and 2,000+ by the end of 2027.

I understand why people are nervous. Trips grew 16%, a bit softer than expected. Part of that, I think, is where Uber is growing now. It's pushing further outside the big metros into smaller towns and rural areas, where people take fewer trips but much longer ones. Fewer rides, but each one is worth more.

Overall, I think the numbers keep saying the same thing. Uber owns the riders and the eaters, and every new car that shows up, driverless or not, ends up wanting that demand.

Management also said they want to focus on buybacks next year, so good luck to all bears out there.

Who's your favorite investor?

Milk Road just launched something pretty SICK. You can now look inside the full portfolios of the biggest investors out there and get a notification the moment one of them makes a change.

My first stop was Bill Ackman, one of my favorite investors.

There's one part of his portfolio I just can't get my head around. As of his last filing, about 11% of Pershing Square sits in Visa and Mastercard, at about 5.8% and 5.6%.

I get why he owns them. For decades they've been two of the best businesses on earth. They take a small toll on almost every card payment, and they barely need any capital to do it.

But I think that toll is about to get squeezed.

New players are building payments on blockchain rails, where money moves in seconds, settles around the clock, and costs a fraction of what cards do. Once a merchant can get paid instantly and cheaply, the card fee gets very hard to justify.

Nothing is wrong with how Visa and Mastercard are run. The rails underneath them are changing, and their margins are the first to get squeezed.

I understand the other side. Billions of their cards are in people's wallets, habits are sticky, and both companies are already testing stablecoin settlement. They could end up running a piece of the new rails too.

But I think the new players will own the customer and the economics, and the old toll booth won't keep the same cut.

So what am I watching? Ackman's next filing on Nov 14. If he starts trimming Visa or Mastercard. I simply don't see a bull case here anymore. Do you?

I'd rather own the companies building the new rails than the ones collecting tolls on the old ones.

Go find your favorite investor, see what they own, and turn on notifications so you never miss a move: milkroad.com/?utm_medium=so…

Uber reports on Wednesday, and I think Wall Street is pricing it like a company that's about to get run over by robotaxis.

The stock is down about a third from its high. Meanwhile, Uber just generated over $10 BILLION of free cash flow in a single year for the first time ever. That puts it at about 13x free cash flow, which is cheap for a business still growing bookings over 20%.

For some context, Wall Street expects about $59.7B in gross bookings for Q3, right in the middle of Uber's own $58.25B to $60.25B guide, with trips up about 18%. And don't get distracted by slow revenue growth. A UK accounting change shrinks reported revenue without touching profit, so bookings and trips are the real scoreboard.

So what am I actually watching?

The big one is Mobility margins. The bear case is that Waymo and Tesla go direct to riders and drag Uber into a price war. If that were happening, it would show up in the margins first. Instead, Mobility earned 7.6% of bookings last quarter and was still climbing. If that number keeps rising on Wednesday, there's no price war, and the "robotaxis eat Uber" story gets a lot harder to tell.

The second is buybacks. Uber bought back just $510M of stock last quarter, down from $1.4B a year ago. The full Delivery Hero takeover doesn't close until 2027, and with the stock this cheap, I want to hear they're buying their own shares aggressively again.

The third is grocery, which is growing about 40%. DoorDash agreed to buy Instacart only last week, after the quarter ended, and the real impact probably won't show up until 2027 or later. So this print is the clean baseline. What I want to hear is Uber's plan for when that fight actually starts.

Options are pricing in a move of about 8% either way, so expect some fireworks.

I understand why people are nervous. Robotaxis are a real long-term question, and Uber is committing billions to Delivery Hero and self-driving partners. But I think the market is so focused on what could go wrong in five years that it's overlooking a business compounding bookings and throwing off record cash right now.

If bookings beat the top of the guide and Mobility margins keep rising, I think the discount starts closing.

UBER is one of my top positions on Milk Road. See it here: link.milkroad.com/Martin