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- RoySimRoySim
  ·2022-01-19
  nice
  Palantir: This Is A Long-Term Investment - Don't Bother If You're Not Looking Out 5-10 Years
  SummaryPalantir is one of my highest conviction picks for capital appreciation. But if you're lookin
  Palantir: This Is A Long-Term Investment - Don't Bother If You're Not Looking Out 5-10 Years
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- RoySimRoySim
  ·2022-01-03
  Good sharing thanks
  Sea Limited: Engaging Wars On Multiple Fronts
  SummaryShopee is taking a long-term approach by re-investing its margins to expand into new markets
  Sea Limited: Engaging Wars On Multiple Fronts
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- RoySimRoySim
  ·2022-01-02
  nice
  2 No-Brainer Stocks Down 27% to 35% to Buy for 2022
  These hot tech stocks might be a steal at these prices.
  2 No-Brainer Stocks Down 27% to 35% to Buy for 2022
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But if you're lookin","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Palantir is one of my highest conviction picks for capital appreciation. But if you&#39;re looking short term, there are other places to invest your capital.</li><li>I see Palantir becoming a 7-10 bagger within my personal investment time horizon, and I continue to add to my original position that I started under $10 per share.</li><li>PLTR had a great 2021, and I&#39;m excited for Q4. They increased guidance and expect to deliver $1.5 billion in revenue and $400 million in adjusted free cash flow.</li><li>PLTR has many long-term catalysts, they have more than $3 billion in remaining deal value, and are partnering with companies that could redefine technology in the future.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c0cc75c297e1081b3206365f618d6ebc\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\"/><span>Chip Somodevilla/Getty Images News</span></p><p>From the government contracts down to its valuation, Palantir(NYSE:PLTR)has been a controversial stock, with neither side backing down from their viewpoints. Since its peak in February 2021, shares of PLTR have crashed 64.42% to $16.01 on 1/14/21. Like many growth stocks, PLTR has been a falling knife inflicting wounds in countless portfolios on its way down. During growth&#39;s ascent into February 2021, investors saw that enormous returns became addicting, and many investors began to believe that companies with disruptive potential would just keep appreciating. Investing became too easy, and many thought they could consistently outperform the market until they couldn&#39;t.</p><p>I have said in previous articles that PLTR is one of my highest conviction investments for the decade, and let me emphasize a keyword here, decade. I&#39;m not a short-term investor, I don&#39;t day trade, and I don&#39;t get caught up in momentum trades. The main aspect many bears overlook when it comes to PLTR is time, and they focus on valuing PLTR the same way they would value Intel(NASDAQ:INTC). My time horizon for investing in PLTR has always been 5-10 years out, and I have repeatedly said I don&#39;t care about the price in the short term. How many people can actually buy a stock around the bottom and sell it around its peak consistently? I bought my original block of PLTR shares for under $10, paid as much as $28 per share, and added to my position at least 15 times in-between.</p><p>As an American, I&#39;m proud to be a shareholder of PLTR as they are elevating our government&#39;s and its allies&#39; technological infrastructures. In the short term, PLTR may not be a great investment, but I&#39;m not looking for it to be. I&#39;m placing my capital behind PLTR because I believe it&#39;s a Unicorn with exponential growth potential and the possibility of becoming one of the most important software companies in the world. Could shares of PLTR keep declining? Absolutely, so stop gambling and don&#39;t invest money you&#39;re unwilling to lose. PLTR is a long-term investment, and if you don&#39;t have the risk tolerance for investing in individual equities, plow your money into an index fund such as the Vanguard S&amp;P 500 ETF(NYSEARCA:VOO). I have written about VOO, I&#39;m invested in VOO, and it&#39;s done quite well. The investment thesis around PLTR has to do with its current growth metrics, projections, forecast raises, technology platforms they unveiled, and the futuristic industries being built on their platforms. I&#39;m planning to buy the dips, and if I can get more shares at $10, even better, bring it. I don&#39;t know if I have ever given a share price prediction for PLTR, so I&#39;m about to give people something to cheer about or leave comments about how ridiculous my prediction is. PLTR will exceed at least $120 per share in 2032, and this will be a 7-10 bagger from here, placing their market cap between $224.7 and $321 billion. I provide mathematical projections and reasoning later in the article so please read that before leaving negative comments that I have lost my mind.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/008f9483cd691b110c8d18443d1d69e6\" tg-width=\"640\" tg-height=\"403\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p><b>I was wrong about PLTR&#39;s chart, and now the chart is signaling PLTR could head lower as a new bottom hasn&#39;t been established</b></p><p>Sometimes technical analysis doesn&#39;t matter, and stocks fall right through levels of resistance. From May of 2021 through November, PLTR&#39;s chart established a pattern of making higher lows and higher highs. During this period, shares of PLTR tried to break out to the upside and retest the $30 level three times, and each dip created a higher low. From May through October, PLTR created a channel where the bottom resistance line wasn&#39;t breached. At the end of September, PLTR sold off after making a new high of $28.50, then fell below $24, but shares didn&#39;t crash through the trend and curled back up to $26. PLTR was set up to trade within this channel and break out to the upside if they delivered a strong Q3.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/39e9f197d938d20b6470d30dc9c4f808\" tg-width=\"640\" tg-height=\"333\" width=\"100%\" height=\"auto\"/><span>Chart</span></p><p>Well, we all know what happened to this story. After earnings shares of PLTR, like many other growth companies, just collapsed, the channel that PLTR had established was decimated and the bottom line of resistance was obliterated. There&#39;s nothing about PLTR&#39;s three-month chart signals that shares have bottomed, and we could see this trend continue. Until some stability is generated, there&#39;s no way to tell if we have bottomed, if PLTR retests $15 or if shares continue to trend lower. The chart isn&#39;t pretty, and PLTR is now caught in a downward spiral. All the bulls shouldn&#39;t be fooled; if PLTR breaks the $15 barrier, $12.50 is a real possibility. A strong earnings call may not be enough to counteract PLTR&#39;s downward momentum in the short term. After all, PLTR delivered a strong Q3, and shares have done nothing but declined. I don&#39;t have a crystal ball, but based on what&#39;s occurred in the Nasdaq and growth stocks in general, there is a real possibility that we see $15 before $20.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/198507937aa3dea125df6076b01e1150\" tg-width=\"452\" tg-height=\"223\" width=\"100%\" height=\"auto\"/><span>Chart</span></p><p><b>Before criticizing PLTR for their Government contract segment, it would be wise to look at the spending trends within the USA and where money is projected to be spent</b></p><p>The Congressional Budget Office has not released their infographic for Fiscal Year 2021, so I&#39;m going to use 2020&#39;s for my example. In 2020, the United States Government spent $714 billion on the defense budget, then an additional $914 billion onnon-defense, including outlays for health, transportation, and other activities. There&#39;s also a section named Other, which $988 billion was allocated to and the capital is allocated to. Since 2008, the defense budget has exceeded $600 billion annually and topped out at $752.29 billion in 2011. In recent years, we have seen the defense budget increase by 5.53% to $682.49 billion in 2018, 7.22% in 2019 to $731.75 billion, then decrease by -2.43% in 2020. From 2010-2019, the United States has spent $6.88 trillion on its defense budget in the last decade.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/be5728341c68cd8446d0960e05227e63\" tg-width=\"640\" tg-height=\"574\" width=\"100%\" height=\"auto\"/><span>Federal Budget</span></p><p>Whether you agree with the federal budget or how the capital is allocated, PLTR continues to win government contracts that correlate to revenue. In Q3, PLTR signed new deals with the U.S. Department of Health and Human Services, the U.S. Air Force, NIH, the U.S. Department of Veterans Affairs, and more. In Q3, PLTR grew the amount of revenue generated from government contracts by 34% YoY and generated $218 million in Q3 from this business segment.</p><p>It&#39;s puzzling how individuals disregard PLTR&#39;s relationship with the US government. When the United States government continues to award contracts to PLTR, it makes PLTR&#39;s software more viable to our allies. PLTR has its hands in every segment of the US military and has expanded throughout the Department of Justice. There&#39;s a large opportunity for PLTR to gain additional contracts internationally from our allies in addition to future contracts domestically.</p><p>I continue to become more bullish on PLTR in the long term because I follow where the money is being allocated. The U.S. Department of the Treasury published The American Families Plan Tax Compliance Agenda in May of 2021. This agenda specifically outlines that $80 billion in additional resources will be allocated to rebuilding the IRS over the next decade. A portion of these resources will be allocated to leveraging information that financial institutions already collect to shed light on those taxpayers who misreport income derived from opaque categories and overhauling antiquated technology to help IRS leverage 21st-century data analytic tools. When you look through the Federal Procurement Data System, several contracts were signed between PLTR and the IRS, and the SEC (Securities and Exchange Commission). The SEC signed a deal with PLTR on 4/29/21 that has a completion date of 6/18/22 and an ultimate completion date of 6/18/25. This deal is worth $13 million for its action obligation and $32 million for its total contract value. This contract is for an Enterprise Data Analytics Platform. Interestingly enough, the IRS also signed a deal on 4/30/21 with PLTR worth $5.6 million.</p><p>On Dec. 2, PLTR won an additional contract from Space Systems Command for $43 million. The contract builds on their previous awards bringing their committed contract value with PLTR to $91.5 million. PLTR also won a second option year with one of their contracts with the U.S. Army. The U.S. Army has greenlit a second option year for the Vantage Program for $116.3 million. The Army Vantage data analytics platform uses Palantir&#39;s software for a central operating system to boost readiness and controlled access to army data sources.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/28aa97a8b0d998aa9302ae6db97abb0a\" tg-width=\"640\" tg-height=\"328\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p>When you follow the dots, the US government is becoming more reliant on PLTR, which puts PLTR at the front of the line for new contracts. I have my eyes on the JEDI contract, a $10 billion cloud computing contract through the Department of Defense, a larger customer of PLTR. On 7/6/21, the Department of Defense released a statement canceling the contract award to Microsoft(NASDAQ:MSFT), upgraded the contract requirements, and sourced the components through a multi-vendor cloud computing contract. The DoD was explicitly clear that their new initiatives included JADC2 (Joint All-Domain Command and Control) and AI and Data Acceleration (ADA). In an official document from the Congressional Research Service, it states:</p><p>&#34;Joint All-Domain Command and Control (JADC2) is the Department of Defense&#39;s (DOD&#39;s) concept to connect sensors from all of the military services - Air Force, Army, Marine Corps, Navy, and Space Force - into a single network.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c5bdf0b04345df9c6b5c645266306305\" tg-width=\"640\" tg-height=\"377\" width=\"100%\" height=\"auto\"/><span>JADAC2</span></p><p>Sometimes you need to become a detective and follow the money. The US government allocates trillions to the safety of this country, and there are more contracts up for grabs. PLTR&#39;s strong relationship with the government is positive, and PLTR has been increasing its moat for years. There aren&#39;t many companies that can compete with PLTR&#39;s software, and let&#39;s face it, the United States Military Industrial Complex isn&#39;t going to disappear. Capital will always be allocated to this budget segment, and PLTR has grown well past a niche software provider. What started out as a secretive black box company has expanded throughout many government segments, and PLTR is winning contracts from everywhere.</p><p><b>Going into Q4 Earnings, Palantir has formed exciting partnerships and executed additional contracts on the commercial client side</b></p><p>PLTR and Hyundai Heavy Industries are forming a joint venture to commercialize big data solutions. PLTR and Hyundai are building a big data platform for Hyundai&#39;s core businesses, including shipbuilding and offshore engineering. PLTR will provide software and development personnel while Hyundai brings the affiliate&#39;s process expertise and sales to the table. Hyundai also will deploy the PLTR Foundry platform.</p><p>PLTR and Dewpoint Therapeutics announced a partnership where Dewpoint will deploy PLTR&#39;s Foundry platform to help power Dewpoint&#39;s efforts to discover treatments and cures for the most challenging diseases. This multi-year deal showcases PLTR&#39;s most comprehensive partnership with a biotech company. Dewpoint will utilize Foundry as the primary platform for its centralized knowledge repository, helping it contextualize its experimental results and prioritize the most viable outcomes. Foundry will also help researchers further their understanding of condensates biology by analyzing lab data and other data sources, including data from the published literature and databases, to identify new compounds and therapeutic approaches.</p><p>MERCK Kommanditgesellschaft auf Aktien (OTCPK:MKGAF) is a $93 billion German company that has been collaborating with PLTR since 2017.MKGAF and PLTR have recently have joined forces to provide a collaborative data analytics platform for the semiconductor industry. The platform will offer insights into materials and processes at semiconductor fabrication plants in addition to utilizing AI and big data to address challenges such as semiconductor chip shortages, supply chain transparency, time-to-market, and product quality. This deal is huge because the semiconductor industry continues to grow. The future implications of this data analytics platform could correlate to future contracts with some of the most prominent semiconductor companies and drive large amounts of revenue to the bottom line. Keep in mind that President Joe Biden has outlined a blueprint for the U.S semiconductor industry. Once the White House delivered their 250-page report, the U.S. Senate expressed bipartisan support by passing a bill offering $52 billion to bolster domestic chip manufacturing. PLTR also signed a multi-year agreement with one of my favorite American energy infrastructure companies Kinder Morgan(NYSE:KMI), which I recently wrote an article on. KMI will deploy Foundry into their storage and operations segment to drive efficiency and safety. KMI will look to optimize its U.S based gas storage operations and leverage Foundry to make data-driven decisions on gas storage, optimization, and maintenance scheduling. This is an incredible deal for PLTR, and it expands their energy contract portfolio as they have been working with BP p.l.c(NYSE:BP) for years.KMI operates more than 70,000 miles of natural gas pipeline and has 144 terminals. Within KMI&#39;s network, they operate over 700 bcf of working storage capacity. The energy infrastructure segment is huge, and I am excited that this could be the first of many large-scale contracts within the industry. By partnering with KMI, PLTR now has the ability to showcase its expertise and possibly win additional contracts from companies like Enterprise Products Partners(NYSE:EPD), Energy Transfer(NYSE:ET), or Enbridge(NYSE:ENB).</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/758f286cea4f4a7259d33a60852d15c4\" tg-width=\"640\" tg-height=\"355\" width=\"100%\" height=\"auto\"/><span>Kinder Morgan</span></p><p><b>Palantir is making strategic investments into young companies and these businesses are being built on PLTR&#39;s software</b></p><p>PLTR has invested in 9 companies and is committed to investing in an additional 12 companies. This is one of the most exciting investment elements in PLTR, but you need to look 5-10 years out, maybe even 15 years, with an open mind. Currently,PLTR has an equity position in nine young companies and is committed to taking an equity position in an additional 12. While these positions are all under $50,000 investments, the more important aspect is that these companies are utilizing PLTR&#39;s software to build their companies. You have everything from connected vehicles to satellite imagery, robotic exoskeletons, and flying vehicles. This is certainly forward-thinking, and these investments will take years upon years to materialize, but it&#39;s a genius move on PLTR&#39;s part. PLTR is getting in on the ground floor, cultivating relationships, and their software will help shape tomorrow&#39;s industries.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/05122ca692b553119ed01bfce0aa33ec\" tg-width=\"640\" tg-height=\"365\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p>Look back to the 80s, 90s and 2000s. Evolution never stops, and technological advances continue to redefine how society operates. Think about how different life is today than in 2000 and how the rate of change continued to increase. To think that this is where evolution stops is crazy. In 2000, if you had said we would have smartphones connected to smartwatches, and you would be able to hold a meeting with 500 people on a digital platform, chances are you would have been told to stop watching science fiction movies. With the computing power we have today, what do you think the world will be like in 2040? Will gene editing become a reality, will we have flying vehicles, will humans utilize robotics to enhance their output and reduce injury from physical labor, will companies be able to track global shipments through deploying dedicated satellite imagery, will autonomous vehicles become the standard, and will all automobiles become connected vehicles? I can&#39;t say yes or no, but I wouldn&#39;t bet against evolution and I am positive that 2040 will look nothing like 2022.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c3ae0a40db60bca95a97d60fb14a407b\" tg-width=\"640\" tg-height=\"218\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8fd3971434a71a5b4249f0e56705e849\" tg-width=\"640\" tg-height=\"295\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p><b>Palantir is delivering on financial growth, and based on its current performance, the future looks bright</b></p><p>PLTR has gotten slaughtered since Q3 earnings were released. While nobody wants to see their investment decrease in value, not a single stock has just gone up. Even Berkshire Hathaway(NYSE:BRK.A)(NYSE:BRK.B)and Apple(NASDAQ:AAPL)have declined in value during periods of time. There isn&#39;t a perfect valuation methodology, and you can drive yourself insane trying to understand why the market rewards one set of financials but not another. If you&#39;re looking for a short-term trade, go buy Apple, I am willing to bet Apple delivers their best quarter ever in a few weeks and sets the tone for their most profitable year, which could generate a bounce to the upside. If you&#39;re looking for an investment into the future that could be a 5-10 bagger and are willing to overlook price volatility over the next several years, PLTR is an outstanding candidate.</p><p>In Q3, PLTR added 34 new customers and closed 54 deals worth $1 million or more. PLTR&#39;s remaining deal value increased by 50% YoY to $3.6 billion. PLTR is now delivering two of the most important metrics, cash from operations and adjusted free cash flow. PLTR&#39;s revenue in Q3 grew by 36% to $392 million, and in the first nine months of 2021, PLTR&#39;s revenue increased by 44% to $1.1 billion compared to 2020. In Q3, PLTR&#39;s cash from operations improved by $153 million YoY as they generated $101 million. This allowed PLTR to generate $119 million in adjusted free cash flow in Q3, which was a 30% margin, and year to date, PLTR has generated $320 million in adjusted free cash flow. In the first nine months of 2021, PLTR achieved their 2021 full-year projection of generating $300 million in adjusted free cash flow and raised their guidance to $400-plus million for 2021. This is exactly what you want to see from a growth company, revenue increasing and driving cash from operations and free cash flow. As PLTR continues to grow, its increased revenue is driving the bottom line.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2690e8d6e47d1ada4e629bf3b9eb47e2\" tg-width=\"640\" tg-height=\"309\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p>In Q3, PLTR added 34 net new customers, and their total customer count increased 20% QoQ. PLTR witnessed its commercial count increase by 46% QoQ on the commercial side. The amount of revenue generated on the commercial side has increased 37% in Q3 YoY and 43% on the government side. There&#39;s a lot to celebrate as 33 of the 54 deals closed in Q3 were valued at $5 million or more, and 18 of the 54 deals had a value that exceeded $10 million. PLTR ended Q3 with $3.6 billion in remaining deal value which was up 50% YoY, but the commercial side increased by 101% YoY to $2.2 billion, which is almost two-thirds of their total remaining deal value. The big complaint used to be that PLTR was dependent on government contracts, and now the investment community is seeing true diversification from its revenue sources.</p><p>PLTR may not have been rewarded for beating earnings and increasing their 2021 guidance, but the important thing is that they did exactly that. PLTR is projecting that their revenue in Q4 will come in at $418 million with a 22% adjusted operating margin. On the full year, PLTR is projecting that their revenue growth will increase to 40% from their 30% forecast and deliver $1.53 billion in revenue for the 2021 fiscal year. PLTR also is increasing their forecast on the bottom line as well and projecting $400 million in adjusted free cash flow, which is a 33% increase from their $300 million guidance. PLTR is still projecting that it will achieve 30% annual revenue growth over the next four years.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eeb769a845771ed745b66efa547b97e4\" tg-width=\"640\" tg-height=\"348\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p>Based on PLTR&#39;s past earnings reports, they have gained a reputation for underpromising and overdelivering. PLTR is going to finish 2021 guiding up on revenue and adjusted free cash flow. I have created some projections for fiscal year 2032, and keep in mind these are just projections. I don&#39;t have a crystal ball. Currently, in the first nine months of 2021, PLTR has an adjusted free cash flow margin of 29.1% as they have generated $1.1 billion in revenue and $320 million in adjusted free cash flow. On their full-year guidance of $1.52 billion in revenue, their low-end $400 million would put them at a 26.2% adjusted free cash flow margin. If PLTR stays flat and generates $119 million of adjusted free cash flow in Q4, that would put them at $439 million of adjusted free cash flow in 2021 for a margin of 28.75%. My projections are going to assume that PLTR can at least maintain their 30% annual revenue increases past 2025, and I am going to use a 28% adjusted free cash flow margin.</p><p>If PLTR can maintain a 30% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $27.37 billion in annual revenue and $7.66 billion in adjusted free cash flow.</p><p>If PLTR can maintain a 35% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $41.45 billion in annual revenue and $11.61 billion in adjusted free cash flow.</p><p>If PLTR can maintain a 40% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $61.84 billion in annual revenue and $17.31 billion in adjusted free cash flow.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/db73e5a53601e42418df0c5cf18e2402\" tg-width=\"640\" tg-height=\"139\" width=\"100%\" height=\"auto\"/><span>Palantir possible future revenue</span></p><p>Today,Shopify (NYSE:SHOP) trades at a 302.33x free cash flow multiple as they generate $458.1 million in free cash flow and have a market cap of $138.5 billion.PayPal(NASDAQ:PYPL) trades at a 41.9x multiple as they generate $5 billion in free cash flow and have a market cap of $209.63 billion. Tesla(NASDAQ:TSLA) trades at a 410.62x free cash flow multiple as their market cap is $1.05 trillion.3M Company(NYSE:MMM) trades at a 15.86x free cash flow multiple with a market cap of $103 billion and $6.5 billion in free cash flow.Meta Platforms(NASDAQ:FB) trades at a 25.78x multiple on its $35.80 free cash flow, having a market cap of $923.27 billion.</p><p>There&#39;s no rhyme or reason as to how the market values individual companies, if there was, investing would be easy. Looking at several different companies, I think that PLTR should receive at least a 25x multiple on its free cash flow, if not more.</p><p>If my first set of projections ends up becoming correct, then PLTR would generate $27.376 billion in revenue and $7.66 billion in adjusted free cash flow in 2032. At a 25x multiple, this would place PLTR&#39;s market cap at $191.56 billion, which would be a 596.77% return. If the market placed a 30x multiple on PLTR&#39;s adjusted free cash flow, which is still under many of today&#39;s larger growth companies, it would place PLTR&#39;s market cap at $229.88 billion for a 716.13% return. If the market placed the same multiple on PLTR as it does for PYPL, then PLTR would have a $321.06 billion market cap, a 1,000% return.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/92074dd1c9fd26338edc683a523678d4\" tg-width=\"640\" tg-height=\"305\" width=\"100%\" height=\"auto\"/><span>Palantir</span></p><p><b>Conclusion</b></p><p>There you have it, I believe PLTR can deliver 700%-1,000% returns during my investment time frame. Shares of PLTR have been under pressure lately, but the fundamental business is performing exceptionally well with many future prospects in the pipeline. I continue to view PLTR as a long-term investment, and I don&#39;t care what the share price did in 2021, and I really don&#39;t care what happens in 2022. I&#39;m invested in PLTR because I believe this can generate exponential capital appreciation to my portfolio 10 years from now.</p><p>For me, the risk is worth the reward, and I&#39;m not waiting for PLTR to have 5-10 years of data to determine if its valuation meets the criteria for a value investment. The capital I have deployed, I don&#39;t need today, and I won&#39;t need next year or the year after that. Some investors don&#39;t have the patience to wait a decade for their investments to materialize. Luckily, I&#39;m not most people. Each one of my investments serves a purpose, and unlike my dividend companies, I&#39;m swinging for another home run with PLTR. When I see articles saying PLTR has a fair value of $5, I laugh and think if someone is willing to sell me 1,000 shares of PLTR for $5,000, send me a message right now, and I will write you a personal check.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir: This Is A Long-Term Investment - Don't Bother If You're Not Looking Out 5-10 Years</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir: This Is A Long-Term Investment - Don't Bother If You're Not Looking Out 5-10 Years\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-01-19 16:36 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4479987-palantir-stock-long-term-investment-5-10-years><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryPalantir is one of my highest conviction picks for capital appreciation. But if you're looking short term, there are other places to invest your capital.I see Palantir becoming a 7-10 bagger ...</p>\n\n<a href=\"https://seekingalpha.com/article/4479987-palantir-stock-long-term-investment-5-10-years\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4479987-palantir-stock-long-term-investment-5-10-years","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1122019752","content_text":"SummaryPalantir is one of my highest conviction picks for capital appreciation. But if you're looking short term, there are other places to invest your capital.I see Palantir becoming a 7-10 bagger within my personal investment time horizon, and I continue to add to my original position that I started under $10 per share.PLTR had a great 2021, and I'm excited for Q4. They increased guidance and expect to deliver $1.5 billion in revenue and $400 million in adjusted free cash flow.PLTR has many long-term catalysts, they have more than $3 billion in remaining deal value, and are partnering with companies that could redefine technology in the future.Chip Somodevilla/Getty Images NewsFrom the government contracts down to its valuation, Palantir(NYSE:PLTR)has been a controversial stock, with neither side backing down from their viewpoints. Since its peak in February 2021, shares of PLTR have crashed 64.42% to $16.01 on 1/14/21. Like many growth stocks, PLTR has been a falling knife inflicting wounds in countless portfolios on its way down. During growth's ascent into February 2021, investors saw that enormous returns became addicting, and many investors began to believe that companies with disruptive potential would just keep appreciating. Investing became too easy, and many thought they could consistently outperform the market until they couldn't.I have said in previous articles that PLTR is one of my highest conviction investments for the decade, and let me emphasize a keyword here, decade. I'm not a short-term investor, I don't day trade, and I don't get caught up in momentum trades. The main aspect many bears overlook when it comes to PLTR is time, and they focus on valuing PLTR the same way they would value Intel(NASDAQ:INTC). My time horizon for investing in PLTR has always been 5-10 years out, and I have repeatedly said I don't care about the price in the short term. How many people can actually buy a stock around the bottom and sell it around its peak consistently? I bought my original block of PLTR shares for under $10, paid as much as $28 per share, and added to my position at least 15 times in-between.As an American, I'm proud to be a shareholder of PLTR as they are elevating our government's and its allies' technological infrastructures. In the short term, PLTR may not be a great investment, but I'm not looking for it to be. I'm placing my capital behind PLTR because I believe it's a Unicorn with exponential growth potential and the possibility of becoming one of the most important software companies in the world. Could shares of PLTR keep declining? Absolutely, so stop gambling and don't invest money you're unwilling to lose. PLTR is a long-term investment, and if you don't have the risk tolerance for investing in individual equities, plow your money into an index fund such as the Vanguard S&P 500 ETF(NYSEARCA:VOO). I have written about VOO, I'm invested in VOO, and it's done quite well. The investment thesis around PLTR has to do with its current growth metrics, projections, forecast raises, technology platforms they unveiled, and the futuristic industries being built on their platforms. I'm planning to buy the dips, and if I can get more shares at $10, even better, bring it. I don't know if I have ever given a share price prediction for PLTR, so I'm about to give people something to cheer about or leave comments about how ridiculous my prediction is. PLTR will exceed at least $120 per share in 2032, and this will be a 7-10 bagger from here, placing their market cap between $224.7 and $321 billion. I provide mathematical projections and reasoning later in the article so please read that before leaving negative comments that I have lost my mind.PalantirI was wrong about PLTR's chart, and now the chart is signaling PLTR could head lower as a new bottom hasn't been establishedSometimes technical analysis doesn't matter, and stocks fall right through levels of resistance. From May of 2021 through November, PLTR's chart established a pattern of making higher lows and higher highs. During this period, shares of PLTR tried to break out to the upside and retest the $30 level three times, and each dip created a higher low. From May through October, PLTR created a channel where the bottom resistance line wasn't breached. At the end of September, PLTR sold off after making a new high of $28.50, then fell below $24, but shares didn't crash through the trend and curled back up to $26. PLTR was set up to trade within this channel and break out to the upside if they delivered a strong Q3.ChartWell, we all know what happened to this story. After earnings shares of PLTR, like many other growth companies, just collapsed, the channel that PLTR had established was decimated and the bottom line of resistance was obliterated. There's nothing about PLTR's three-month chart signals that shares have bottomed, and we could see this trend continue. Until some stability is generated, there's no way to tell if we have bottomed, if PLTR retests $15 or if shares continue to trend lower. The chart isn't pretty, and PLTR is now caught in a downward spiral. All the bulls shouldn't be fooled; if PLTR breaks the $15 barrier, $12.50 is a real possibility. A strong earnings call may not be enough to counteract PLTR's downward momentum in the short term. After all, PLTR delivered a strong Q3, and shares have done nothing but declined. I don't have a crystal ball, but based on what's occurred in the Nasdaq and growth stocks in general, there is a real possibility that we see $15 before $20.ChartBefore criticizing PLTR for their Government contract segment, it would be wise to look at the spending trends within the USA and where money is projected to be spentThe Congressional Budget Office has not released their infographic for Fiscal Year 2021, so I'm going to use 2020's for my example. In 2020, the United States Government spent $714 billion on the defense budget, then an additional $914 billion onnon-defense, including outlays for health, transportation, and other activities. There's also a section named Other, which $988 billion was allocated to and the capital is allocated to. Since 2008, the defense budget has exceeded $600 billion annually and topped out at $752.29 billion in 2011. In recent years, we have seen the defense budget increase by 5.53% to $682.49 billion in 2018, 7.22% in 2019 to $731.75 billion, then decrease by -2.43% in 2020. From 2010-2019, the United States has spent $6.88 trillion on its defense budget in the last decade.Federal BudgetWhether you agree with the federal budget or how the capital is allocated, PLTR continues to win government contracts that correlate to revenue. In Q3, PLTR signed new deals with the U.S. Department of Health and Human Services, the U.S. Air Force, NIH, the U.S. Department of Veterans Affairs, and more. In Q3, PLTR grew the amount of revenue generated from government contracts by 34% YoY and generated $218 million in Q3 from this business segment.It's puzzling how individuals disregard PLTR's relationship with the US government. When the United States government continues to award contracts to PLTR, it makes PLTR's software more viable to our allies. PLTR has its hands in every segment of the US military and has expanded throughout the Department of Justice. There's a large opportunity for PLTR to gain additional contracts internationally from our allies in addition to future contracts domestically.I continue to become more bullish on PLTR in the long term because I follow where the money is being allocated. The U.S. Department of the Treasury published The American Families Plan Tax Compliance Agenda in May of 2021. This agenda specifically outlines that $80 billion in additional resources will be allocated to rebuilding the IRS over the next decade. A portion of these resources will be allocated to leveraging information that financial institutions already collect to shed light on those taxpayers who misreport income derived from opaque categories and overhauling antiquated technology to help IRS leverage 21st-century data analytic tools. When you look through the Federal Procurement Data System, several contracts were signed between PLTR and the IRS, and the SEC (Securities and Exchange Commission). The SEC signed a deal with PLTR on 4/29/21 that has a completion date of 6/18/22 and an ultimate completion date of 6/18/25. This deal is worth $13 million for its action obligation and $32 million for its total contract value. This contract is for an Enterprise Data Analytics Platform. Interestingly enough, the IRS also signed a deal on 4/30/21 with PLTR worth $5.6 million.On Dec. 2, PLTR won an additional contract from Space Systems Command for $43 million. The contract builds on their previous awards bringing their committed contract value with PLTR to $91.5 million. PLTR also won a second option year with one of their contracts with the U.S. Army. The U.S. Army has greenlit a second option year for the Vantage Program for $116.3 million. The Army Vantage data analytics platform uses Palantir's software for a central operating system to boost readiness and controlled access to army data sources.PalantirWhen you follow the dots, the US government is becoming more reliant on PLTR, which puts PLTR at the front of the line for new contracts. I have my eyes on the JEDI contract, a $10 billion cloud computing contract through the Department of Defense, a larger customer of PLTR. On 7/6/21, the Department of Defense released a statement canceling the contract award to Microsoft(NASDAQ:MSFT), upgraded the contract requirements, and sourced the components through a multi-vendor cloud computing contract. The DoD was explicitly clear that their new initiatives included JADC2 (Joint All-Domain Command and Control) and AI and Data Acceleration (ADA). In an official document from the Congressional Research Service, it states:\"Joint All-Domain Command and Control (JADC2) is the Department of Defense's (DOD's) concept to connect sensors from all of the military services - Air Force, Army, Marine Corps, Navy, and Space Force - into a single network.JADAC2Sometimes you need to become a detective and follow the money. The US government allocates trillions to the safety of this country, and there are more contracts up for grabs. PLTR's strong relationship with the government is positive, and PLTR has been increasing its moat for years. There aren't many companies that can compete with PLTR's software, and let's face it, the United States Military Industrial Complex isn't going to disappear. Capital will always be allocated to this budget segment, and PLTR has grown well past a niche software provider. What started out as a secretive black box company has expanded throughout many government segments, and PLTR is winning contracts from everywhere.Going into Q4 Earnings, Palantir has formed exciting partnerships and executed additional contracts on the commercial client sidePLTR and Hyundai Heavy Industries are forming a joint venture to commercialize big data solutions. PLTR and Hyundai are building a big data platform for Hyundai's core businesses, including shipbuilding and offshore engineering. PLTR will provide software and development personnel while Hyundai brings the affiliate's process expertise and sales to the table. Hyundai also will deploy the PLTR Foundry platform.PLTR and Dewpoint Therapeutics announced a partnership where Dewpoint will deploy PLTR's Foundry platform to help power Dewpoint's efforts to discover treatments and cures for the most challenging diseases. This multi-year deal showcases PLTR's most comprehensive partnership with a biotech company. Dewpoint will utilize Foundry as the primary platform for its centralized knowledge repository, helping it contextualize its experimental results and prioritize the most viable outcomes. Foundry will also help researchers further their understanding of condensates biology by analyzing lab data and other data sources, including data from the published literature and databases, to identify new compounds and therapeutic approaches.MERCK Kommanditgesellschaft auf Aktien (OTCPK:MKGAF) is a $93 billion German company that has been collaborating with PLTR since 2017.MKGAF and PLTR have recently have joined forces to provide a collaborative data analytics platform for the semiconductor industry. The platform will offer insights into materials and processes at semiconductor fabrication plants in addition to utilizing AI and big data to address challenges such as semiconductor chip shortages, supply chain transparency, time-to-market, and product quality. This deal is huge because the semiconductor industry continues to grow. The future implications of this data analytics platform could correlate to future contracts with some of the most prominent semiconductor companies and drive large amounts of revenue to the bottom line. Keep in mind that President Joe Biden has outlined a blueprint for the U.S semiconductor industry. Once the White House delivered their 250-page report, the U.S. Senate expressed bipartisan support by passing a bill offering $52 billion to bolster domestic chip manufacturing. PLTR also signed a multi-year agreement with one of my favorite American energy infrastructure companies Kinder Morgan(NYSE:KMI), which I recently wrote an article on. KMI will deploy Foundry into their storage and operations segment to drive efficiency and safety. KMI will look to optimize its U.S based gas storage operations and leverage Foundry to make data-driven decisions on gas storage, optimization, and maintenance scheduling. This is an incredible deal for PLTR, and it expands their energy contract portfolio as they have been working with BP p.l.c(NYSE:BP) for years.KMI operates more than 70,000 miles of natural gas pipeline and has 144 terminals. Within KMI's network, they operate over 700 bcf of working storage capacity. The energy infrastructure segment is huge, and I am excited that this could be the first of many large-scale contracts within the industry. By partnering with KMI, PLTR now has the ability to showcase its expertise and possibly win additional contracts from companies like Enterprise Products Partners(NYSE:EPD), Energy Transfer(NYSE:ET), or Enbridge(NYSE:ENB).Kinder MorganPalantir is making strategic investments into young companies and these businesses are being built on PLTR's softwarePLTR has invested in 9 companies and is committed to investing in an additional 12 companies. This is one of the most exciting investment elements in PLTR, but you need to look 5-10 years out, maybe even 15 years, with an open mind. Currently,PLTR has an equity position in nine young companies and is committed to taking an equity position in an additional 12. While these positions are all under $50,000 investments, the more important aspect is that these companies are utilizing PLTR's software to build their companies. You have everything from connected vehicles to satellite imagery, robotic exoskeletons, and flying vehicles. This is certainly forward-thinking, and these investments will take years upon years to materialize, but it's a genius move on PLTR's part. PLTR is getting in on the ground floor, cultivating relationships, and their software will help shape tomorrow's industries.PalantirLook back to the 80s, 90s and 2000s. Evolution never stops, and technological advances continue to redefine how society operates. Think about how different life is today than in 2000 and how the rate of change continued to increase. To think that this is where evolution stops is crazy. In 2000, if you had said we would have smartphones connected to smartwatches, and you would be able to hold a meeting with 500 people on a digital platform, chances are you would have been told to stop watching science fiction movies. With the computing power we have today, what do you think the world will be like in 2040? Will gene editing become a reality, will we have flying vehicles, will humans utilize robotics to enhance their output and reduce injury from physical labor, will companies be able to track global shipments through deploying dedicated satellite imagery, will autonomous vehicles become the standard, and will all automobiles become connected vehicles? I can't say yes or no, but I wouldn't bet against evolution and I am positive that 2040 will look nothing like 2022.PalantirPalantirPalantir is delivering on financial growth, and based on its current performance, the future looks brightPLTR has gotten slaughtered since Q3 earnings were released. While nobody wants to see their investment decrease in value, not a single stock has just gone up. Even Berkshire Hathaway(NYSE:BRK.A)(NYSE:BRK.B)and Apple(NASDAQ:AAPL)have declined in value during periods of time. There isn't a perfect valuation methodology, and you can drive yourself insane trying to understand why the market rewards one set of financials but not another. If you're looking for a short-term trade, go buy Apple, I am willing to bet Apple delivers their best quarter ever in a few weeks and sets the tone for their most profitable year, which could generate a bounce to the upside. If you're looking for an investment into the future that could be a 5-10 bagger and are willing to overlook price volatility over the next several years, PLTR is an outstanding candidate.In Q3, PLTR added 34 new customers and closed 54 deals worth $1 million or more. PLTR's remaining deal value increased by 50% YoY to $3.6 billion. PLTR is now delivering two of the most important metrics, cash from operations and adjusted free cash flow. PLTR's revenue in Q3 grew by 36% to $392 million, and in the first nine months of 2021, PLTR's revenue increased by 44% to $1.1 billion compared to 2020. In Q3, PLTR's cash from operations improved by $153 million YoY as they generated $101 million. This allowed PLTR to generate $119 million in adjusted free cash flow in Q3, which was a 30% margin, and year to date, PLTR has generated $320 million in adjusted free cash flow. In the first nine months of 2021, PLTR achieved their 2021 full-year projection of generating $300 million in adjusted free cash flow and raised their guidance to $400-plus million for 2021. This is exactly what you want to see from a growth company, revenue increasing and driving cash from operations and free cash flow. As PLTR continues to grow, its increased revenue is driving the bottom line.PalantirIn Q3, PLTR added 34 net new customers, and their total customer count increased 20% QoQ. PLTR witnessed its commercial count increase by 46% QoQ on the commercial side. The amount of revenue generated on the commercial side has increased 37% in Q3 YoY and 43% on the government side. There's a lot to celebrate as 33 of the 54 deals closed in Q3 were valued at $5 million or more, and 18 of the 54 deals had a value that exceeded $10 million. PLTR ended Q3 with $3.6 billion in remaining deal value which was up 50% YoY, but the commercial side increased by 101% YoY to $2.2 billion, which is almost two-thirds of their total remaining deal value. The big complaint used to be that PLTR was dependent on government contracts, and now the investment community is seeing true diversification from its revenue sources.PLTR may not have been rewarded for beating earnings and increasing their 2021 guidance, but the important thing is that they did exactly that. PLTR is projecting that their revenue in Q4 will come in at $418 million with a 22% adjusted operating margin. On the full year, PLTR is projecting that their revenue growth will increase to 40% from their 30% forecast and deliver $1.53 billion in revenue for the 2021 fiscal year. PLTR also is increasing their forecast on the bottom line as well and projecting $400 million in adjusted free cash flow, which is a 33% increase from their $300 million guidance. PLTR is still projecting that it will achieve 30% annual revenue growth over the next four years.PalantirBased on PLTR's past earnings reports, they have gained a reputation for underpromising and overdelivering. PLTR is going to finish 2021 guiding up on revenue and adjusted free cash flow. I have created some projections for fiscal year 2032, and keep in mind these are just projections. I don't have a crystal ball. Currently, in the first nine months of 2021, PLTR has an adjusted free cash flow margin of 29.1% as they have generated $1.1 billion in revenue and $320 million in adjusted free cash flow. On their full-year guidance of $1.52 billion in revenue, their low-end $400 million would put them at a 26.2% adjusted free cash flow margin. If PLTR stays flat and generates $119 million of adjusted free cash flow in Q4, that would put them at $439 million of adjusted free cash flow in 2021 for a margin of 28.75%. My projections are going to assume that PLTR can at least maintain their 30% annual revenue increases past 2025, and I am going to use a 28% adjusted free cash flow margin.If PLTR can maintain a 30% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $27.37 billion in annual revenue and $7.66 billion in adjusted free cash flow.If PLTR can maintain a 35% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $41.45 billion in annual revenue and $11.61 billion in adjusted free cash flow.If PLTR can maintain a 40% YoY revenue growth rate and a 28% adjusted free cash flow margin, then in 2032, PLTR would generate $61.84 billion in annual revenue and $17.31 billion in adjusted free cash flow.Palantir possible future revenueToday,Shopify (NYSE:SHOP) trades at a 302.33x free cash flow multiple as they generate $458.1 million in free cash flow and have a market cap of $138.5 billion.PayPal(NASDAQ:PYPL) trades at a 41.9x multiple as they generate $5 billion in free cash flow and have a market cap of $209.63 billion. Tesla(NASDAQ:TSLA) trades at a 410.62x free cash flow multiple as their market cap is $1.05 trillion.3M Company(NYSE:MMM) trades at a 15.86x free cash flow multiple with a market cap of $103 billion and $6.5 billion in free cash flow.Meta Platforms(NASDAQ:FB) trades at a 25.78x multiple on its $35.80 free cash flow, having a market cap of $923.27 billion.There's no rhyme or reason as to how the market values individual companies, if there was, investing would be easy. Looking at several different companies, I think that PLTR should receive at least a 25x multiple on its free cash flow, if not more.If my first set of projections ends up becoming correct, then PLTR would generate $27.376 billion in revenue and $7.66 billion in adjusted free cash flow in 2032. At a 25x multiple, this would place PLTR's market cap at $191.56 billion, which would be a 596.77% return. If the market placed a 30x multiple on PLTR's adjusted free cash flow, which is still under many of today's larger growth companies, it would place PLTR's market cap at $229.88 billion for a 716.13% return. If the market placed the same multiple on PLTR as it does for PYPL, then PLTR would have a $321.06 billion market cap, a 1,000% return.PalantirConclusionThere you have it, I believe PLTR can deliver 700%-1,000% returns during my investment time frame. Shares of PLTR have been under pressure lately, but the fundamental business is performing exceptionally well with many future prospects in the pipeline. I continue to view PLTR as a long-term investment, and I don't care what the share price did in 2021, and I really don't care what happens in 2022. I'm invested in PLTR because I believe this can generate exponential capital appreciation to my portfolio 10 years from now.For me, the risk is worth the reward, and I'm not waiting for PLTR to have 5-10 years of data to determine if its valuation meets the criteria for a value investment. The capital I have deployed, I don't need today, and I won't need next year or the year after that. Some investors don't have the patience to wait a decade for their investments to materialize. Luckily, I'm not most people. Each one of my investments serves a purpose, and unlike my dividend companies, I'm swinging for another home run with PLTR. When I see articles saying PLTR has a fair value of $5, I laugh and think if someone is willing to sell me 1,000 shares of PLTR for $5,000, send me a message right now, and I will write you a personal check.","news_type":1},"isVote":1,"tweetType":1,"viewCount":55,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9001108944,"gmtCreate":1641180095525,"gmtModify":1676533579990,"author":{"id":"3587014802417066","authorId":"3587014802417066","name":"RoySim","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3587014802417066","idStr":"3587014802417066"},"themes":[],"htmlText":"Good sharing thanks","listText":"Good sharing thanks","text":"Good sharing thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9001108944","repostId":"1171608797","repostType":4,"repost":{"id":"1171608797","pubTimestamp":1641177163,"share":"https://ttm.financial/m/news/1171608797?lang=&edition=fundamental","pubTime":"2022-01-03 10:32","market":"us","language":"en","title":"Sea Limited: Engaging Wars On Multiple Fronts","url":"https://stock-news.laohu8.com/highlight/detail?id=1171608797","media":"Seeking Alpha","summary":"SummaryShopee is taking a long-term approach by re-investing its margins to expand into new markets ","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Shopee is taking a long-term approach by re-investing its margins to expand into new markets and pursue more market share.</li><li>While Garena growth seems to be tapering down, we do not think its growth has peaked yet due to its strong monetization capabilities in the U.S and others.</li><li>SeaMoney is intentionally ramping up its sales and marketing efforts to drive more adoption to ShopeePay, and that is temporarily suppressing its margins.</li><li>Using a sum-of-parts valuation, the intrinsic value of the business is $341.33, a 55% upside from the current share price.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9e67f7a326258558c1021793376f4c25\" tg-width=\"1536\" tg-height=\"1025\" referrerpolicy=\"no-referrer\"/><span>Wachiwit/iStock Editorial via Getty Images</span></p><p><b>Overview</b></p><p>Sea Limited is an internet platform company that consists of three main business segments – Garena (digital entertainment), Shopee (e-commerce), and SeaMoney (digital financial services). Throughout the years, Sea Limited has been reinvesting aggressively into their business to capture market share rapidly and grow their user base in every region. Starting out from Singapore, they have since achieved a respectable presence in Southeast Asia, Taiwan, and most recently in Latin America. In this article, we will be unpacking Sea Limited Q3’21 results, as we share our thoughts on the quarter. Do also head to the previous article we have written for Sea Limited.</p><p><b>Garena</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/11f0e27a4acd7a2b1671fd01bf86d291\" tg-width=\"1280\" tg-height=\"791\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>In Q3’21, Garena’s quarterly active users (“QAU”) grew 0.5% sequentially to 729 million, a slowdown in users growth due the law of large numbers. Bookings growth has also stagnated as a result. More users are increasingly transitioning into paying users as the paying user ratio (“PUR”) rose to 12.8%. Based on the low PUR, there is still a large opportunity to convert its existing user base into paying users.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/614efda95d41b79b0ed25736f40cbec8\" tg-width=\"1056\" tg-height=\"652\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Next, Garena’s average revenue per paying user (“ARPPU”) continues to taper down to $12.88, and that is likely due to most users coming from India and Latin America with much lower spending power. We will not rule out the possibility that Garena may increase the pricing of its in-game items to increase its monetization. Over time, the two key metrics that we should be measuring closely are PUR and ARPPU, and both tell us whether Garena can improve its monetizing capabilities to sustain its growth rate.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ac621fe91314553c8c3337633f7055c6\" tg-width=\"970\" tg-height=\"759\" referrerpolicy=\"no-referrer\"/><span>Source: Sensortower</span></p><p>What is impressive during the quarter is that Garena Free Fire (“FF”) revenue per download (“RPD”) heavily surpassed its rivals in the United States, even though it has a much smaller user base. And despite PUBG re-launching in India in Q2&#39;21, FF is still leading by the highest RPD, as well as app rankings, showing that it has better monetization capabilities than its peers. According to SensorTower, FF was also the top five most downloaded games worldwide for six consecutive quarters, and in Q3’21, it was ranked as top three. With the game nearing five years of operation, this removes any doubt that its growth has peaked, and it is well on its way to building an enduring franchise.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4cb798c3496a01756720d7566f71ec6f\" tg-width=\"900\" tg-height=\"900\" referrerpolicy=\"no-referrer\"/><span>Source: Free Fire Twitter</span></p><p>Garena Free Fire Max, an enhanced version of the current FF game was also launched in the quarter. Interestingly, what caught our eye was the introduction of a new feature called “Craftland”, where FF offers a “platform” for users to unleash their creativity through creating their own maps and inviting their friends over to play. This helps to increase social interaction, engagements, and also the stickiness of the game. As of today, it has over 4.57 million downloads on Google Play Store and it has a high review of over 4 stars. If we head over to Youtube, there are plenty of videos related to “Craftland”, showing how well received it is by the FF community. Looking ahead, Garena seeks to introduce more content, features, modes, and gameplays to sustain its existing strong base of users.</p><p>On top of that, Garena’s strong global presence has also received accelerated interest from worldwide studios looking to partner up with them, and management states that they are working on new ideas in the pipeline.</p><p><b>Shopee</b></p><p><b>Expansion into other markets</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a9be6ee805f0031bdbda5f9091e2d818\" tg-width=\"748\" tg-height=\"556\" referrerpolicy=\"no-referrer\"/><span>Source: Shopee India</span></p><p>Shopee has also expanded into multiple markets, including France,Poland,Spain,India, and also Argentina. If we head to the websites, there are a few common traits that we observed, and that is Shopee replicating its playbook by giving out free shipping, free commission (to sellers), cashback, and vouchers across its platform to entice users to use the platform and to spur the flywheel effect. This has proven to work in countries in SEA and Brazil, as evident from its market leadership.</p><p><b>Operating and Financial Metrics</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e705eacc3dc34accf3e60455b81f0112\" tg-width=\"1280\" tg-height=\"791\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Shopee recorded a growth rate of 80% which saw its GMV reach US$16.8 billion. Recently, Alibaba (NYSE:BABA) has disclosed the LTM revenue of Lazada, which is US$21 billion, up 60% YOY. By comparison, Shopee LTM GMV grew 90% YOY to $US56 billion, heavily surpassing that of its rival.</p><p>There are also signs of improving monetization as the take-rate increased sequentially to 8.93% during the quarter. As Shopee scales larger over time, it has the ability to increase its take-rate without losing its sellers as it is able to bring higher sales volume to its sellers than any other platform.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/3f793d575a267fe3e4fe60299189f29e\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Based on the total addressable market (“TAM”) of US$260 billion GMV, Shopee is the clear market leader with 21% of the TAM, followed by Lazada&#39;s 8%. This shows how quickly Shopee has been gobbling up market share, making it an undisputed leader in the region.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/88f5af1de4543fd03fcebaa9de4c1e3c\" tg-width=\"1280\" tg-height=\"678\" referrerpolicy=\"no-referrer\"/><span>Source: Google Trend</span></p><p>Data from Google Trend also shows that Shopee continues to lead ahead of Lazada and Tokopedia. Interestingly, Alibaba’s management has also laid out a goal to achieve a $US 100 billion GMV, although a timeline is not given. Alibaba is re-focusing its attention on the Southeast Asia market.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0411927ec3f53dbbbd0a669cae109dc7\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Shopee’s order volume grew 129% YOY, which is its ninth-consecutive quarter of triple-digit growth rate. By comparison, Lazada’s order growth rate was only 82%. This tells us that users are spending more on Shopee than Lazada, which is not surprising due to Shopee’s overwhelming consumers’ mindshare. To get an outlook into next quarter’s results, Shopee recorded 13 times more items sold on an average day in the first 2 hours of its 12.12 event promotion, revealing how successful the campaign was.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/3f5b0365bf05142d748d698ab1c3d0f1\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>The average order value (&#34;AOV&#34;) continues to decline to $9.88 in the quarter. In our view, this is not a cause for worry. In the newer markets that Shopee has expanded into, users tend to start with smaller purchases with lower AOV. Over time, as they established more trust with the platform, they will increasingly move towards purchasing higher-ticket items.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a3be44b2dc1e75eaf3db57e1d823ecaa\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Turning to profitability, Shopee’s gross profit margin (“GPM”) was 26.72%, compared to 31.94% in Q2’21. This was largely due to the higher cost of revenue in the quarter, including higher logistic costs associated with order growth and value-added services such as inventory management and fulfillment services provided to customers.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d06185d6b36d451ed2095fabbc052ba6\" tg-width=\"1280\" tg-height=\"790\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>Sales and marketing expenses (“S&amp;M”) expenses increased 124% YOY to $689 million, as Shopee ramp up its S&amp;M efforts to capture more market share across its existing and new markets. As a result, S&amp;M expenses as a % of GMV continue to fluctuate at 4.10%. Considering that some of its operating markets are in the early stages, investments may increase if the management spots any clear opportunities.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8aaa58e08ff935169c615806c98eadca\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>As a result of the lower gross profit and higher S&amp;M expenses, Shopee’s adjusted loss per order fluctuates at a negative $0.40 in the quarter. This is notable considering Shopee entered many new countries with zero monetization, and took its profits from its matured markets to finance S&amp;M expenses in the newer markets.</p><p>This is supported by a statement by Chief Corporate Officer Wang in Q2 2021:</p><blockquote>In terms of positive EBITDA from Malaysia, again, we&#39;re very happy to report that Malaysia has become the second market to achieve positive EBITDA after Taiwan for our Shopee business. And of course, it is followed by the results of better monetization over time as well as improving operational efficiency over time. As we stressed before that the marketplace e-commerce model in terms of profitability is highly proven and with scale and strong market leadership and ability to deliver a clear and increasing value to our seller communities, we will be able to make a strong profit down the road. And this is basically generating value to our communities and, by that, will generate value to our shareholders as well.</blockquote><p><b>Battle with the Incumbents</b></p><p>While Shopee expands aggressively, it is also important to consider the competitive landscape across its markets, and that includes the incumbent Allegro, a 20-year-old well-established local e-commerce platform in Poland, and Mercado Libre, the biggest e-commerce platform across Latin America (“LATAM”), particularly in Brazil, Mexico, and Argentina.</p><p><b>Latin America</b></p><p>According to Similarweb, Shopee’s web traffic is increasing steadily across LATAM, which include Colombia,Mexico, and Brazil, although MELI is leading by a wide margin.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d8e8ab3232fdc0a70c67186b0bae587c\" tg-width=\"552\" tg-height=\"556\" referrerpolicy=\"no-referrer\"/><span>Top shopping app in Colombia, Source: SensorTower</span></p><p>However, based on the app rankings on SensorTower, Shopee has surpassed and overtook MELI as the top shopping app across Mexico,Chile, Colombia, and Brazil. This was accomplished within a span of 6 months, excluding its operation in Brazil.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d50771a33f9bbe4451ae3b496eeed1db\" tg-width=\"1200\" tg-height=\"742\" referrerpolicy=\"no-referrer\"/><span>Source: Instagram</span></p><p>Alternatively, we can also track their social media followers as this gives us a sense of Shopee’s brand awareness in the region. As of ending Dec 2021, it has more followers than Mercardo in Colombia and Brazil, with Chile and Mexico coming close.</p><p><b>Poland</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/82d28504ed7a24520b23f28860b28fed\" tg-width=\"547\" tg-height=\"472\" referrerpolicy=\"no-referrer\"/><span>Figure - Shopee is the #1 shopping app in Poland, Source: Sensortower</span></p><p>Similarly in Poland, Shopee follows the same footprint whereby Allegro’s (WSE:ALE) web traffic leads by a mile, but it was overtaken by Shopee as the number one shopping app, and this was achieved within 3 months since Shopee was launched. In addition, Shopee and Allegro have 12.8k and 68k Instagram followers, respectively.</p><p>Although Allegro has over 10 million downloads on Google Play Store, this is insignificant considering that it is only a fraction of its total website visits of 222 million. This may suggest that there is lesser focus and emphasis on the mobile app.</p><p><b>Shopee Concluding Thoughts</b></p><p>It is not surprising to see this data surfaced because users in Poland and LATAM are more accustomed to shopping on the browser, and so there was much less emphasis on mobile. Therefore, Shopee leveraged its mobile-first approach, capitalizing on the opportunity and that has proven to be successful based on the data from third-party sources.</p><p>While investors seem to be concerned that Shopee is fighting too many wars on its front, including its expansion into India, Argentina, and France, the management has demonstrated that they are capable enough to execute given its strong localization capabilities. This long-term approach to sacrifice short-term profitability and pursue additional market share are also well-aligned to the shareholders.</p><p><b>Digital Finance - SeaMoney</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5d530155412cffe0c2f8eb8d2f56adb7\" tg-width=\"1280\" tg-height=\"791\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>In Q3’21, SeaMoney’s total payment volume (“TPV”) grew 119% YOY to reach $4.6 billion, and this was mainly driven by the increase in customers’ adoption of ShopeePay. There are also improvements in monetization as take-rate increased to 2.9% from 0.7% in Q3’20, and as a result, revenue grew at a staggering rate of over 800% YOY.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eefc6aab1a7fe29f20f51ef27681affa\" tg-width=\"946\" tg-height=\"604\" referrerpolicy=\"no-referrer\"/><span>Source: Own&#39;s Graph</span></p><p>During the earnings call, the management also talked about an inherent flywheel effect in SeaMoney, that as more merchants join ShopeePay, the number of use cases increases. This encourages consumers to use ShopeePay and thus drives further adoption. When the user base grows larger and larger, more merchants expressed their interest to get on board, accelerating the acquisition on both sides (merchants and consumers) of the business. Users also get additional benefits such as cashback and vouchers, which help to spur the network effect. Over time, customer acquisition costs (“CAC”) will also come down as more users join organically.</p><p>ShopeePay’s use cases include bill payments, contactless payment at offline retails, paying for taxi rides (i.e. partnership with Blue Bird Taxi in Indonesia), and many more.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/17a8cd811e58a9ca86e248cb272f77e5\" tg-width=\"1280\" tg-height=\"787\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>S&amp;M expenses increased 65% YoY as SeaMoney drives more adoption to its mobile wallet business. However, S&amp;M expenses as a % of TPV have reduced to 4.26% from 5.64% a year ago, showing sales efficiency as lower marketing spending are translating into higher revenue growth. If we add back the S&amp;M expenses to its adjusted EBITDA, its normalized margin for this quarter is actually 27.8%. This shows that its margin is artificially depressed as the management is intentionally spending on S&amp;M to grow its market share.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/609d411ca867f1c02768681be73e44d6\" tg-width=\"1280\" tg-height=\"792\" referrerpolicy=\"no-referrer\"/><span>Source: Sea Quarterly Report</span></p><p>As of Q3’21, the number of quarterly paying users (“QPU”) reached 39.7 million, a 20% sequential growth from Q2’21. This existing user base is important as its digital bank is set to launch in 2022.</p><p>Diving deeper, we can get a glimpse into the upcoming financial products that will be launched based on Linkedin’s job openings, and that includes insurance,wealth management,prepaid cards, and as well as credit services revolving around repayment loans and revolving credits. And in Sep 2021, SeaMoney also launched its digital bank app in Indonesia.</p><p><b>Risks</b></p><p>The slowdown in Garena’s growth rate</p><ul><li><p>As Garena’s growth starts to taper down, it is important for us to track whether the PUR and ARPPU are increasing over time as these tell us whether they are improving their monetization capabilities.</p></li><li><p>However, we do not expect growth to decline drastically due to the highly engaging nature of the game, and as well as new ideas in the pipeline.</p></li></ul><p>Shopee aggressive expansion into new markets</p><ul><li><p>Shopee entry into new markets and the competitive pressure may accelerate its cash burn rate and erode its profit margin over time. However, we believe the risk is mitigated for a few reasons — due to the hefty $11.2 billion cash on its balance sheet, cash cow of Garena, and not to mention, Shopee is also profitable on a GPM basis.</p></li><li><p>Going forward, we should track Shopee’s website traffic,app rankings,google trends,social media followings to see if these investments are translating into results.</p></li></ul><p><b>Valuation</b></p><p>To calculate the intrinsic value of Sea Group, we will be using the sum-of-the-parts (“SOTP”) valuation model and some comparables.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5e1008fe7564b4ddff7f3b72591d647e\" tg-width=\"1280\" tg-height=\"569\" referrerpolicy=\"no-referrer\"/><span>Source: Morningstar, OutlookIndia</span></p><p><b>Garena Valuation</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a02ef5f5a79b78be636a73b04be45e78\" tg-width=\"1280\" tg-height=\"137\" referrerpolicy=\"no-referrer\"/><span>Source: Own Estimates</span></p><p>To determine a reasonable multiple to assign to Garena, we cross-reference to other gaming peers such as Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI), which are trading at roughly 18x multiple. Considering that both companies are growing much faster, and growth rate in Q3’21, an implied multiple of 18x and a forward growth rate of 25% are reasonable. Therefore, Garena is worth approximately $63.83 billion.</p><p><b>Shopee Valuation</b></p><p>Looking at comparable transactions of Flipkart, Tokopedia, and Lazada, along with assessing the quality of each business, we think of a fair multiple of EV/GMV as 1x.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/05e90103e5677261fee18f312dd39b00\" tg-width=\"1280\" tg-height=\"129\" referrerpolicy=\"no-referrer\"/><span>Source: Own Estimates</span></p><p>With an implied EV/GMV of 1x, and a forward 100% growth rate on Shopee’s last 12 months (“LTM”) GMV of $56 billion, Shopee is worth $112.6 billion.</p><p><b>SeaMoney Valuation</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2d5a874c9c714f6fda34c50a4354d107\" tg-width=\"423\" tg-height=\"535\" referrerpolicy=\"no-referrer\"/><span>Source: Own Estimates</span></p><p>Referencing from matured peers such as Paypal (NASDAQ: PYPL) with an operating margin of 25% and take-rate of 2.3%, we think that these financial metrics are achievable for SeaMoney. With a forward growth rate of 100% based on Q3’21 results, considering that it is still in the early stages and yet to launch its digital bank, this gives us an implied EV/TPV of 0.3x.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/08c8ea50bcca5f450ad3c27a79390bad\" tg-width=\"1280\" tg-height=\"129\" referrerpolicy=\"no-referrer\"/><span>Source: Own Estimates</span></p><p>With an implied EV/TPV of 0.3x, and a growth of 100% on the annualized TPV (based on Q3’21 TPV), SeaMoney is worth $11 billion.</p><p><b>Entire Business</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/340a2ecbea6bcb1460204dbe8aa82e58\" tg-width=\"1280\" tg-height=\"813\" referrerpolicy=\"no-referrer\"/><span>Source: Own Estimates</span></p><p>After calculating the individual business segments, this gives us a market cap of $196.9 billion for the entire business, after accounting for cash and debt. With shares outstanding of 576 million, after factoring in 4% dilution, this gives us an intrinsic value of $341.33 per share, a 55.4% upside from the current share price.</p><p><b>Conclusion</b></p><p>Shopee continues to extend its market leadership position by pursuing new growth opportunities in new markets. While Shopee seems to be fighting too many wars on its front, it has demonstrated that it has strong localization capabilities and the know-how to expand overseas as Shopee tops the shopping app across Latin America and Poland within a short span of 3 to 6 months. However, the incumbents are still leading by website traffic, and it is still early to judge whether Shopee could be a real threat to its rivals.</p><p>Next, while Garena’s growth seems to be slowing down, we do not think its growth has reached its peak because of its strong growth exhibited in the US, paying user ratio of only 12.8%, and potential games in the pipelines. With the management track record of creating highly engaging content on FF, we believe it can be an enduring franchise for years to come, with growth likely not to taper down so quickly.</p><p>The management is intentionally suppressing SeaMoney’s margins by ramping up the S&amp;M efforts to drive more adoption to its mobile wallet business. However, they have demonstrated sales efficiency as S&amp;M as % of revenue is declining YOY. With the digital bank set to launch in Singapore in FY2022, we believe SeaMoney is still in the early stages of growth.</p><p>Finally, based on our estimation, we believe Sea Group is worth $341.33 per share. This is a 55.4% upside from the current share price.</p><p>This article was written by Superstocks Seekers.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Sea Limited: Engaging Wars On Multiple Fronts</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSea Limited: Engaging Wars On Multiple Fronts\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-01-03 10:32 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4477615-sea-limited-engaging-wars-multiple-fronts-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryShopee is taking a long-term approach by re-investing its margins to expand into new markets and pursue more market share.While Garena growth seems to be tapering down, we do not think its ...</p>\n\n<a href=\"https://seekingalpha.com/article/4477615-sea-limited-engaging-wars-multiple-fronts-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SE":"Sea Ltd"},"source_url":"https://seekingalpha.com/article/4477615-sea-limited-engaging-wars-multiple-fronts-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1171608797","content_text":"SummaryShopee is taking a long-term approach by re-investing its margins to expand into new markets and pursue more market share.While Garena growth seems to be tapering down, we do not think its growth has peaked yet due to its strong monetization capabilities in the U.S and others.SeaMoney is intentionally ramping up its sales and marketing efforts to drive more adoption to ShopeePay, and that is temporarily suppressing its margins.Using a sum-of-parts valuation, the intrinsic value of the business is $341.33, a 55% upside from the current share price.Wachiwit/iStock Editorial via Getty ImagesOverviewSea Limited is an internet platform company that consists of three main business segments – Garena (digital entertainment), Shopee (e-commerce), and SeaMoney (digital financial services). Throughout the years, Sea Limited has been reinvesting aggressively into their business to capture market share rapidly and grow their user base in every region. Starting out from Singapore, they have since achieved a respectable presence in Southeast Asia, Taiwan, and most recently in Latin America. In this article, we will be unpacking Sea Limited Q3’21 results, as we share our thoughts on the quarter. Do also head to the previous article we have written for Sea Limited.GarenaSource: Sea Quarterly ReportIn Q3’21, Garena’s quarterly active users (“QAU”) grew 0.5% sequentially to 729 million, a slowdown in users growth due the law of large numbers. Bookings growth has also stagnated as a result. More users are increasingly transitioning into paying users as the paying user ratio (“PUR”) rose to 12.8%. Based on the low PUR, there is still a large opportunity to convert its existing user base into paying users.Source: Sea Quarterly ReportNext, Garena’s average revenue per paying user (“ARPPU”) continues to taper down to $12.88, and that is likely due to most users coming from India and Latin America with much lower spending power. We will not rule out the possibility that Garena may increase the pricing of its in-game items to increase its monetization. Over time, the two key metrics that we should be measuring closely are PUR and ARPPU, and both tell us whether Garena can improve its monetizing capabilities to sustain its growth rate.Source: SensortowerWhat is impressive during the quarter is that Garena Free Fire (“FF”) revenue per download (“RPD”) heavily surpassed its rivals in the United States, even though it has a much smaller user base. And despite PUBG re-launching in India in Q2'21, FF is still leading by the highest RPD, as well as app rankings, showing that it has better monetization capabilities than its peers. According to SensorTower, FF was also the top five most downloaded games worldwide for six consecutive quarters, and in Q3’21, it was ranked as top three. With the game nearing five years of operation, this removes any doubt that its growth has peaked, and it is well on its way to building an enduring franchise.Source: Free Fire TwitterGarena Free Fire Max, an enhanced version of the current FF game was also launched in the quarter. Interestingly, what caught our eye was the introduction of a new feature called “Craftland”, where FF offers a “platform” for users to unleash their creativity through creating their own maps and inviting their friends over to play. This helps to increase social interaction, engagements, and also the stickiness of the game. As of today, it has over 4.57 million downloads on Google Play Store and it has a high review of over 4 stars. If we head over to Youtube, there are plenty of videos related to “Craftland”, showing how well received it is by the FF community. Looking ahead, Garena seeks to introduce more content, features, modes, and gameplays to sustain its existing strong base of users.On top of that, Garena’s strong global presence has also received accelerated interest from worldwide studios looking to partner up with them, and management states that they are working on new ideas in the pipeline.ShopeeExpansion into other marketsSource: Shopee IndiaShopee has also expanded into multiple markets, including France,Poland,Spain,India, and also Argentina. If we head to the websites, there are a few common traits that we observed, and that is Shopee replicating its playbook by giving out free shipping, free commission (to sellers), cashback, and vouchers across its platform to entice users to use the platform and to spur the flywheel effect. This has proven to work in countries in SEA and Brazil, as evident from its market leadership.Operating and Financial MetricsSource: Sea Quarterly ReportShopee recorded a growth rate of 80% which saw its GMV reach US$16.8 billion. Recently, Alibaba (NYSE:BABA) has disclosed the LTM revenue of Lazada, which is US$21 billion, up 60% YOY. By comparison, Shopee LTM GMV grew 90% YOY to $US56 billion, heavily surpassing that of its rival.There are also signs of improving monetization as the take-rate increased sequentially to 8.93% during the quarter. As Shopee scales larger over time, it has the ability to increase its take-rate without losing its sellers as it is able to bring higher sales volume to its sellers than any other platform.Source: Sea Quarterly ReportBased on the total addressable market (“TAM”) of US$260 billion GMV, Shopee is the clear market leader with 21% of the TAM, followed by Lazada's 8%. This shows how quickly Shopee has been gobbling up market share, making it an undisputed leader in the region.Source: Google TrendData from Google Trend also shows that Shopee continues to lead ahead of Lazada and Tokopedia. Interestingly, Alibaba’s management has also laid out a goal to achieve a $US 100 billion GMV, although a timeline is not given. Alibaba is re-focusing its attention on the Southeast Asia market.Source: Sea Quarterly ReportShopee’s order volume grew 129% YOY, which is its ninth-consecutive quarter of triple-digit growth rate. By comparison, Lazada’s order growth rate was only 82%. This tells us that users are spending more on Shopee than Lazada, which is not surprising due to Shopee’s overwhelming consumers’ mindshare. To get an outlook into next quarter’s results, Shopee recorded 13 times more items sold on an average day in the first 2 hours of its 12.12 event promotion, revealing how successful the campaign was.Source: Sea Quarterly ReportThe average order value (\"AOV\") continues to decline to $9.88 in the quarter. In our view, this is not a cause for worry. In the newer markets that Shopee has expanded into, users tend to start with smaller purchases with lower AOV. Over time, as they established more trust with the platform, they will increasingly move towards purchasing higher-ticket items.Source: Sea Quarterly ReportTurning to profitability, Shopee’s gross profit margin (“GPM”) was 26.72%, compared to 31.94% in Q2’21. This was largely due to the higher cost of revenue in the quarter, including higher logistic costs associated with order growth and value-added services such as inventory management and fulfillment services provided to customers.Source: Sea Quarterly ReportSales and marketing expenses (“S&M”) expenses increased 124% YOY to $689 million, as Shopee ramp up its S&M efforts to capture more market share across its existing and new markets. As a result, S&M expenses as a % of GMV continue to fluctuate at 4.10%. Considering that some of its operating markets are in the early stages, investments may increase if the management spots any clear opportunities.Source: Sea Quarterly ReportAs a result of the lower gross profit and higher S&M expenses, Shopee’s adjusted loss per order fluctuates at a negative $0.40 in the quarter. This is notable considering Shopee entered many new countries with zero monetization, and took its profits from its matured markets to finance S&M expenses in the newer markets.This is supported by a statement by Chief Corporate Officer Wang in Q2 2021:In terms of positive EBITDA from Malaysia, again, we're very happy to report that Malaysia has become the second market to achieve positive EBITDA after Taiwan for our Shopee business. And of course, it is followed by the results of better monetization over time as well as improving operational efficiency over time. As we stressed before that the marketplace e-commerce model in terms of profitability is highly proven and with scale and strong market leadership and ability to deliver a clear and increasing value to our seller communities, we will be able to make a strong profit down the road. And this is basically generating value to our communities and, by that, will generate value to our shareholders as well.Battle with the IncumbentsWhile Shopee expands aggressively, it is also important to consider the competitive landscape across its markets, and that includes the incumbent Allegro, a 20-year-old well-established local e-commerce platform in Poland, and Mercado Libre, the biggest e-commerce platform across Latin America (“LATAM”), particularly in Brazil, Mexico, and Argentina.Latin AmericaAccording to Similarweb, Shopee’s web traffic is increasing steadily across LATAM, which include Colombia,Mexico, and Brazil, although MELI is leading by a wide margin.Top shopping app in Colombia, Source: SensorTowerHowever, based on the app rankings on SensorTower, Shopee has surpassed and overtook MELI as the top shopping app across Mexico,Chile, Colombia, and Brazil. This was accomplished within a span of 6 months, excluding its operation in Brazil.Source: InstagramAlternatively, we can also track their social media followers as this gives us a sense of Shopee’s brand awareness in the region. As of ending Dec 2021, it has more followers than Mercardo in Colombia and Brazil, with Chile and Mexico coming close.PolandFigure - Shopee is the #1 shopping app in Poland, Source: SensortowerSimilarly in Poland, Shopee follows the same footprint whereby Allegro’s (WSE:ALE) web traffic leads by a mile, but it was overtaken by Shopee as the number one shopping app, and this was achieved within 3 months since Shopee was launched. In addition, Shopee and Allegro have 12.8k and 68k Instagram followers, respectively.Although Allegro has over 10 million downloads on Google Play Store, this is insignificant considering that it is only a fraction of its total website visits of 222 million. This may suggest that there is lesser focus and emphasis on the mobile app.Shopee Concluding ThoughtsIt is not surprising to see this data surfaced because users in Poland and LATAM are more accustomed to shopping on the browser, and so there was much less emphasis on mobile. Therefore, Shopee leveraged its mobile-first approach, capitalizing on the opportunity and that has proven to be successful based on the data from third-party sources.While investors seem to be concerned that Shopee is fighting too many wars on its front, including its expansion into India, Argentina, and France, the management has demonstrated that they are capable enough to execute given its strong localization capabilities. This long-term approach to sacrifice short-term profitability and pursue additional market share are also well-aligned to the shareholders.Digital Finance - SeaMoneySource: Sea Quarterly ReportIn Q3’21, SeaMoney’s total payment volume (“TPV”) grew 119% YOY to reach $4.6 billion, and this was mainly driven by the increase in customers’ adoption of ShopeePay. There are also improvements in monetization as take-rate increased to 2.9% from 0.7% in Q3’20, and as a result, revenue grew at a staggering rate of over 800% YOY.Source: Own's GraphDuring the earnings call, the management also talked about an inherent flywheel effect in SeaMoney, that as more merchants join ShopeePay, the number of use cases increases. This encourages consumers to use ShopeePay and thus drives further adoption. When the user base grows larger and larger, more merchants expressed their interest to get on board, accelerating the acquisition on both sides (merchants and consumers) of the business. Users also get additional benefits such as cashback and vouchers, which help to spur the network effect. Over time, customer acquisition costs (“CAC”) will also come down as more users join organically.ShopeePay’s use cases include bill payments, contactless payment at offline retails, paying for taxi rides (i.e. partnership with Blue Bird Taxi in Indonesia), and many more.Source: Sea Quarterly ReportS&M expenses increased 65% YoY as SeaMoney drives more adoption to its mobile wallet business. However, S&M expenses as a % of TPV have reduced to 4.26% from 5.64% a year ago, showing sales efficiency as lower marketing spending are translating into higher revenue growth. If we add back the S&M expenses to its adjusted EBITDA, its normalized margin for this quarter is actually 27.8%. This shows that its margin is artificially depressed as the management is intentionally spending on S&M to grow its market share.Source: Sea Quarterly ReportAs of Q3’21, the number of quarterly paying users (“QPU”) reached 39.7 million, a 20% sequential growth from Q2’21. This existing user base is important as its digital bank is set to launch in 2022.Diving deeper, we can get a glimpse into the upcoming financial products that will be launched based on Linkedin’s job openings, and that includes insurance,wealth management,prepaid cards, and as well as credit services revolving around repayment loans and revolving credits. And in Sep 2021, SeaMoney also launched its digital bank app in Indonesia.RisksThe slowdown in Garena’s growth rateAs Garena’s growth starts to taper down, it is important for us to track whether the PUR and ARPPU are increasing over time as these tell us whether they are improving their monetization capabilities.However, we do not expect growth to decline drastically due to the highly engaging nature of the game, and as well as new ideas in the pipeline.Shopee aggressive expansion into new marketsShopee entry into new markets and the competitive pressure may accelerate its cash burn rate and erode its profit margin over time. However, we believe the risk is mitigated for a few reasons — due to the hefty $11.2 billion cash on its balance sheet, cash cow of Garena, and not to mention, Shopee is also profitable on a GPM basis.Going forward, we should track Shopee’s website traffic,app rankings,google trends,social media followings to see if these investments are translating into results.ValuationTo calculate the intrinsic value of Sea Group, we will be using the sum-of-the-parts (“SOTP”) valuation model and some comparables.Source: Morningstar, OutlookIndiaGarena ValuationSource: Own EstimatesTo determine a reasonable multiple to assign to Garena, we cross-reference to other gaming peers such as Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI), which are trading at roughly 18x multiple. Considering that both companies are growing much faster, and growth rate in Q3’21, an implied multiple of 18x and a forward growth rate of 25% are reasonable. Therefore, Garena is worth approximately $63.83 billion.Shopee ValuationLooking at comparable transactions of Flipkart, Tokopedia, and Lazada, along with assessing the quality of each business, we think of a fair multiple of EV/GMV as 1x.Source: Own EstimatesWith an implied EV/GMV of 1x, and a forward 100% growth rate on Shopee’s last 12 months (“LTM”) GMV of $56 billion, Shopee is worth $112.6 billion.SeaMoney ValuationSource: Own EstimatesReferencing from matured peers such as Paypal (NASDAQ: PYPL) with an operating margin of 25% and take-rate of 2.3%, we think that these financial metrics are achievable for SeaMoney. With a forward growth rate of 100% based on Q3’21 results, considering that it is still in the early stages and yet to launch its digital bank, this gives us an implied EV/TPV of 0.3x.Source: Own EstimatesWith an implied EV/TPV of 0.3x, and a growth of 100% on the annualized TPV (based on Q3’21 TPV), SeaMoney is worth $11 billion.Entire BusinessSource: Own EstimatesAfter calculating the individual business segments, this gives us a market cap of $196.9 billion for the entire business, after accounting for cash and debt. With shares outstanding of 576 million, after factoring in 4% dilution, this gives us an intrinsic value of $341.33 per share, a 55.4% upside from the current share price.ConclusionShopee continues to extend its market leadership position by pursuing new growth opportunities in new markets. While Shopee seems to be fighting too many wars on its front, it has demonstrated that it has strong localization capabilities and the know-how to expand overseas as Shopee tops the shopping app across Latin America and Poland within a short span of 3 to 6 months. However, the incumbents are still leading by website traffic, and it is still early to judge whether Shopee could be a real threat to its rivals.Next, while Garena’s growth seems to be slowing down, we do not think its growth has reached its peak because of its strong growth exhibited in the US, paying user ratio of only 12.8%, and potential games in the pipelines. With the management track record of creating highly engaging content on FF, we believe it can be an enduring franchise for years to come, with growth likely not to taper down so quickly.The management is intentionally suppressing SeaMoney’s margins by ramping up the S&M efforts to drive more adoption to its mobile wallet business. However, they have demonstrated sales efficiency as S&M as % of revenue is declining YOY. With the digital bank set to launch in Singapore in FY2022, we believe SeaMoney is still in the early stages of growth.Finally, based on our estimation, we believe Sea Group is worth $341.33 per share. This is a 55.4% upside from the current share price.This article was written by Superstocks Seekers.","news_type":1},"isVote":1,"tweetType":1,"viewCount":44,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9001092745,"gmtCreate":1641097059628,"gmtModify":1676533572254,"author":{"id":"3587014802417066","authorId":"3587014802417066","name":"RoySim","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3587014802417066","idStr":"3587014802417066"},"themes":[],"htmlText":"nice","listText":"nice","text":"nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9001092745","repostId":"2200441314","repostType":4,"repost":{"id":"2200441314","pubTimestamp":1641085740,"share":"https://ttm.financial/m/news/2200441314?lang=&edition=fundamental","pubTime":"2022-01-02 09:09","market":"us","language":"en","title":"2 No-Brainer Stocks Down 27% to 35% to Buy for 2022","url":"https://stock-news.laohu8.com/highlight/detail?id=2200441314","media":"Motley Fool","summary":"These hot tech stocks might be a steal at these prices.","content":"<html><head></head><body><p>While the stock market at large is hitting all-time highs, many technology stocks have been getting hammered in 2021. Despite this broad drop in tech companies, many businesses are seeing strong success operationally. The share prices are sinking, but these companies continue to grow their top-line and establish their leadership roles in their respective industries.</p><p>Both <b><a href=\"https://laohu8.com/S/PATH\">UiPath</a></b> (NYSE:PATH) and <b>Twilio</b> (NYSE:TWLO) are in this boat. Shares of both tech stocks have fallen 35% and nearly 30%, respectively, despite strong growth across their businesses. With large markets ahead of them, I think today&#39;s prices could be optimal buying opportunities to get these innovative stocks at a bargain.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8ba4359608f283fe2078db19e0b044a2\" tg-width=\"700\" tg-height=\"465\" width=\"100%\" height=\"auto\"/><span>Image source: Getty Images.</span></p><h2>1. UiPath: Bringing AI to the enterprise</h2><p>We have all been doing something so tedious and repetitive at work that we wish we could simply have it magically completed. It is, after all, a huge waste of our time because we would rather work on more thought-intensive, engaging work. With artificial intelligence-powered virtual bots, UiPath is turning our wishes into commands.</p><p>The company offers automation software that can emulate a human by understanding what is on a screen, extracting data, and making critical decisions. However, this software can do it much faster than humans, making 58% fewer mistakes. UiPath uses robotic process automation (RPA) in tandem with humans to make businesses more efficient. With UiPath, real workers are not fired or eliminated but rather freed to work on more critical tasks. UiPath has saved some of its customers millions of hours and dollars, which is why over 9,600 customers use UiPath and are currently spending 44% more than they did <a href=\"https://laohu8.com/S/AONE.U\">one</a> year ago.</p><p>The stock has not fallen because of bad operational performance. The company has brought in $602.5 million in revenue so far this year, 50% higher than the year-ago period. Shares have taken a downturn because of the major uptick in the company&#39;s net loss. In the third quarter, the company lost almost $123 million -- more than the total net loss for the first nine months of 2020. This has been because UiPath has rapidly ramped up its spending on advertising, along with research and development.</p><p>This is not without good reason, however. The company projects that its addressable market will nearly double to $30 billion by 2024. UiPath is already the industry leader in RPA, according to <b>Gartner</b>&#39;s Magic Quadrant, but the company is ramping up spending to make sure its competitors like Automation Anywhere do not overtake them. With the RPA market growing so rapidly over the next few years, UiPath is spending now -- rather successfully -- to obtain brand recognition as the industry begins to explode.</p><p>Here&#39;s the bottom line: UiPath is the leader in a futuristic industry that is expected to grow rapidly over the next few years. With so much investment going toward capturing this growth, along with a dominant product that has caught the eyes of NASA and <b>Alphabet</b>, I think that today&#39;s share prices are a gift to long-term investors.</p><h2>2. Twilio: Falling victim to the tech sell-off</h2><p>With over 250,000 businesses using Twilio, most of us have used its technology without even recognizing it. Anyone who has ever communicated with a food delivery driver or <b>Lyft</b> driver has used Twilio&#39;s services unknowingly. The company is helping other enterprises communicate within apps, allowing consumers and businesses to connect easier. These services seem to have grown even more important for Twilio&#39;s users as they are now spending 31% more today than they did one year ago with the company.</p><p>Twilio posted year-over-year revenue growth of 65% in Q3, but some of that came from its acquisitions. Although the company has consistently been able to post impressive organic growth -- something most growth-by-acquisition companies lack. In Q3, the company&#39;s revenue improved 38% year over year organically, and it has been able to organically boost its top line by 34% or more year over year for the past nine quarters.</p><p>Shares have largely been sent downward in 2021, and Twilio&#39;s major net losses haven&#39;t been helping. The company lost $224 million in Q3, with almost $170 million of that being stock-based compensation. While this might be worrisome today, it is overshadowed by the impressive top-line growth that the company is seeing, both organically and inorganically, in this lucrative market. At 17 times sales, this stock is trading at levels not seen since mid-2020, leaving an opportunistic window for investors.</p><p>The use of in-app communication will only become more prevalent as the world continues to adopt these habits, and Twilio has been and will likely continue benefiting from it. Twilio&#39;s future is bright, which is why I think investors should consider taking advantage of these low stock prices today.</p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>2 No-Brainer Stocks Down 27% to 35% to Buy for 2022</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n2 No-Brainer Stocks Down 27% to 35% to Buy for 2022\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-01-02 09:09 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2022/01/01/2-no-brainer-stocks-down-27-to-35-to-buy-for-2022/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>While the stock market at large is hitting all-time highs, many technology stocks have been getting hammered in 2021. Despite this broad drop in tech companies, many businesses are seeing strong ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/01/01/2-no-brainer-stocks-down-27-to-35-to-buy-for-2022/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4097":"系统软件","BK4505":"高瓴资本持仓","BK4116":"互联网服务与基础架构","BK4561":"索罗斯持仓","BK4528":"SaaS概念","BK4539":"次新股","BK4551":"寇图资本持仓","BK4548":"巴美列捷福持仓","TWLO":"Twilio Inc","PATH":"UiPath"},"source_url":"https://www.fool.com/investing/2022/01/01/2-no-brainer-stocks-down-27-to-35-to-buy-for-2022/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2200441314","content_text":"While the stock market at large is hitting all-time highs, many technology stocks have been getting hammered in 2021. Despite this broad drop in tech companies, many businesses are seeing strong success operationally. The share prices are sinking, but these companies continue to grow their top-line and establish their leadership roles in their respective industries.Both UiPath (NYSE:PATH) and Twilio (NYSE:TWLO) are in this boat. Shares of both tech stocks have fallen 35% and nearly 30%, respectively, despite strong growth across their businesses. With large markets ahead of them, I think today's prices could be optimal buying opportunities to get these innovative stocks at a bargain.Image source: Getty Images.1. UiPath: Bringing AI to the enterpriseWe have all been doing something so tedious and repetitive at work that we wish we could simply have it magically completed. It is, after all, a huge waste of our time because we would rather work on more thought-intensive, engaging work. With artificial intelligence-powered virtual bots, UiPath is turning our wishes into commands.The company offers automation software that can emulate a human by understanding what is on a screen, extracting data, and making critical decisions. However, this software can do it much faster than humans, making 58% fewer mistakes. UiPath uses robotic process automation (RPA) in tandem with humans to make businesses more efficient. With UiPath, real workers are not fired or eliminated but rather freed to work on more critical tasks. UiPath has saved some of its customers millions of hours and dollars, which is why over 9,600 customers use UiPath and are currently spending 44% more than they did one year ago.The stock has not fallen because of bad operational performance. The company has brought in $602.5 million in revenue so far this year, 50% higher than the year-ago period. Shares have taken a downturn because of the major uptick in the company's net loss. In the third quarter, the company lost almost $123 million -- more than the total net loss for the first nine months of 2020. This has been because UiPath has rapidly ramped up its spending on advertising, along with research and development.This is not without good reason, however. The company projects that its addressable market will nearly double to $30 billion by 2024. UiPath is already the industry leader in RPA, according to Gartner's Magic Quadrant, but the company is ramping up spending to make sure its competitors like Automation Anywhere do not overtake them. With the RPA market growing so rapidly over the next few years, UiPath is spending now -- rather successfully -- to obtain brand recognition as the industry begins to explode.Here's the bottom line: UiPath is the leader in a futuristic industry that is expected to grow rapidly over the next few years. With so much investment going toward capturing this growth, along with a dominant product that has caught the eyes of NASA and Alphabet, I think that today's share prices are a gift to long-term investors.2. Twilio: Falling victim to the tech sell-offWith over 250,000 businesses using Twilio, most of us have used its technology without even recognizing it. Anyone who has ever communicated with a food delivery driver or Lyft driver has used Twilio's services unknowingly. The company is helping other enterprises communicate within apps, allowing consumers and businesses to connect easier. These services seem to have grown even more important for Twilio's users as they are now spending 31% more today than they did one year ago with the company.Twilio posted year-over-year revenue growth of 65% in Q3, but some of that came from its acquisitions. Although the company has consistently been able to post impressive organic growth -- something most growth-by-acquisition companies lack. In Q3, the company's revenue improved 38% year over year organically, and it has been able to organically boost its top line by 34% or more year over year for the past nine quarters.Shares have largely been sent downward in 2021, and Twilio's major net losses haven't been helping. The company lost $224 million in Q3, with almost $170 million of that being stock-based compensation. While this might be worrisome today, it is overshadowed by the impressive top-line growth that the company is seeing, both organically and inorganically, in this lucrative market. At 17 times sales, this stock is trading at levels not seen since mid-2020, leaving an opportunistic window for investors.The use of in-app communication will only become more prevalent as the world continues to adopt these habits, and Twilio has been and will likely continue benefiting from it. Twilio's future is bright, which is why I think investors should consider taking advantage of these low stock prices today.","news_type":1},"isVote":1,"tweetType":1,"viewCount":151,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"following","isTTM":true}