FCF

jrex035

Sure, why not? It's got a triple digit PE, forward PE over 55, PB of 15, PS of 25, and a P/FCF of ***121*** as is, clearly fundamentals don't mean anything any more

JabCrossE4E5Quark

Their PE is low because their EPS is artificially inflated by investment gains and shady accounting. Their FCF multiple is extremely high. Q1 and Q2 had a combined 28B FCF. Last time they had FCF that low over 2 quarters was.... Q1 and Q2 in 2023. Their stock is up 150% since then lmao

Slow_Particular3638

It all depends on the FCF.... which is poised to go up 10 billion within the next 2 years... maybe only 8 billion who knows... With a market cap of 19 billion not to shabby.

wrestlerkid

I am considering a short position in META on another spike up but only in consideration of the fact that rampant AI capex spending will almost certainly send FCF negative within the next year despite META being a cash printing machine which they will continue to be as they have tremendous moat in this department, that will be literally affected 0% by negative publications (member the "The Social Dilemma" on Netflix years ago ...yea what you're describing is a remake of that. no one cares. It is like telling a heroin addict that heroin is bad 🫠) Oh, and your thesis about advertising is just absolute nonsense. If your gonna be a doomer, at least study up past doom periods in US history. During the Great depression, the companies that emerged on top were in fact those that doubled down on advertising rather crawling in a ball and focusing on cutting costs. People still need stuff, they just have no choice but to become more selective on the stuff they can buy. Hope whatever type of superior fish brain you have is able to process all of this 😉

CanYouPleaseChill

A market cap of $461B for a company that made 2.5B in FCF - SBC over the past year. Clown market.

throwaway9gk0k4k569

The mechanic is marketing budgets. Consumers are freaked over fuel prices and don't have money to spend. There's no reason to advertise to poor people, so marketers pull their ad budgets. Ad budgets were what was keeping MAG7 stocks FCF up, so now they have to cut CapEx. And it all goes to shit from there. That's the risk right now. Tell me I am wrong, please.

throwaway9gk0k4k569

Thanks. I actually read reddit and know the accounts. It's 98% daycare and morons. I have your account tagged as "interesting". You probably said something smart and useful at some point recently, but your karma is low for the age and there are indicators of finfluencing. You probably had this account in storage for a long time and took it out recently, or bought it on a market. Anyway, there's no doubt the smaller lawsuits will continue to be a drag over time. It's the immediate risks over the next 3 weeks that I am mostly concerened with. The hot PMI this morning means high chance of October FOMC hike, which I had already anticipated. This increases the chance that marketing budgets are going to get cut. There is a bigger risk to the market right now. I'm not the only one watching marketing budgets right now. The question is how this will affect CapEx spend in Q1-2 of next year if marketers don't spend on ads in Q3-4. Google's earnings will be very interesting next. They don't have stock appreciation to lean on this time around and FCF went negative. I don't know how the market is going to react to that.

JabCrossE4E5Quark

Dude, anything other than promoting this clown market, curcular financing, insane bubble, circle jerk gets downvoted. You can have a post about FCF and valuations and accounting gimmicks making EPS look good and it just gets mass downvoted because it isnt "If you arent invested in AI you are a permanent underclass" level dumb fuck comment

Separate_Baker7280

Haha. I guess that evades the fact of zero debt. Zero investment. Moreover, check out ANET. FCF and a load of cash. Check out its growth. So I don’t think that applies.

AdCritical5383

I think we’re going to see more ATHs before the end of the year. Record earnings will continue. I’m generally bearish on our long term prospects…whether that’s seeing AI actually generate the trillions of FCF it needs to justify all the capex, or the affordability of our national debt and deficit spending, But I think for now we’re going up to SPY 850 before we see SPY under 750 again. Now that I’ve said this, shits gonna go down bigly and my leaps will be fuck. 🤌

DM_KITTY_PICS

Complaining about FCF while witnessing the AI buildout is incredibly dumb. Its not like it mysteriously went down and the business is in trouble. A technological breakthrough occurred in 2022 that made the turing test child's play, and now we have matrix mults that are smarter than you and have solved at least 1 millennium problem while you were winging about it being bad at math 2 years ago. Give up. You don't understand the tech and are being left in the dust. You can't make accurate predictions about future capabilities with 4 years of evidence behind you. You can't even see the robot revolution coming.

Clear-Aide1349

66B market cap on 2.4B FCF is 27.5x, and that's price to free cash flow, not a PE. Where's the 26x coming from? Also those 2025 revenue and FCF numbers, is that actual full year or a projection, since we're not through the year.

Consistent-Radio-428

he also has a 6B stake in WM. they are both huge players and i am honestly bullish on both but [moreso on RSG](https://www.athenic.com/share/46705096-65be-4ffb-81bd-41ef26c5dc15) because of faster recent FCF growth, stronger margins and lower cashflow to debt

thenuttyhazlenut

100% I was outperforming pre AI craze being focused on FCF and fundamentals. Lately? Honestly, I'm thinking of just sticking my future deposits into ETFs for the foreseeable future.

JabCrossE4E5Quark

Future FCF will be even worse as Capex apparently is going to grow significantly in 2027. And unlike the internet or railroad buildout, chips depreciate, and need to be replaced and improved. Its not a 1 time cost, its a constant recurring cost.

Preme2

Current FCF or future FCF? We all know capex spending is high for the AI buildout.

JabCrossE4E5Quark

The entire market is now a meme stock. Completely trades based on FOMO and nonsense headlines instead of the most important thing by far for companies: Free Cash Flow. FCF is DOWN YoY for SPY lmao. EV to FCF is like 40:1 or something absurd. Complete detachment from reality and ignoring fundmantels: Meme stock.

JabCrossE4E5Quark

Were totally not in a bubble. Thats why the Price to Free Cash Flow ratio is 99th percentile. Its because we arent in a bubble, thats why. Companies with negative FCF or flat FCF growth being up 50% to 400% in a year is totally not bubble behaviour, thats just healthy market behaviour, totally normal.

JabCrossE4E5Quark

Its a bull market. But its a bull market based on FOMO, fraud, and a bunch of accounting gimmicks to prop up EPS in the short term as FCF gets eviscerated and future EPS gets hurt as the CapEx from today will be hitting the income statements for 5 more years. Who knows how long this nonsense can last, but the admin is gonna do everything in their power to keep it going (and they have been suceeding for 18 months)

Loose-Dream7901

Yes you’re looking at this from a static perspective. Markets price cash flows per share, not cash balances. Buybacks can drive a rerate because they increase FCF/EPS per share and change how that cash flow is priced. You should expand analysis beyond balance sheet and also consider cash flow and income statements which should improved metrics by reducing the denominator.

Loose-Dream7901

This is a dumb comparison as you just outlined a shell company with only cash. That cash example only works because it assumes valuation never changes and the market just passively translates balance sheet cash into price without repricing anything else. That’s not how equities are priced, especially in the institutional space. It’s any buybacks are seen as positive Buybacks change per-share earnings power (EPS/FCF per share), and the market constantly reprices that. That’s why they can matter and why your example of pure cash company with no sales is a fallacy. It disregards repricing of metric compression.

Orennji

>Ben's family connections Can you explain? All I know is the Kovlers got rich selling off Jim Beam (probably and Ben was an 8th grade math teacher before going back to school for a MBA and then starting GTI right after. > GTI balance sheet The other top tier MSOs are FCF positive and will very likely pay off their debt gradually or refinance. But the real advantage is the depth they've built in their markets using that debt. Trulieve makes the majority of it's $1B+ revenue and $200m-ish FCF from just Florida. Just one state. While GTI is running around in small towns near the Iowa border or weird markets like Minnesota. That's not sustainable. Of course there's alternative distribution channels like hemp beverages or Circle K co-locations (which we have never heard about again since it was announced in 2022), but if GTI can do that, why can't the other MSOs do the same?

JabCrossE4E5Quark

But you see, even though the companies that have invested the most into this tech have not shown one hint of it actually driving FCF, the market just prices in that the investments will pay off extremely well. Albeit, they cant be pricing it in too far in the future, because if they did the stocks would crash from rising yields. So apparently, the market expects AI to be monetized into immediate FCF. I dont even know what the fuck is going on other than the biggest bubble in history continuing to get bigger each day.

jrex035

FCF is one of the best ways to analyze stock values, which is ironic since the entire market has apparently forgotten this. Companies with insanely high FCF are being sold right now, this very day, so that people can FOMO into tech stocks with *negative* FCF. Most highly regarded market in history

jrex035

The AI buildout is driving markets higher. But there are numerous headwinds to this buildout the market is straight up ignoring. The rate of data centers coming online is slowing with delays and backlogs growing, all the inputs to building data centers are getting more expensive (chips, memory, energy, raw materials, labor, etc), hyperscalers are already dumping all their FCF and thensome into the buildout with less and less to show for it due to those rising prices and delays, public resistance to data centers and AI more broadly is rising, the list goes on and on. Most of the AI-related equities are cyclicals that are relying on ever-growing investment from hyperscalers, which is going to hit a brick wall sooner or later. Oh and China keeps releasing open source models that are 95% as good as US models, but *free*. Why is none of this risk being priced in? >Will it hurt consumers? There isn't any evidnece of this, all I see is assumptions on your point. It's not an "assumption" that rate hikes and inflation hurt consumers, it's an established fact and we're already seeing the impact. >Agreed, however, impact isn't being felt. Once again I need to see this in earnings report to see a bear thesis play out. Soaring energy prices are a big part of why inflation is rising. Diesel prices are at nominal ATHs and *this* close to inflation-adjusted ATHs as well. Diesel is more than $220 a barrel and gasoline around $150 a barrel with no real relief in sight. You need to wait to see the impact of those prices on earnings before you accept that they're going to hurt? Of course they're going to hurt.

TheKaiserAlpha

$664B in contracted backlog and people are still treating negative FCF like Oracle forgot how to make money.

icydragon_12

It's a good question. I can give you the numerical, rational, objective, financial model driven answer, though it won't be sufficient to explain reality. The TLDR is: there's a lot of runway to spend if we're looking at financial capacity. But much of the pricing power within the ecosystem hinges on whether frontier model training continues to have buy-in. The largest risk isn't running out of funding sources, but rather, investor belief. We've all seen this [alarming chart](https://i.redd.it/6ulgj5hkk0dh1.jpeg) of hyperscalers printing walls of FCF historically which now falls off of a cliff (12 mo forward). From a debt health perspective though, what the chart doesn't show us, is that hyperscalers (ex oracle) are actually levered at \~0.2-0.4x next year (fuck all), and, for the most part, even under dramatically rising capex assumptions, that doesn't change much. The underappreciated reason for this: building data centres is NPV positive, which is increasingly evident in recent cloud operating profits. You can think of it like... the hyperscalers are building little neoclouds within themselves. GOOG even reports its cloud business separately, so we can see that although the returns aren't great (vs ads), they're also not negative, and are in fact growing quite fast. But this brings us back to the Achilles heel. The following is supposition: the reason that neoclouds are economic is because frontier model training represents the marginal buyer willing to consume endless compute without much price sensitivity. Frontier training has very questionable economics.

Evening_Result4070

Expanding potential > Earnings if FCF positive ComputeNeutronRocketDemand<<<1,1>>>(Iridium);

Evening_Result4070

Expanding opportunities > earnings if FCF positive. ComputeNeutronRocketDemand<<<1,1>>>(Iridium);

Designer_Respect4285

Can this level of spend be sustained though, both as a matter of choice and in terms of literally having the capital to do so? I see MSFT could still fund their cap ex via FCF, but GOOG just dropped into negative FCF. Then of course you would think these CEO's woud smarten up if AI looks like it's going to under perform expectations, or they might cave to shareholder pressure. I do appreciate though what you said about it being a general purpose technology, and I've heard CEO's talk about the game theory aspect of this. They see not investing in it as an existential risk, so even if there's only a 35% chance AI will pay off, it could still be rational to invest in it. This all comes from the perspective of a lay person who went to law school and not business school though, this isn't my area of expertise. I'm also generally on your side, outside of index funds, SK Hynix is my third biggest holding.

the_mammynun

Raj has been fine tuning his model for years and is now achieving GAAP net income, after years of positive FCF. Vireo is throwing money at things and taking on major executional risk while delivering net losses and negative FCF.  Surprised so many people agreed with you and down voted me, but there is also a lot of ignorance regarding High Tide. I know the company very well, and I know management's standards and expectations. Best of luck.

jrex035

I'm assuming it's people worried about the Brazilian election results and taking profits, but yeah its dumb. Insanely high FCF, low pe, lower forward pe and it still can't break 52w highs. Doesn't even make sense anyway, Lula is gonna win and not much will change (he's the current president and was president when PBR hit ATHs back in 08)

g3tr1ghttt

I didn’t say a word about the credit agencies. The problem I see is news outlets with michael burry want you to value the stock only based on credit ratings, while discounting every other factor, that’s why you see them singing the same song about free cash flow, leverage rate, etc. The missing piece is that credit agencies are not in the business of valuing the stocks, and if you look at analysts price targets, they’re much higher than the trailing average. If you look at other companies, like neoclouds, you can see that they have higher leverage, keep rapidly diluting their shares and losing more money every quarter, while their market caps balloons, and the news outlets with the market say it’s alright we like it. Meanwhile Oracle shows unprecedented growth both top and bottom line, their cash flow in last quarter came in much better than expected and the market cap is suppressed. In the last quarter analysts projected -$9.56B FCF while actual result was -$5.4B, and net income was $4.76B vs $4.28B prior quarter and $3.88B last year’s quarter, does it mean Oracle is struggling servicing and repaying its debt? My point is the amount of debt should not be the only factor in the stock valuation, but the media wants you laser focused on it and coerce all news into a debt disaster while withholding important information.

Diguojigood

News just came out: OpenAI will am have FCF of 280 billion dollars through 2030.

jrex035

I was giving those as particular examples, they aren't the only high FCF equities I'm holding but fair point that they are war related. >But let's say purely hypothetically if everything went back to normal, wouldn't tanker, shipping etc. profits plummet? There is no return to "normal" after this war. However the conflict does eventually end, there will be permanent changes to how goods are shipped globally. Countries are being forced to diversify and strengthen their supply chains, there aren't remotely enough ships to move goods around the world as needed (fleets are aging significantly, quite a few damaged/destroyed, more ships now part of "dark" fleets, etc), shipping more likely to be targeted in the future compared with the recent past (this is more of a return to historical norms), ships moving around regional chokepoints add tons of extra miles (the Red Sea and Persian Gulf won't return to pre-war transit levels again for years, if ever), etc. There's honestly more to add, including Sinokor having a partial monopoly on global VLCC tonnage and using it to force rates higher, but you get the point. No, I don't expect $1m per day voyages from the ME to Asia after the war like we're seeing today, but we wont see anything remotely resembling the pre-war rates either. And it's going to be several years before new-build ships are available in enough numbers (assuming more of the global shipping fleet doesn't get blown up by then) to bring shipping rates down meaningfully on their own.

jrex035

I've been focusing on FCF. Done pretty well this year so far because of it, and many of the equities I'm holding remain quite undervalued so I expect more upside ahead. So many people are just straight up missing what's happening in the shipping industry in general, and tanker industry in particular. Companies like FRO and ECO are literally printing cash and returning it to shareholders, all while paying down debt. And they lowballed the hell out of q3 earnings, the blowout ERs are going to be glorious in a few months

Sufficient_Habit5091

He said both? I think they've been saying it will royally fuck bulls mostly and ended up wrong. That said, I don't think fundamental investing is relevant at all in the current environment. Is anyone even genuinely looking at FCF anymore, doing a genuine DCF or care? It's purely momentum, macro and story driven. Those who have a good handle on those will make money.

_ehwaz

I did some similar securities analysis. I think the current market is heavily discounting this one. I think the market expects the insane price wars to continue with new providers in fiber but lots of these providers are going under. Fiber is still expensive. Charter has staying power and is good enough for most consumers and businesses. Like you said wireless and sat can’t fully replace this (and sat might even need to work with cable for their own network) Their network can still evolve later too . As you said the last mile isn’t fiber but can be upgraded. And the high split upgrades are good enough for now. Plus their advertising division spectrum reach is growing and providing more FCF which will synergize with the capex cliff. There are half as many shares now than 10 years ago and they will continue to buyback soon. This seems like a classic example of a hyped market pumping money into other narratives and ignoring some real value. Plus AI needs solid networks and that will provide consistent revenue for years to come (unless it goes all on prem) I am heavily invested at $140

LetzBRealTea

Considering how crowded the market is AND potential undervalued stocks that are already seen and have been wrecked, I'm almost ready to give up learning and creating valuation spreadsheets. No matter what, the company could be a fucking perfect goldmine with amazing margins, FCF etc and if nobody is willing to buy it and everyone along with [Mr.Market](http://Mr.Market) is pumping all the other speculative garbage, you'll never make any money. This market is BS. It's not like it was when a company like Coca-cola or Sears started and you could just quietly and actually INVEST into the growth of the company. No, now, every single person and their dead relatives are piling in, ramping shit up and getting out. There is no "value" investing anymore. No to mention, our orange clown leader can just manipulate the markets which makes it even more worthless to try and invest.

LimitIntelligent9946

[You don't have to predict the future to know when returns look bleak in the future if they're already expensive in the present.](https://imgur.com/a/cKoIvfl). And those are largely accounting-based earnings, not cash flow. It's even worse when you look at P/FCF and understand that the closed-loop frontier lab financing is not durable.

GenesGeniesJeans

And negative FCF?!

Orennji

>You keep saying 45% premium like that matters at this point. Make a real offer or give it up. An acquisition offer is typically made at a premium over some objective metric of value. Such as EV. Just stating the facts. >That network that is also not making a ton of money? But according to Boris will make money based upon the FUTURE of international cannabis. As I said, even if Aurora gets less synergies without Curaleaf, if the future outlook is as Boris suggests it would be better It's objectively not making money. Not for Aurora itself, which is FCF negative despite some of the highest margins in the industry. This trend does not seem to be changing significantly. When they do break FCF positive, it will barely be above break even. Yes, they will never explicitly say it, but it really seems like Curaleaf is overpaying for Aurora's grow facilities alone, in exchange for time to get ahead in EU market share. >You can pretend like Curaleaf didn't way overexpand. It's been a very common criticism of them for a while now. That's not just me. They had to bail out of other markets to prop up their existing operations, and they will continue to see price compression in the US. There's a reason Boris is **pivoting hard** into pumping international. Can you point out where I said any of that? Margins in US markets have been compressing for years. And yet several MSOs have defended or even slightly improved their margins and free cash flow. And the US is still the largest Cannabis market. As the legal market expands, volume and market share will become very important. >Your biggest selling point is that Curaleaf can re-finance their debt? Whoopdy freakin do it's still billions in liabilities that they have to service for many years. I'm not selling anything. Just stating the facts. Curaleaf has serious market share in many important jurisdictions. Imagine if you're a competitor growing one or two stores at a time, pinching your pennies. Curaleaf, Verano, and all the other bloated debt-loving MSOs are like the opponents that just wont go down no matter how many times you hit them, and every time you figure out something that works for you there's nothing to stop them from copying it.

Orennji

Just stating the facts. > You still want a higher return on your investment than what Cura is offering.  They offered a premium 45% of the price the day it was announced, and far above EV. For a company with no FCF, impending dilution from ATM's, and a free falling share price. >Cura is trying to thread a very fine line between shitting on Aurora and also saying how valuable their assets will be to Cura. Every interview Boris has done since the offer was announced has been him praising Aurora as a supplier through **Curaleaf's** network and why it would be a good wholly owned asset in **Curaleaf's** hands. As far as I know, no mention about branding or licenses, most of which will probably be written off. Yes, the PR's to be very formulaic and speaking in tropes. >Yes he did aggressively expanded by taking on massive debt lol after seeing how awful it worked out for LPs. Aurora tried to grow in a giant indoor custom built indoor facility with negative gross margins and Canopy *voluntarily* indebted themselves for god knows why. Both were over-building for a market that was way too small anyway. Curaleaf is FCF positive within its existing markets and the majority of the debt is not due until 2028 and 2029. They refinanced their debt without any issue or dilution earlier this year. I went into some detail about what I think might happen with the UTP a few months ago [here](https://www.reddit.com/r/weedstocks/comments/1sw3cwk/comment/oigxok9/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button). Just stating the facts.

Reasonable-Buy5895

The 10-year Treasury yield hitting 5% changes the DCF math more than most people realize ! If I run a standard two-stage DCF on an “average” S&P 500 company and use the current risk-free rate as the starting point for WACC, the implied fair P/E comes out around 16–17x. The problem is that many stocks in the index are still trading at 22-24x forward earnings. In practical terms, that means a company needs to grow earnings by roughly 12%+ every year for the next decade just to justify today’s valuation at a 5% discount rate. And realistically, most S&P 500 companies don't have the moat, margins, or free cash flow profile to sustain that kind of growth for 10 years. The companies that hold up under this kind of math tend to have a few things in common: * **Stable operating margins** over the past 5 years. Not just high margins — consistent ones. That’s a better sign of a real competitive advantage rather than a temporary cycle. * **Debt-to-equity well below 0.50**, so higher rates don't add another layer of pressure. * **FCF yield above 5%**, which suggests the earnings are backed by actual cash generation rather than being mostly an accounting number. Run those three filters across the entire S&P 500 and the list gets very short, very quickly. Even Berkshire sitting on a huge pile of T-bills earning around 5% starts to make a lot more sense in this environment. You're getting the risk-free return while waiting for the market to offer better opportunities.

Disastrous_Rent_6500

Company makes more money. Basically if earnings and FCF expand, the company value will expand as well

the_mammynun

Frankly there is no good way to lose $2B. If it's a write down then they overpaid significantly for assets that are also cash flow negative.  That's great regarding your theory. I just don't think it will make a dent in TLRYs problems. The bottom line has a lot of catching up to do. You should take that enthusiasm for cannabis stocks and apply it to a better company. HITI is an increasingly interesting global retailer and importer at a very fair valuation. If you prefer cultivators look at VFF. Both have long histories of positive FCF and earnings, along with talented and driven management teams. 

youdidthistome2026

Software "opex-turned-capex" is actually a small fraction of the cost of hardware. But there is a logic behind it too. When you train a model, you are building a software asset that stays and gets used for a while - updates to it are incremental and count towards incremental maintenance and more asset-building capex. The risk is that if the entire foundation shifts (current transformer based models become obsolete resulting in a complete software rewrite), your software asset might go to zero earlier than the projected depreciation cycle. But at this stage nobody is rewriting everything from the ground up again as we move from one model's v3 to v4 and from v4 to v5 and so on. Right now these companies are in the rapid investment phase, so the problem is they are compressing their free cashflow or even going negative FCF at a much faster pace than you normally see in typical capex schedules. You should compare it to other software product/service startups which were making their very first software products in a pre-AI environment in the past decade or so to get a sense of what is going on here. If they required relatively little in infrastructure expenses to develop their technologies (for example Shopify) they tended to put it all in opex. But when they had to build a lot of robust core infrastructure (Paypal), a lot of these expenses ended up in the capex line. Simply building an AI model requires upfront astronomical expenses in building up multi-billion dollar compute clusters in multi-billion dollar datacentres, and the cost of the work done on the software for it while not negligible, is still relatively low so it doesn't change the bottom line that meaningfully when looking at it from a long term perspective. Another thing is, the software part of the capex has a much faster depreciation cycle in the balance sheet compared to the hardware, so it is actually not like a legacy software is showing up as a zombie asset which is inflating the books. Which reminds me, you should actually look at the hardware depreciation cycle as the bigger villain in this story since chips are now being amortized over 7-8 years rather than the previous 3-4 year horizon and have a much more meaningful impact in the bottom line.

DryBicycle5629

Okay, what about the fucking P/FCF? EPS growth for next 5 years? Or their 60%+ gross margins?!

jrex035

Currently watching in awe as the energy sector falls off a fucking cliff over a 25 bps hike. What a joke of a sector ffs. These companies are making money hand over fist, with no end in sight, and they're still up ~30% ytd. FCF for most of these companies with crude at $100 bbl, gasoline at ~$150 bbl and diesel well over $200 bbl is fucking bonkers but it doesn't matter. Energy has been underperforming the S&P over the past 6 months ffs. Anyway, I'm moving some money into offshore drilling, there's a lot of signs pointing to that popping off in the coming months and its one of the sectors that hasn't seen any meaningful improvement since the war began. And yes, I 100% agree with you about the safety of domestic energy infrastructure. It's actually surprising to me it hasn't really happened yet.

GoneWithTheFishes

I was assigned APP at slightly under $360 after the last earnings call. The highlights are its amazing net margin and FCF numbers. I think the main issue is that APP was projected to grow faster than what Q2 numbers showed and what management guided to on the last call, so it is now being priced at a lower multiple. Management cited that Q2 did not receive the benefit of improvements to its Axon model and this should be reflected in Q3, so that's something to look out for. There is also the question of whether it can successfully expand into the e-commerce market, and risk of competition from Apple, Meta and Google. I am cautiously bullish and hope the Q3 earnings will be the catalyst for a recovery but much would depend on execution by management.

CharlesElwoodYeager

Manufacturers of compute are profitable today, are you stupid? Nvidia reports 75% gross margins, samsung was what like 80% operating margin? On hyperscalers; Microsoft was FCF positive this quarter. Amazon has always made money on AWS. Anthropics lessors are mostly making money on their leases, they're effectively printing it, so I'm actually quite confused by what you're talking about

North_Category_3781

This is the right way to dismantle the insider-selling story, plan-based sales and tax withholding aren't a signal, agreed. But there's a separate, more concrete thread worth pulling that doesn't depend on interpreting anyone's intent: margins have compressed meaningfully and free-cash-flow-to-sales has fallen sharply from where it was, that's not a 13F timing artifact or a scheduled-sale technicality, it's happening in the actual financials right now as capex ramps. That's a different question from "did insiders lose confidence," it's "is the AI spend converting into returns fast enough to keep the margin profile intact." The 10b5-1 debate and the 13F-timing mismatch both wash out as noise once you separate them properly, like you did. The margin/FCF trajectory doesn't wash out the same way, it's a real trend, not a timing artifact, and it's probably the more useful thing to track than any single filing.

trueprice_cash

Been covering ORCL on [TruePrice ](https://www.trueprice.cash/stock/ORCL)— worth updating in light of Thursday's report. **What we had going in:** our DCF (base case as of late June) pegged fair value around $162, a HOLD with modest \~8% upside from $150. The core concern wasn't growth — it was capex. FY2026 saw capital expenditure surge to $55.7B, pushing free cash flow to -$23.7B, and debt at $156B against a 3.63x debt/equity ratio well above the sector norm. **What just changed:** the Q1 FY27 print actually strengthens the growth side of the thesis without resolving the capex/leverage side. Revenue hit $19.35B (beat), EPS $1.92 vs $1.74 expected, cloud infrastructure revenue up 121% YoY on top of a 93% prior quarter — that's acceleration, not deceleration. Management raised full-year guidance to $8.10 EPS on a $90B+ revenue floor, and RPO (their backlog metric) came in at $664B, well above the $630B consensus. Notably, they said $30B+ of new AI contracts this quarter came via prepay/BYO-hardware structures that won't require incremental Oracle capital — that's a meaningfully better capital-efficiency signal than the FY2026 numbers showed. **What hasn't changed:** capex guidance stayed at $90-95B for the year, and management still isn't committing to a timeline for positive free cash flow. That's the same structural tension our report flagged — you're paying up for AI infrastructure growth before it's throwing off cash. **Net-net:** the beat and raised guidance likely push fair value estimates modestly higher than our $162 base case (the stock already moved \~4% on the print), but it doesn't retire the core risk — this is still a story where the market is pricing in FCF normalization that hasn't happened yet. I'd treat this as growth-thesis-confirmed, leverage-thesis-unresolved. Worth rerunning the DCF with the new RPO conversion data before calling it anything more than a HOLD-leaning-positive. Not investment advice — just how I'm reading the numbers.

B35TR3GARD5

And that totally makes sense. But eventually their data center will be operational and revenue is going to balloon! Once FCF covers the debt repayments, Oracle goes brrrrrrrrr

madness_incarnate_22

Only because hyperscalers went full retar mode and sacrificed their entire FCF on altar of korean RAM makers. That doesn't mean it's well managed company, it's just means that mag7 CEOs are incompetent.

_hiddenscout

I usually screen and do my own research, but do find it useful to ask some questions about a company. Usually i find it useful to do things like a DCF using last quarters results and guidance with a base, bear, and bull case. I ask about management track record and what headwinds/tailwinds a company has. What is their moat and competition. Also like to calculate the PEG and P/FCF using the latest numbers as well. I'm a GARPy investor, growth at responsible price, so my goal is try to find good companies at a good price to hold long term. I use screening to find the companies and dig into them, but I do like asking some of those questions to the LLM's to dig a bit deeper into the companies. You still need to verify everything the LLM's are telling you are true, but I do find it interesting to learn more about companies and industries as you are diving deep into the company.

Alarming_Bee_2290

Higher rates are the main thesis. CRWV has huge CapEx, debt, financing needs, and negative FCF, while ORCL is spending heavily on AI infrastructure. If yields stay elevated, I think both could get hit hard as the market reprices future earnings

Equivalent_Spell3824

87% of the debt is fixed rate, the remainder is floating. Undoubtably, rates will go up on the debt wall that needs to be rolled over in the next few years, but if the management achieves anywhere close to the \~$4B in capex cuts they are projecting over the same time period then that should more than make up for the increase in rates. For illustrative purposes if we assume 200 bps increase on the $28B of debt that needs to be rolled, that will be a $560M increase to the debt service expense (so net of the capex cuts we are still looking at $3.0B - $3.5B of increase in levered FCF when factoring in the debt repricing). Of course that is IF mgmt hits their capex projections and IF the rerate is in the range I am estimating. This is a casino and neither is guaranteed.

Potential-Tip6106

Ask the plenty of bag-holders how it went lol. I remember they were like "dont sleep on it", "space stock", etc. The "covid experts" came back to reality with this one as well. Being serious now, as others have said, they are a satellite firm that takes pictures of the planet and hence have nothing to do with rockets. So the only thing with "space" is literary the satellites being there to function and not b/c some rocket or spaceship will suddenly appear from them. If it hasent changed since I first discover it last year, they have the largest satellite fleet and Google has a position on them so that can say something and given their business model, they will probably exit as you and I get older. Check the three statements and you will see it fails a fundamental analysis. They have no operating income, share dilution increasing, eps terrible, but they do have some FCF (dident expect that) while OCF has been compounding quickly and solid liquidity ratios (short term) and a negative ROIC vs WACC which clearly destroys value. As today, its way overvalued based on intrinsic value and metrics like revenue, fcf, ebitda and book value. With this, take into account the US bond market going up? With cost of capital getting expensive once again, the hurdle rate increases and the value decreases on models. The business seems to become profitable during 2028 however, why do you want to buy the stock? What's your thesis (future growth and future guidance, smart money allocation recently, relative analysis, etc) and what do you think it should be its price (if the market seems to miss-judging based on actual metrics and fundamental analysis)? If you cant answer those questions, are you sure PL is a solid stock for you? Do you at least know what you will be buying and how much you are willing to pay to ensure your desired CAGR? Hint: dont follow the "covid-experts" crowd b/c otherwise you risk becoming long-term investor due to bag-holding by becoming the exit liquidity or not having sold when you could have to.

jrex035

I'll keep saying it, we're in the midst of a new commodities supercycle and most people aren't positioned properly for it. 15 years ago, tech was out of favor while commodities, especially energy was booming. You know what happened? Companies in the commodity sphere, especially oil, dumped insane amounts of money into capex, destroying their FCF, and wrecking their profitability in the process. Companies went from printing cash to being cash flow negative. Sound familiar?

jrex035

It's funny seeing the cycles play out in real time though. ~15 years ago, no one wanted to touch tech with a 10 ft poll, it was hated and the energy sector was booming. But then the energy sector went overboard with capex expenses that wrecked the price of energy and eliminated all their FCF. Sound familiar?

jrex035

It's almost like dumping all their FCF for years into something with no real ROI thus far isn't great for your stock value

Lootoholic

The way I see it, this is a play on interest rate. If the rate come down meaningfully, the stock appreciates significantly, if the rates go higher and stay higher longer, the stock tanks, because the future FCF will be lost to future interest. It looks like a value trap to me.

DickyFishb

I love how ever since DeepFuckingValue made headway with GME six years ago, almost every DD post on WSB feels the need to read like this. Full porting your retirement and expecting a 3x–8x return because “uranium + rare earths + geopolitics” is insane. I'm not even saying UUUU is a shit company. I'm saying you haven't explained why UUUU at TODAY'S valuation is somehow worth 3–8x more. Where's the valuation that gets you there? Revenue? Margins? Uranium prices? Rare-earth production? FCF? What assumptions make this thing worth 3x, let alone 8x? The government wanting domestic uranium and rare-earth production is bullish for the industry. That doesn't automatically mean every company exposed to it becomes the next GME. If you wanted the asymmetric bet, the move would've been around $3 before the late-2025 run. Full-porting AFTER the market has already repriced the story and then expecting another 300–800% is a completely different bet. So good luck, in every sense of the word.

Lootoholic

Tesla is just a bunch of empty promises. Uber had more self-driving cars on the road than tesla. Uber FCF is also higher than Tesla, even though Tesla is like 10 times more expensive.

Lootoholic

You are forgetting that Amazon and Oracle are in a huge AI spending cycle, and have to FCF to go after a large acquisition.

liftingshitposts

I started a position back in the $70s because of their FCF margin, strong balance sheet, and (albeit modest) they are somehow still growing

GrokM14232

The checklist is useful, but I’d add a regime check: margins and multiples built during zero-rate years may not survive with the 10-year Treasury around a structurally higher range. FCF yield should be compared with both the company’s history and the risk-free rate, since a 4% yield means something very different when bills pay 5% than when they pay 0.5%. Most important, write the invalidation point before buying and give it a timeframe, otherwise every miss gets rationalized as “long term.

FreedK70980

I think the invalidation point is the most useful part, since it makes you write down what would prove your thesis wrong before you get attached to it. Dumb beginner question: when comparing FCF yield across companies, how do you account for unusually high stock-based compensation without making the comparison subjective?

EntrepreneurSea5781

I understand your point: Yelp says it aims to return more than 50% of annual FCF through buybacks, so I think you're saying the repurchases were simply execution of a published capital-allocation policy, not management making some independent call that the stock was cheap. But the policy doesn't explain the amount they actually spent. In the first half Yelp generated $106.2M of FCF and spent $174M on repurchases, 164% of FCF. $53M would already have met the 50% threshold. FCF was also down about 20% from the prior-year period while buyback spending increased.s So the criticism isn't that Yelp shouldn't have bought any stock because it had a 50% policy. It's that management chose to go far beyond that policy while the stock was higher, then wound up with revolver debt and paused repurchases after the stock fell. The decision to spend 164% rather than 50%, 75% or 100% was still management's judgment.

EntrepreneurSea5781

I agree 100% with your points. They are treated as a dying ad company because their leadership sucks IMO. They have tons of potential. Ultra low FCF ratio, possible legal victory and valuable data. They are just shackled by some bad leadership. Listen to the quarterly reports yourselves... you'll see how stupid and lazy the CFO is. He blamed Iran for low advertising. Surely he couldn't be that dumb... but he is.

PotadoLoveGun

I mean we can look at the buffet indicator and its not good for USA, they were both high, but USA is higher. Our debt load as a country does scare me. Its a lot, its been this high but usually on actively in Wartime. If we ever lose USD as the global currency were are fucked. But for things to look at: Japan not global currency, which put them at risk global powers fucked them over FCF aggregated Cash on hand aggregated Current ratios Public companies Japan 1990 had 1800 vs now USA has almost 6000 from what I see % of companies in Russell that make profit PE comparisons by sector since the averages vary wildly

jrex035

Dems will win the House, just a question of if they pick up the Senate too which is a big stretch. Regardless, idk why people expect it to have much of an impact on equities. What's really important is the Hormuz crisis which continues to get worse by the day, and is exacerbating other interrelated crises (Suez, Russia-Ukraine, Houthi attacks in Red Sea). Shipping will likely continue to run for a little while come, there are a lot of structural issues pushing shipping rates higher (longer ton-miles from forced workarounds, more idling ships, long lead time on new production, especially in drybulk which hasn't seen a huge surge in new builds, etc). As far as the Mag 7 go, until they see FCF rebound from their huge AI bets, they're going to be trading for much less than they typically do, especially if the Iran war pushes the US into a financial crisis and we see a correction or even bear market in equities

PotadoLoveGun

I show Meta having FCF after they are spending 92% of it. Debts not inherently bad, but to compare it to Japan is silly. In 1990 Japan had avg debt to equity ratios between 1.5 and 2.0. Thats when it is an issue. METAs is .25, which is spectacular

longGERN

It's temporary and why would you need another large loan after paying it off lmfao Also doesn't stop FICO from returning g FCF to shareholders

Immediate_Code_9272

I mean, it's a growth stock. You can rate it for its merits on that basis but why are you why are you looking at EV/FCF? its essentially useless at this stage. Revenue growing 39% YoY, non-GAAP operating margins are 9% in expansion phase. This stock really is a bet on AI - whether you think it will be revenue generator or sink. If its a sink then yes you might be right. If it can further increase revenue and also reduce development costs in terms of future SBC, then its a huge tailwind. If it can sustain 3 years of 45% growth or higher (personally I think AI credits for software are a revenue tailwind) on this years. That gives 4.46B revenue in 3 years, at a more normal 30% operating margin for software (maybe better with reduced dev headcount due to AI) gives 1.4B looking at around 1B net. So lots of potential expansion on multiple over the next few years as it matures. (presuming the growth rates will still be high then, even if decelerating) Of course this is predicated on maintaining or accelerating growth, which is the whole point. FCF is not.

Maestro_Canello

On the fundamental side EPS have been heading down for the past 5 years, as it did ROIC, FCF has negative growth, just to name few important metrics. On a macro base: Hoka and On are rapidly eating market share. Also Nike took some terrible commercial decisions, like betting heavikly on his own digital channels, thinking that they could overlook big retailers like Foot Locker. Add the tariff war with China to the recipe, and the soup is ready. To me, Nike looks attractive at these levels only for those who don't yet hold a position and want to chase a good dividend yield (though, if things continue this way, the dividend might be at risk in a few years) and buy in at historically low P/E ratios.

I_like_code

This is a substantial post. The author’s core argument is that **AI companies can be producing very real earnings while the overall AI investment cycle can still become bubble-like**, because a large portion of today’s revenue is ultimately being financed by continued capital investment rather than mature end-user demand. The financing-flow argument is the most interesting part. Hyperscalers, AI labs, VCs, and other investors pour capital into AI infrastructure; that money then becomes genuine revenue for companies such as NVIDIA, data-center operators, power-equipment suppliers, and construction firms. So NVDA can report completely legitimate, enormous revenue and profits even if the ultimate economic return on all those GPUs and data centers eventually disappoints. The author therefore isn’t really arguing **“AI is fake.”** Quite the opposite. They acknowledge the technology has obvious utility and that today’s major AI beneficiaries are fundamentally much stronger businesses than dot-com-era speculative companies. Their concern is that expectations and investment spending could outrun the eventual cash generated by customers using AI. For your own AI thesis, I’d pay particular attention to three things the post identifies: **hyperscaler capex, inference/end-user monetization, and free cash flow.** The bearish scenario isn’t necessarily “AI stops growing.” It could simply be: **AI usage grows rapidly → infrastructure gets overbuilt → compute becomes cheaper → hyperscaler returns fall → capex growth slows → suppliers lose pricing power/growth multiples.** That’s a much more credible risk to NVDA and the broader AI infrastructure trade than “AI turns out to be useless.” The author also correctly points out that Google, Meta and others have effectively said the risk of **underbuilding is currently worse than overbuilding**, which naturally creates the possibility of eventual excess capacity. Where I’d push back is the author’s claim that **75%+ of the ecosystem’s money ultimately comes from investors**. They explicitly describe that as a rough ChatGPT-generated estimate. That’s far too uncertain to serve as the quantitative foundation for the argument. Hyperscaler capex also isn’t equivalent to speculative VC financing: Microsoft, Google, Amazon and Meta have enormous operating cash flows and existing cloud businesses that monetize infrastructure across many workloads. Their proposed exit strategy is also much weaker than their diagnosis. They plan to stay invested, watch for an obvious peak followed by a significant decline and failed rallies, and then progressively reallocate based partly on their judgment of whether the bubble has popped. That’s essentially **market timing after the fact**, and identifying a bear-market rally in real time is notoriously difficult. So I’d rate the post as **thought-provoking and directionally useful, but considerably more speculative than its detailed presentation makes it appear**. The financing-flow concept is worth incorporating into how we monitor your AI exposure, but I wouldn’t use the author’s bubble dashboard as a sell signal by itself. In fact, for your NVDA/SCHG/AI-infrastructure thesis, I’d simplify the monitoring considerably: watch **hyperscaler capex guidance → GPU/data-center utilization → inference revenue growth → AI pricing → hyperscaler FCF → NVDA backlog/margins**. If capex keeps climbing *while* inference/customer monetization catches up, the author’s central concern gets progressively weaker. If capex keeps exploding while monetization stalls, it gets much stronger. That distinction is probably the single most useful takeaway from the entire post.

FartPolluter

If this survives till next earnings with no correction, we know exactly what it will be. Hyperscalar "Record beating FCF" while their balance sheet will have deteriorated sharply while they dont reveal 2027 capex. Bols will sell it as a major victory

Xalksahsax

It's undervalued if anything. $20 B FCF by 2028. Don't bet against the American dream. I'll sell it to you at $350.

Lootoholic

Their stock return may be less than money market, BUT their FCF yield is far better than money market. Don't judge Berkshire's performance by the performance of their stock

Lootoholic

It's good to have some high quality dividend stocks within your portfolio among other things. Be careful though not to fall for a dividend trap. A dividend stock is considered high-quality if they have been paying dividend for a long long time, without reducing or removing it, and they should have enough room in their FCF to support (and raise) that dividend in the future. some of my favorite dividend stocks: T, VZ, BAM, DB

nobertan

I already had oil stocks with the expectation that nothing would get resolved and it’ll rip. More recently though, with the Fed losing control of interest rates (*they’re set by the market now, not them*), I’m not confident in holding long bonds thru a recession with the hope of “*lowering interest rates to stimulate growth*”. I’m just gonna pivot my safety money in low debt (including hidden AI debt), high FCF stocks. Maybe dumb, maybe not, but long bonds look like complete ass.

vollov2021

Agree with you right here. 0.14% isn't a dividend play other than being able to, technically, call themselves a dividend stock. Imagine if Meta had paid out the invests into the metaverse as dividends instead...that would have made them incredibly attractive with their FCF plus dividends. But, instead of returning value back to investors, they put it into metaverse, AR, and now AI build out when they are laggards. Even MSFT isn't a dividend play. They are still a growth stock. And the reason why they and the other Hyperscalars have risk now is they are sacrificing FCF for building the future. If their business is mature, without other CAPEX investment, I would expect a conversion of FCF into dividends.

Avidtrader81

Some of the fundamental numbers matter to me, others depend on the reason. For example FCF went negative on goog. Top lines were great. But cap ex spending was the reason in the bottom line numbers. The next question is will the capex generate good returns and if I believe in the outlook of the business model.

Bekabam

I think you're looking at this too binary. It's not a yes/no to dividends, it's how much of a portfolio is allocated to them and which ones. You have to weigh opportunity cost. Another metric to layer is the investor's life position. Full yield chasing portfolios I think many can agree are irrelevant for young investors, yet we see many are seduced by the surface-level arguments for them. From a business perspective, dividends are the last option for using FCF. Investing in the core business, in moonshots, in stock buybacks all come before deciding to pay a dividend.

BTCTickerlicker

Their plan has them hitting positive FCF with current cash on hand and burn. Delays could be dilutive but so far they are on track.

dieharddubsfan

I don't know man, looking at [Nike's financials table](https://www.stock-table.com/ticker/NKE/fundamentals?public_uuid=8ad80ca9-c8f6-4845-9c85-3a9a090ede5d&timeframe=annual) for the past few years, it really seems to be on a downward spiral with no obvious signs of reversal. Revenue, EPS, ROIC, FCF all trending downwards. Yes, its P/E seems cheap at 18 now, but it's cheap for a reason. The only thing attractive about NKE right now is its 4% dividend yield.

Midget_Molester10

projected FCF between 50-70% of their current market cap by 2030.

Which_Cost8015

u/TreGet234 PANW’s drop is more about the softer-than-expected FCF margin outlook and stretched valuation, while the constant acquisition spree is adding integration and execution concerns.

liftingshitposts

You can easily look up how much ZM invested in anthropic, and then use math + their disclosed gains on strategic investments to size. ZM actually doesn’t have a bad underlying business either. Good enterprise growth, excellent FCF margin, strong balance sheet

Outrageous_Length975

When he took over, they were already the largest market cap company in the world and were making more FCF than they could conceivably ever put back into the business. What new product lines did he put out there, AirPods and Apple Vision Pro in 15 years? In the 15 year tenure under Jobs, they did iMac G4, iTunes Music Store, iPod, iPhone, iPad, and the App Store. You or I could very easily replicate Tim's performance. We would not be able to replicate Steve's performance.

Outrageous_Length975

I think you or I could be in that chair and perform the same. We'd tell some of the division heads, "Hey, which of these expensive parts that we source out could we conceivably vertically integrate and do ourselves?" And then sink a few of the endless billions of dollars of FCF into executing that.

Sure_Let6170

Red after red, decline after decline, and people here still shill for mag7 CEOs pretending those crappy stocks were not floated only with buybacks. Considering zero dividends it only fits. Now that they sacrificed their entire FCF to gods of overpriced korean RAM, they're slipping to Paypal levels. And honestly, well deserved. Tech giants my ass. I hope Walmart and Nvidia buys them off once they get low enough.

Comprehensive_Tea388

The stock comp gap is the real story here. 25.6% of revenue at CrowdStrike vs 3.9% at Fortinet means Fortinet's FCF is structurally more credible. 47x isn't cheap, but you're paying for a business that actually converts revenue to cash rather than one that dilutes shareholders to show growth.

HiddenCompounding

You forgot to mention some small details: the stunning growth rates (**+32% revenue, +25% net income**), the outstanding profitability (**\~41% net margin**) and cash generation (**\~19% FCF margin**). And maybe the low valuation (**\~7.8x forward P/E / \~13% earnings yield**), because yeah, it’s Kazakhstan. But also Kazakhstan: Contrary to many Western countries, it has favorable demographics (**\~29% of the population aged 0–14; population growing \~1.2% p.a.**) and, due to its vast resources, is energy-independent (**\~221% energy self-sufficiency**). Two claims many countries wish to have, but don’t.

Parking-Banana-212

yes, i think you're right, but im just betting it would hit companies with FCF, profitable companies, less so then growth names, thats all

MarthaJulietta

Even in the very unlikely world where margins continually compress and increased revenue can’t make up for it and net income and FCF fall 5% YoY, the buybacks, even reducing alongside FCF will buoy the stock price. Worst case in 5 years they’ve bought back 50% of the company and it’s worth 25B doing 4B a year it likely trades higher than it does today. The downside is extremely limited even in bad scenarios. In my eyes the asymmetry is obvious and sizeable. I can eat the argument that there is much more upside potential elsewhere in the market. I can’t eat that the downside is comparable

Virtual_Secretary_98

Bro they have negative FCF they won't pump for a while just accept it

hirschimwald

If we have a 3 year capex cycle, then the relevant number is 3 year forward P/FCF. That is 31.52x. They are not going to go bankrupt, they're not cheap either.