FCF

parsley_lover

Which one do you think scares the market the most? 1- Big tech spends all these AI CapEx and then a recession hits when the return on the investment is supposed to happen.  2- CapExs short term restriction on FCF slows down buyback, dividend, ... 

SamLeCoyote_Fix_1

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bryanocarro

I wrote a longer post about this on my substack but opportunities are getting thrown up for sure. PINS looks interesting to me, down 50% in six months but high cash, low debt, profitable, tax cushion for FCF going forward and now deploying AI and efficiencies. Trading at c.11x EV/FCF which is compelling.

Final-Cancel-3607

Looks cheap on a 5-year DCF basis: Assumptions # Current Cash Flow FCF/Share (TTM)$3.61 FCF Yield (TTM)2.58% SBC Impact-50.16% FCF/Share (TTM) $3.61 FCF/Share Growth Rate % 20 FCF Yield (TTM) % 2.58 FCF Yield (expected) % 2 Desired Return % 15 # 5-Year Projection # Calculation Results Annual Return from today's price 26.27% Entry Price for 15% Return $223.30 (And I expect they'll grow FCF faster than 20%.)

_hiddenscout

Capex spending is kind of the lag in stock performance. Amazon is known for being a company that likes to re-invest back into the company for growth. The CAPEX for the company this year means the company is probaly looking at negative FCF growth, which is going to turn off investors.

whoji

We use a 5-year Discounted Cash Flow (DCF) model to estimate the intrinsic value of Reddit, focusing on its ability to generate cash now that it is profitable. Baseline Metric (2025 Actuals): Free Cash Flow (FCF): $684 Million Total Cash on Hand: ~$2.48 Billion Shares Outstanding: 206.1 Million (Diluted) Assumptions: Growth Phase (Years 1-5): We project FCF to grow at 35% CAGR. This is conservative compared to its current 69% revenue growth and 200%+ net income expansion, reflecting natural deceleration as the ad business matures. Discount Rate (WACC): 10.5% (Reflecting a volatile tech stock environment but adjusted for its debt-free balance sheet). Terminal Growth Rate: 3.5% (Slightly above global GDP due to digital ad secular trends). DCF Calculation Output: Year Projected FCF ($M) Present Value ($M) 2026 (Y1) $923 $835 2027 (Y2) $1,246 $1,020 2028 (Y3) $1,683 $1,247 2029 (Y4) $2,271 $1,523 2030 (Y5) $3,066 $1,861 Terminal Value $45,290 $27,485 Sum of PV of Cash Flows: ~$6.49 Billion PV of Terminal Value: ~$27.49 Billion Net Cash Adjustment: +$2.48 Billion Total Equity Value: ~$36.46 Billion Implied Share Price: ~$176.90

osantacruz

It's still expensive... Even if you look at FCF, so excluding all SBC, they are trading at 40 per FCF per share, higher than MSFT's 38, and mich higher than Adobe and Autodesk which make much more money: https://sg.finance.yahoo.com/compare/FIG?comps=ADBE,MSFT,ADSK Figma's TTM FCF margin is 25%, Adobe's is 41%, Autodesk's 30%, and Microsoft's 25%. ... and if you take SBC back into account, it's even worst. They still have about a billion in vesting RSUs. As someone else said, I wouldn't be surprised if it goes down to single digits.

Lazy_Whereas4510

Finance bros don’t have a clue about what a “once in human history” technology paradigm shift like AI means. They have limited tools to understand the world, like FCF and EPS, and they use those. Big Tech gets AI and doesn’t really care about FCF and margins, as long as they are turning their big ships in the right direction. Hence the disconnect.

_SirShackleton_

True, small marketcap and small tradingvolume. But with a short float ratio over 10 percent, this thing can speed up rather quickly. Downside should be covered by the strong FCF-Yield.

slicknick775

91% gross margins sound great, but you should know that's not how come up with FCF. You're missing a lot of costs that need to get subtracted in order for DCF intrinsic value to be accurate. A DCF isn’t based on revenue, gross margin, or p/s multiples, it’s based on future free cash flow. Gross margins ignore real costs. With a 7.1% discount rate, $38 fair value simply means the operating business is worth around $26/share under conservative assumptions. If you think the stock is worth $150+, then you think Reddit eventually generates margins similar to Meta and sustained excess returns. That's not a baseline assumption given RDDTs performance vs direct competition like Zillow and Pinterest. Tbf the market often ignores real raw data and stock prices go up based on sentiment and momentum. I can see that happening like it did in its initial IPO stage, but the numbers don't support it.

_hiddenscout

Some investors due care though. For example, Apple pays a 0.37% dividend, so it's basically pennies. However, companies like Berkshire own so much that they still make a ton of money from it. Like this is from a few years ago: [https://finance.yahoo.com/news/heres-much-warren-buffetts-berkshire-135404208.html](https://finance.yahoo.com/news/heres-much-warren-buffetts-berkshire-135404208.html) >Berkshire Hathaway will receive about $789.4 million in dividends annually from its investment in Apple, which does not include reinvesting those dividends. If those dividends were reinvested, the annual dividend income would grow along with its total share count in its portfolio. It's part of the reason why some of the MAG7 do offer a tiny dividend, it opens the stock up for more portfolio managers. Like even MSFT generated like \~75B in FCF last year, but still paid out like 22B in dividends, so like 1/3 of all their FCF going to a dividend payment compared. Based on what Amazon is going to spend this year, they are looking to be negative in FCF for the year.

Newflyer3

It's undervalued because it lost 45% in 3 weeks going into earnings and the company is still beating targets and guiding upwards. No AI Capex spend, 90% gross margins, and FCF for days with buybacks announced. It's less expensive today at it's current metrics compared to the tariff panic dip, or the initial spike after IPO is late 2024. Bears are out there wanting another 50% off and by that point, they'll still be shorting it lol

Newflyer3

I understand those stocks going down because of AI Capex, but when RDDT comes out saying they only spend $3.2M (which Mag 7 probably wipes their ass with that amount), it's shocking to see FCF, share buybacks and 90% gross margin get punished. If it down to $145 today, what would the price action been if it went into earnings at $260...

Loose-Dream7901

The best Canadian company theoretically is high tide and they have terrible margins FCF comparatively to the us Msos? The landscape of the us vs Canada is completely different with the provincial distributor model.

Otherwise_Wave9374

Interesting take. The "valuation reset without fundamental damage" point is basically what a lot of SaaS names went through when multiples compressed. If youre modeling it long term, I like looking at rule-of-40-ish signals (growth + FCF margin) more than headline P/E, especially for software businesses where operating leverage can kick in hard. Not sure if its your thing, but we have some lightweight notes on how SaaS fundamentals tie into go-to-market and retention here: https://blog.promarkia.com/

_hiddenscout

I think it just depends. Like investing is really all about FCF. Like with the amount of CAPEX Amazon is spending, they are going to be negative in terms of FCF this year. [https://www.morningstar.com/news/marketwatch/2026020636/amazons-stock-drops-as-investors-question-whether-200-billion-can-buy-an-ai-edge](https://www.morningstar.com/news/marketwatch/2026020636/amazons-stock-drops-as-investors-question-whether-200-billion-can-buy-an-ai-edge) >Evercore ISI's Mark Mahaney was more bullish on Amazon's prospects but noted that investors seem worried about the financial implications of the required investment, as enormous amounts of capex will turn into depreciation expenses in the coming years. >Amazon's free cash flow could turn negative this year, he wrote, and the stock is "likely range-bound" until investors feel more confident that the company can get on a better free-cash-flow path for 2027, or that revenue trends will improve enough this year to justify the massive capital expenditures. That's one reason I've called out here many times why I never liked Amazon as an investment. The only thing I would want to own is AWS, but Amazon is one of those companies that will continue to just re-invest back into the company to grow. Not saying that's a bad thing, but not something that I like an investment.

_hiddenscout

Because some of these companies produce an insane amount of FCF and if the flipside is that if the company is wrong about AI not becoming a thing, then the shareholders will be equally as mad and you'll still probably lose your job.

Gandalftron

Fear and irrational behavior when both companies are printing cash.  Take advantage and accumulate.  MSFT it a beast and will continue to put up massive FCF. 

Iron-Peregrine

Just because you make more doesn’t mean you should spend more. In this case, you end up with less(see FCF).

HolisticWill

Guess you missed PLTR’s earnings report. To think PLTR is going back to $7 is to believe that a GAAP-profitable, S&P 500 company growing revenue at 70% with a 56% FCF margin is somehow worth less than its own cash pile and office furniture. The problem is you think still think this is a 'memestock' - well, sorry, that era is over; this is a fundamental execution play now. Ignorance is bliss though!

Negative_Win_5117

My lesson to learn (again) from this: FCF > PE

IslandExact429

Tesla still owns bitcoin and their stock hasn’t budged with the trend Except Tesla is broke on paper, worth $1T on market cap, and $1B of bitcoin to them is like 10% of their FCF Bum ass stock. No pain in the market till Tesla hits $100

BreadCoLLC

its not about beating estimates, its about the capex and CF needed to support such capex. if CF from Ops cant do it, then they need to finance it. And banks arent feeling super keen about their trillions in exposure that just keeps growing where ROI isnt materializing quickly enough. Meta did well because FCF was up. MSFT got punished b/c too much capex (same with GOOG really). So the question is, will AMZN project heavy capex that outpaces the Wall Street models?

MitchCurry

Just finished some DD on VEEV and EZPW (shoutout u/jigglyjohnson13 for mentioning the latter in yesterday's daily thread). I think VEEV is slight undervalued here. They're priced like a high single digit/low double-digit growth company for the next decade but they're growing at 16% y/y through Q3 and I really don't see the life sciences industry bringing what VEEV offers in-house via AI builds. The catastrophic results from a shitty in-house AI solution are too great. Plus VEEV has already introduced AI agents into their offerings to clients and they've already begun moving away from seat-based pricing to a usage-based pricing model for high-value tasks like MLR review and clinical data cleaning. I also like that insiders still own >10% of shares outstanding. I'm likely to open a position although not fully committed yet as I want to read up a bit more. EZPW is *very* interesting. On a rDCF, they're priced at negative growth when assuming 10% FCF margins. In FY24, they had 8.7% FCF margin and TTM they're at 9.1%. Even if you drop the FCF margin assumption to 5%, they're currently priced at 8% growth, a number they've comfortably exceeded the past 4 years while expanding operating income from 4% in 2021 to 12% in 2024. Insider ownership is high (15% in 2024, up from 8% in 2016). One yellow flag is the Executive Chairman, who bought the company in 1989 and took it public in 1991, is the sole voting shareholder. Class A shares are non-voting and Cohen owns all 2,970,171 Class B voting shares. Insiders do own over 6MM Class A shares though (nearly half of which Cohen also owns) so at least they have skin in the game. Their growth in LatAm will be a big driver in the coming years as US location growth has basically stalled with 520 locations in 206 to 545 in 2024. LatAm has gone from 266 to 815 in the same timeframe. So can they keep growing store counts profitably? I'm almost certainly going to open a position, just not sure what sizing.

MitchCurry

[Here's ](https://www.reddit.com/r/stocks/comments/1qoa9tx/comment/o20w2wz/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button)what I wrote last week: Bobs Discount Furniture, Inc. (BOBS) is looking to IPO at a range of $17 to $19/sh. At the midpoint, that'd raise $350MM at a valuation of $2.35B. In FY24, they reported revenue of $2.03B, basically flat from 2023 and down \~4% from 2022. GP% was 47% in FY24 while OI% was \~6%. Net income was $87.9MM (4% NI margin). Net income did rise while revenue stagnated. They're also FCF positive. YTD Q3'25 looks much better than YTD Q3'24 so they may have re-accelerated topline growth. Balance sheet is meh. They took out $350MM in debt late last year in order to pay Bain Capital, owner of the company who bought it in 2014, a dividend that exceeded $400MM. Part of the IPO funds are allocated towards paying back that debt. Company plans to expand from 200 locations to 500+ by 2035. Anecdata from the pre-Bain days: As a native northeasterner, reports of poor customer service and bad deliveries were accurate. I'm bought some furniture from them one time a couple decades ago and never did again. No interest in this company.

natures3

Lmao they literally spend all their profit/FCF on Stock Based Compensation.

CanaryUmbrella

Negative FCF

UsefulStooge

It depends. CapEx was already high and is nearly *doubling* this year to support AI investments, which really eats in to what could have been other investments, acquisitions, or shareholder returns.  So the two questions are 1) how much of a moat will this massive CapEx buy them? Can they turn the capital investment into high ROI products and services? 2) what is the trendline for CapEx over the next several years? Will it double again for ‘27? Stay flat? Go down? When the CapEx numbers are this massive, how you answer those two questions will really define future FCF-based valuation.  Macro of course has an impact too. This is a huge AI investment so overall sentiment on AI will impact things in the short term, but I think are less impactful if you’re a long term investor.  Personally, I’m still long GOOGL. They are firing on all cylinders and I think will comfortably outperform peers. 

jrex035

I think its the pace and scale that's the concern, they're eating up their FCF and dialing down stock buybacks to dump into AI despite minimal evidence that it's profitable or will be anytime soon

_hiddenscout

$ITT reports robust 2025 results with Q4 revenue up 13% ($1.05B) and full-year revenue up 8.5% ($3.94B), raises dividend 10%. - Q4 adj. EPS $1.85; FY adj. EPS $6.72 - Record backlog $1.9B; Acquiring SPX FLOW to boost Industrial Process - Strong cash flow: FY FCF $555.4M (14.1% margin) - 2026 Q1 guidance: ~11% rev growth, adj. EPS $1.68-$1.72

pink_ego_box

It's the worst blue chip miner by far and its FCF is up 180% and dividend 140%. $NEM and silver miners results will be out of this world

Silver-Direction-938

Dead cat with $5,5bn FCF, has reduced float 20% in the past 5 years, trades at P/E 8 and has operational access to 200 countries, no net debt, relatively manageable operational expenses, legacy branding that will milk the global millennial generation in brand recognition for the next 30-40 years as we become the next boomers, etc, etc.. HP CEO appointed as PayPal CEO gotta be an inside joke too lol.. A cigarette butt company CEO does not a zoomer company make as they say.. They have accepted their fate it seems like. But since everyone is selling, I gotta be buying, just the way it goes I guess.

foo-bar-nlogn-100

Their FCF was down 48% YoY in thr earnings rwport.

Mutthupattaru

73 billion is FCF which is after capex. You can’t assume FCF to fuel capex. Maybe look at the OCF for that.

GamblingMan420

EPS just ain’t what it used to be. Now, a lot of good investments are not currently profitable but show a path to profitability. FWD-PE is a much better indicator than PE for value/growth, but it still only looks ahead 1 year. You now have to evaluate a companies core method of generating FCF, their debt obligations, run rate, cash runway, etc. Palantir was not profitable when they IPOd, neither was $AVAV and hundreds of other companies that turned out to be good investments. Is Figma a good long term investment? I don’t think so, but their EPS doesn’t factor into that belief for me at all.

dbasea

Even with a beat and strong FCF, the drop could reflect multiple compression, conservative guidance, and macro/sector rotation, so focus on margin trajectory, cash flow quality, and what management guides for the next quarters.

vinmen2

FCF is down significantly and the market is questioning if this will impact profits in the coming quarters.

skilliard7

Yeah, I said here that the market is pricing in 5-8% annual FCF decline. Whether or not that will happen will only become clear with time.

LengthAltruistic3791

Garbage stock your SBC actually makes snap negative FCF

Jeff__Skilling

I wonder why all the other CEO's in the tech industry don't just max out FCF like this Lores guy? Are they stupid?

Canna-dian

>Short-term liquidity is tight relative to total current liabilities, but manageable with operational cash flow and/or short-term financing 0 Chance of that. They generate roughly $5M in FCF annually, and have $28M in income taxes alone, which is 5 years worth of FCF. And that still leaves another ~30M in liabilities for the year

MitchCurry

>LANO, Texas--(BUSINESS WIRE)-- Tyler Technologies, Inc. (NYSE: TYL) announced today that its board of directors approved a share repurchase plan with authorization to purchase up to $1 billion of its Class A Common Stock, effective immediately (the “Repurchase Plan”). The Repurchase Plan underscores Tyler’s confidence in its business, strategic objectives, and long-term opportunities. It also reflects the view that Tyler shares are undervalued. Tyler’s consistently durable generation of free cash flow has allowed it to opportunistically return capital to shareholders, especially in periods of undervaluation, while also investing for sustained growth. At current price, that equals \~7% of shares outstanding. They aren't very dilutive either (1.7%, 1.2%, and 1.4% the past 3 years) so, if fully executed, this would reduce s/o by a significant amount. FCF was $573MM in 2024 and is \~$350MM through Q3 2025.

iwasshotbyatigeronce

Boomer stocks ripping. Weirdo AI techtard CEOs are not cool, and people are figuring it out. FCF is a thing, and you can't just talk about spending it forever.

SamLeCoyote_Fix_1

It seems to me that being cautious is professional, but the forensic depth here is undeniable. For less than the cost of a coffee, it runs a delta analysis on transcripts to detect subtle semantic shifts in management's narrative. Having real-time Bloomberg or Fitch credit parity and $SBC/FCF ratios on the go is a level of institutional intelligence I didn't think possible at this price point. It is basically a high-end terminal audit condensed into a mobile workflow that is hard to find anywhere else outside of a professional desk setup. Of course, we could always leave them a comment about what we would like to see added or refined.

GoZukkYourself

By this logic, no company has FCF. Tell us what they should do with their money?

pink_ego_box

META, a company that used to make 50 billion in free cash flow, will make *ZERO FCF* this year because the AI cookie monster will eat it all up. Half of MSFT's booked future Azure usage (that they have to invest and build as data centers) is from a single company that doesn't have the money to pay them in the future, OpenAI for *300 BILLIONS* in RPOs. Nvidia's largest direct cost (*HALF OF IT*) when building Blackwell cards is fast memory whose price recently tripled, which either means less margins or rising prices to their customers, who despite being the richest companies in the world are already becoming cash strapped, starting with ORCL and now META. Data centers for AI use so much electricity that they are using *PLANE TURBINES* to complement the grid energy that is subsidized by the common man paying higher bills. They pinky promise to build Nuclear plants that will be ready *30 YEARS* from now, meanwhile the Kazakh Uranium mines, the largest in the world, are reportedly almost depleted and Cameco is already selling U308 30% over spot to panicked nuclear plant customers. And y'all keep piling into this circlejerk of bullshit that is about to unleash yet another financial crisis? You deserve to lose your money.

SoullessGinger666

This is some of the most regarded "investing" logic I've ever seen. Buddy is actively wanting to lose money because making money "hurts the math" Christ some people really can't be saved, you're going to be red on this one forever. P.S: It's trading at 7x FCF because everyone else sees worsening as revenue and profits decline.

pink_ego_box

META, a company that used to make 50 billion in free cash flow, will make ZERO FCF this year because the AI cookie monster will eat it all up. Half of MSFT's future Azure usage (that they have to invest and build as data centers) is from a single company that doesn't have the money to pay them, OpenAI for 300 Billions And Nvidia's largest direct cost when building Blackwell cards is fast memory whose price recently tripled, which either means less margins or rising prices to their customers, the richest companies in the world who already are cash stripped. And y'all keep piling into this circlejerk of bullshit that is about to unleash yet another financial crisis? You deserve to lose your money.

ExplanationNormal339

The SBC/FCF ratio focus sounds solid in theory, but forensic audits from a Poe app feel like betting on a medical degree from YouTube. Before anyone drops real money, I'd want to see actual track record vs. actual earnings misses on major caps.

txxicer

Whats about that?: The vaule Trap. You think about that the FCF stays the Same or grows. But what happens If it shrinks? Assumptions: - FCF bleeds ~10% a year - Competition keeps eating lunch (Apple Pay, Stripe, BNPL, pick your poison) - Buybacks continue, but get smaller every year - Market slaps the stock with an even lower multiple because vibes = bad What actually happens: - Yes, shares go down - But earnings go down faster - EPS doesn’t moon, it flatlines and then faceplants Stock stays “cheap” because the business is getting worse Fast forward ~3 years: - FCF down ~25–30% - Buybacks weak AF - EPS still down ~10–15% - Multiple compression finishes the job Important math lesson: Buybacks only work if the denominator shrinks faster than the numerator. If cash flow is dying: - Buybacks = financial lipstick 💄 - FCF yield is a trap - You’re not buying value, you’re buying cope Congrats, you’re now holding a certified value trap: - Stock looks cheap - Reddit says “undervalued” - Your portfolio says “pain” Buybacks don’t create value. They just hide the bleeding… until they don’t.

Blue_Horseshoe-143

PYPLo is now a perfect take-over target. Im buying it for the M&A arb trade. 8.5x PE is cheap for $6B of FCF per year.

cbusoh66

PE, PEG, PS, P/FCF, you name it, more expensive.

ToughAsPillows

They have 6 billion in FCF guided for 2026 which is just enough for buybacks. Market doesn’t like that it’s not being invested in more growth tbf but they are hardly going to burn through their cash pile lol

skilliard7

Paypal's results were only a mild disappoint, EPS were slightly below estimates, 2026 guidance was a bit worse than expected. Adjusting growth projections from market expectations to new guidance, I would've expected a 4-5% selloff at most. However, the actual 20% selloff is quite extreme relative to the change in fundamentals. It suggests that at the current $42 price, if we assume 0% growth, the market is using a 17% discount rate/expected return being used. If we use a more modest 11.8% discount rate(even though most of the market is using a 6% discount rate), a $42 price is pricing in 2% annual FCF decline in perpetuity, assuming Paypal slowly dies off and fails to offset revenue declines with reductions in expenses.

Legitimate-File-248

You’re allowed to do whatever you want and enter in whenever you want with prices comfortable to you. But your numbers are wrong. Their PE for the last 20 years is ~29 and P/FCF is ~28. So as of now it’s well under the 20 year average

IgorKis

Vibes > 6B FCF

analbuttlick

Probably not, but average PE for MSFT the last 20 years is 21. Their average P/FCF is 19. It’s too expensive for me right now. It’s getting close, but I’m not chasing any gains and im in no rush to get a good opportunity

halozor4444

A few numbers (yahoo finance) to point out: \-Cost of revenue seems to be increasing faster than actual revenue. \-They are doing share buybacks, but debt is increasing. \-Operating Income and FCF is about the same as it was in 2021 While i agree that they have a good moat, it seems like an inefficient company that is getting worse. I don't see anything in your thesis to show that this will change. The way i see it, any price increase above 300-350$ in the past 5 years has been market hype and hopium. That said, it's currently at \~280, so there is a little upside

CableIllustrious1609

Absolute madman but I actually respect this play. Been watching UNH get absolutely bodied since that earnings disaster and yeah the sentiment is proper toxic right now but thats usually when the real money gets made Your DCF work looks solid and that 10.6% FCF yield is genuinely mental for a company of this scale. The vertical integration moat is something most people here dont even understand - they just see "evil health insurance company" and switch off their brains. But owning the entire stack from payer to provider to pharmacy to data is basically printing money once you get the margins sorted That 88.9% cost ratio is definitely scary though. If thats the new normal rather than cyclical peak then your whole thesis falls apart. But honestly given their history and the fact theyve navigated worse regulatory environments before I reckon youre probably right about mean reversion The Change Healthcare cyberattack aftermath is still working through the system too so some of this cost pressure might genuinely be temporary. Plus the 0.09% Medicare rate increase is so absurdly low it almost feels political rather than actuarial - wouldnt be shocked if that gets revised upward in April Anyway good luck mate. Boring value plays like this are how actual wealth gets built even if they dont generate the same dopamine hits as 0DTE SPY calls. Will be watching to see how this ages

decomposition_

Take a look at their FCF, EPS and revenue growth over the last ten years and get back to us

MitchCurry

Reddit is trading at 16x EV/S, 19x GP, 63x FCF. For me, I wouldn't call that reasonable.

Weak-Pomegranate-435

I was waiting to buy it at $40 and sofi at $20. Bcz technicals were showing they will reach there. But after the train wreck of a earnings report, its going to lower $30s or even lower, (unless they start paying dividends with their FCF instead of buying-back stock).. but sofi is still ok to nibble at $20 and we will probably see $16 for sofi

Educational_Ad_6303

Because a software company with huge cash piles and FCF cannot buy out AI startups and use it to their advantage of course! Now I get it

SuperLeverage

That FCF is the trap. It’s a declining business.

Fractious_Cactus

The FCF is well north of 10%.. I believe it's a dying business but completely gone in 10-15 years? Probably not. But the cashflow is so massive at this point relative to market cap, they can completely cannibalize their stock within 8 years if they can just keep the cashflow over 5-6B. I think the company will die eventually but holy the valuation is getting wild. They have 14B in cash (vs 11B in debt).. they could deploy half of that and instantly erase 10-15% of their market cap right now. This will be like an Altria stock.. slowly dying but still pushing out massive cashflows for years.

DegenWhale_

||||| |:-|:-|:-|:-| |Metric|Value|Calculation|Source| |**Enterprise Value**|**$16.49 B**|Mkt Cap + Net Debt|| |**EBITDAX (TTM)**|**$3.94 B**|\[Q1-Q3 Actuals + Q4 Est\]|| |**Net Debt/EBITDAX**|**0.9 x**|Net Debt / EBITDAX|| |**EV/EBITDAX**|**4.2 x**|EV / EBITDAX|Attractive Valuation| |**EV/Adj. FCF**|**8.5 x**|EV / Adj Op FCF|\~11.8% FCF Yield| |**EV/Flowing Barrel**|**$43,156**|EV / Daily Prod|Calculated|

Ok_Cry7572

Snap is an ~$11.5B company with ~1B Monthly active users and ~$132M Q3 adj. EBITDA, but: Stock-based comp was $2.5B TTM (now ~$1.06B/year). The company takes on debt to buy back shares offsetting executive dilution. CEO SBC alone runs ~$1B+ annually, masking true FCF. Snap pays 6.875% interest just to prevent exec pay from crushing the stock If execs weren’t extracting billions, Snap screens as a $20B+ company (~21x FCF) with major monetization upside

Ok_Cry7572

Snap is an ~$11.5B company with ~1B MAU and ~$132M Q3 adj. EBITDA, but: Stock-based comp was $2.5B TTM (now ~$1.06B/year). The company takes on debt to buy back shares offsetting executive dilution. CEO SBC alone runs ~$1B+ annually, masking true FCF. Snap pays 6.875% interest just to prevent exec pay from crushing the stock If execs weren’t extracting billions, Snap screens as a $20B+ company (~21x FCF) with major monetization upside

PutSpreadDaddi69

Some of yall never watched a tech company fall to 5x FCF like BMBL and it shows

StockAstro

Their current cash position would secure the buybacks that are already approved. Their FCF is really impressive. I don’t see any scenario where earnings get so bad they backtrack on already approved buybacks.

Ok_Perspective5407

Besides profits and growth what is your philosophy on finding a stock that’s is on sale? Or primed for a reversal after a long downturn? MOAT? FCF? EBITA? Sector tailwinds? Global or regional. Partnerships? Products? Customer base or reach globally?

Glittering_Water3645

I believe the FCF yield sits closer to 6% after including the SBC. In any case the fundamentals looks solid in their numbers relative to the valuation.

ExplanationNormal339

Look, low-float momentum plays can absolutely rip, but I need to see the actual fundamentals here. What's the earnings trajectory on these names? Because if we're chasing volume spikes on companies with negative FCF or contracting margins, we're just playing musical chairs with retail money. Been burned too many times on OBI alerts where the initial pop masks deteriorating business quality.

Artistic_Item_5710

You can't look at everything. You have to distill your approach to the most important metrics, those that capture what you are looking for. For example, I focus on ROE/ROA/ROIC metrics to understand management efficacy, I look at Operating/EBITDA margin to understand the business earning potential, I look at debt ratios and FCF to assess business resilience, I look at P/E and EV/EBITDA to assess valuation. I look at historic revenues and profit growth/decline to get a sense of their growth profile. I also look at insider ownership to assess management/shareholder alignment. Finally and perhaps first and foremost, I spend sometime reading a description of what the business does and see if I can understand what they do and how they make money, if I can't get the business in 5 minutes, the rest doesn't matter. All in all, I can get 80% of what I need to learn about a business in 45 min or less.

DieOnYourFeat

It would very much depend on my financial position and investment goals. If I was looking to multiply it and willing to gamble CRDOF trades for about 1X FCF. Insane number. If I was looking for a mega cap 2 year hold probably GOOG.

labowner85

Based on the current data, Reddit is selling at 50 times forward earnings so the expectation is that company will grow at a rate that is extremely rare in the industry. But if I accept your thesis and even say that the data Reddit generates is extremely valuable for AI players and give it to generate $500M in FCF (you listed 183) and allow for a more aggressive 25% growth you and assign an aggressive earnings multiple of 35, the fair market cap would be 500 * 35 =17.5 B. Based on that market cap, you’ll get the fair price at around $92. So as you can see current price of $180 is still very overvalued. I do think that a price close to $120 will make it attractive if you argued that they can grow at around 50% yoy. PS- Value of a company is in the eyes of the beholder.

Correct_Estate4422

Trillion dollar companies with money printing models spending FCF on highly profitable cloud services expansion does not = 2008 or 1970.

No_Interview_6278

Because there are other lower quality SAAS companies trading at lower than 15 P/FCF (-SBC), why should the better ones trade at 100? Additionally now you can't spend all of your free cash flow on SBC like you used too.

outsideofaustin

I agree, that is impressive. And they finally started generating some FCF the past few years. They still have negative earnings. Until they start producing better margins and earnings, it will be hard to earn a better multiple. Im not arguing that it wont happen. But it hasnt happened yet.

avilacjf

The main thing that pushed me to trigger the ServiceNow buy was the announcement of the $2B accelerated buyback. Re Veeva, they're at the very bottom of their Forward Price/PE and Forward Price/FCF going back to 2016. They're meaningfully below Liberation Day lows, and they're coming off the back of an extended legal battle. I can't predict market sentiment but I can do my best to find value when I see it and these two are just screaming at me.

avilacjf

I like IQVIA too but right now on a revenue growth and FCF margin basis VEEV looks like a much stronger business. Their Forward P/FCF ratios are not to dissimilar but their growth and profitability are very different. My understanding is that the settlement lets VEEV use IQVIA's data and they get to own the software layer with software layer margins. VEEV is also at a historically low level across forward valuation metrics where IQVIA is closer to their historical mean, giving it a stronger mean reversion opportunity.

Dev_Whale69

Msft can solve that problem alone by funnelling cashflows / capex they’ll just take more equity … still rocking 5bn FCF per quarter even with heightened capex what will also surprise is how quickly OpenAI can monetise and the quantum of those cashflows.

Helmdacil

light years is a distance not a time. But you have to admit, HITI runs an efficient machine. With 25% margin they are generating FCF and expanding 10% a year. With such tight margins, you have to imagine that margins are more likely to increase rather than decrease. HITI runs the margins as they do because they are throttling their competition, starving the life out of them, one town and one block at a time. The HITI ceo has mentioned that in the small towns, once competition is defeated, margins increase somewhat. I think the point of the argument is this: As t approaches 20 years, will HITI be competing against US MSO's. Yes. It is inevitable. If you did purchase a stock based on a buy-it-and-hold-it-forever mentality, you would choose hiti. Now maybe you think that a 5 year timeframe is plenty. But, we return to FCF and operational risk. Which has more? You say Trulieve. I think HITI's 5-year potential is greater. But that is okay :)

_hiddenscout

Just different business types and also just business quality. CRM is still growing revenue double digits compared to CRM in the single digits. Now has better ROIC and more constant FCF growth. NOW also has less debt.

MitchCurry

Just added 6% more shares in Chewy. On a rDCF with as 8% FCF margin assumption, it's basically price at no expected revenue growth over the next decade. Topline growth is slowing, sure, but they have returned to growth in active customers after pulling *a lot* of business ahead during COVID. Net sales per active customer also continues to grow. Net income and FCF are solidly positive now. I remain bullish on their international expansion, which has begun with Canada. Less excited for their foray into physical vet clinics but they've started with just 8 of them. Very curious what the update will be on those two topics in the annual report. Either way, I think the topline will certainly grow in the coming years and I think bottomline will grow even faster despite capex to build out their initiatives. CC u/AJ_Grey since we were discussing Chewy a week or so ago.

Euphoric-Guess-1277

Nah the Mag7 has enough FCF to keep the bubble inflated with CAPEX spending almost indefinitely

According-Tip-457

Microsoft is NOT treated as a bond substitute... what are you talking about? Microsoft's 20Y annualized total return is 14.26% Why you bring up FCF yield is like comparing a growth stock with no dividend to a dividend stock like Verizon... what are you even doing? That's like saying Verizon has a higher yield than Nvidia, therefore you're getting paid more to hold Verizon? absolutely DUMB. I'm not even sure where you retail guys get this crap from.

Warm-Ad-1806

f you’re trying to decide *for the next year*, it really helps to put them side-by-side instead of debating narratives. MSFT right now looks like the cleaner **execution + growth** story (Azure, enterprise AI, OpenAI integration). AAPL is more of a **cash-flow machine** with slower growth, where upside depends on services expansion and how well they monetize on-device AI. What changed my view was actually comparing their **revenue growth, margins, FCF, and valuation multiples** in one place. When you see AAPL vs MSFT next to each other, it becomes obvious that you’re choosing between: * MSFT = higher growth, higher multiple * AAPL = slower growth, stronger buybacks, more defensive I used a simple AAPL vs MSFT comparison page that breaks all of that down visually (growth, profitability, balance sheet, etc.), and it made the tradeoff much clearer than reading takes in isolation: [https://whatifmoney.com/compare/aapl-vs-msft](https://whatifmoney.com/compare/aapl-vs-msft) For a 1-year horizon, I slightly favor MSFT if AI spending stays strong, but AAPL makes sense if you want something more resilient if the market chops around. What’s your main goal here — upside, safety, or just parking money?

be-ay-be-why

My model had MOD at a $22B-30B market cap company at the end of 2026. Now with this restructuring, their margins will explode, net earnings should meaningfully increase thus fueling an explosion in FCF. I have them now being anywhere between a $40B - 70B market cap company by the end of FY26 now. I'm bullish basically. I'm waiting for pre/post earnings volatility next week and I'm yoloing my entire net worth into it.

pink_ego_box

FCF -30% EPS -60% Seems like a sustainable business

microdosingrn

Yes, but the problem is they're spending all, more than all, of it on reinvestment. Peek at their FCF. So the question is; proper allocation of earnings, or are they torching it? TBD, big question if/when ai and cloud capex continues to payoff.

ConditionHorror9188

I think this is it. As long as the market considers AI a good bet, there’s absolute confidence that they can turn the tap off whenever they want to and build as much FCF as they want. The big prize for Meta (end to end ad campaigns where they pocket every penny) is clearly monetizable, and most importantly potentially achievable with current AI without relying on an AGI pipe dream. Microsoft has exactly the opposite problem- they’ve hitched their wagon to OAI and cloud services to others. Their destiny on all of it is pretty much out of their hands

Arrowhead_Pride15

SoftBank, large investors like MSFT and NVDA, Governments and sovereign wealth funds. If/when they IPO they will pocket a huge windfall. It will be a long time before OpenAI is profitable on FCF basis but they will be able to borrow and defer for a very long time yet to come

csky

I bought some but not too much. AI capex exists because these guys are willing to put the money on the table. Best case scenario they bankroll their investments, worst case scenario more FCF for dividends. MSFT doesn't need AI to sustain its 30% roe.

pink_ego_box

If you think ORCL cooks its book you're not ready for the reality of META creating Special Purpose Vehicle entities to move its dozens of billions in debt off the balance sheet. Good thing they print billions in cash! Oh wait this year their FCF will be ZERO [https://x.com/zerohedge/status/2016714862433329372?s=20](https://x.com/zerohedge/status/2016714862433329372?s=20)

MitchCurry

Really like what I'm seeing with NOW. RPO accelerated for the first time since 2023 and is outpacing revenue growth. GP% did shrink but OI% expanded. Customers with an ACV >$5MM accelerated in 2025, gross retention has been 98% for 8 straight years now. It's not cheap by any metric but it's also trading at the cheapest P/S and P/GP in a decade and cheapest P/FCF since they became consistently FCF positive. Same for P/E. Optimized for FCF margin (40%), they just need to grow on the topline by 9% annually over the next decade to justify today's price. I opened 3/5 of a full position this morning at $115.39/sh. I left some room to add and will likely do so if it keeps slipping. If it bounces, I'll watch over the next few quarters and decide if the headwinds are overblown and is worth making a full position.

_hiddenscout

They are an interesting company, but still feel abit more on the speculative side of things, since they don't generate FCF. So for me, nothing wrong if you want to speculate, but I try to avoid anything that isn't generating FCF or at least have negative FCF because they are investing heavy into CAPEX, with a path forward to generating FCF again. Nice part is, they do have a lot of capital and the burn rate is improving, but i still view this more as speculating than investing, since I have a terrible time trying to put value on a company that loses money. Doesn't mean you shouldn't buy it, if you like something, go for it. Just keep in mind, that if there is a market down turn, people will tend to sell this stuff first.

pink_ego_box

$META should be the one digging. They sure are digging their own grave in the mid term with so much CAPEX spending. Yeah, their gross earnings rose. Their spending rose even more. FCF this year will be ZERO. [https://x.com/zerohedge/status/2016633794011258980?s=20](https://x.com/zerohedge/status/2016633794011258980?s=20)

_hiddenscout

Just me personal opinion, but I think we land in a place where LLMs really aren't winners per say. I think how AI is going to win, is more about how companies apply AI to their own businesses to see productivity increases. I do think at one point, we will see the CAPEX get cut. which will probably hurt a ton of companies and really crush the more speculative stuff. The thing is, market will always have narratives. Same thing happened with Google and even Meta at one point. Each have their own unique stories and circumstances. I do go back to one my favorite Buffet quotes around buying companies, 'It's Better To Buy A Wonderful Company At Fair Price Than A Fair Company At A Wonderful Price'. To me, I like the price of MSFT at these levels and just opened a position. The tough part about investing is, you can still be wrong. I just think where MSFT is at at these levels, you are buying a megacap company still growing revenue double digits, high ROIC, really good gross margins, with the company generating like 72B of FCF the last 3 quarters.

pink_ego_box

That's becoming irrelevant when most companies with debt can pay it with the FCF of a single quarter 😂