FCF

charon-the-boatman

**Great questions! I agreek this is the right way to look at it and really understand MSFT valuation.** I think Microsoft can no longer be seen or valued as low-capex software compounder it was up to now, since they're guiding to roughly $190B of capex in calendar 2026, which is huge. So from a small investor perspective the main question is when and how does that capex turn into actual earnings power for them (and get my MSFT stock up)? **If Microsoft wants just a 10% annual return on $190B of capex, that’s about $19B of incremental annual after-tax cash flow.** Assuming a 30% FCF margin on incremental AI/cloud revenue, they need roughly **$60B+ of extra annual revenue to justify** it (or at a 15% return, closer to needing $90–100B+ of incremental annual revenue). In terms of fully paying back $190B over five years, that means around $38B of incremental FCF per year, or something like $125B+ of additional annual revenue at a 30% FCF margin. 100M Copilot seats at $30/month brings in "only" $36B annual revenue before costs, so to make this work Microsoft needs to sell the whole stack to compound: Azure AI growth, M365 Copilot penetration, GitHub Copilot, Security Copilot, agents, usage-based Copilot credits, Fabric/Foundry/data services, better GPU utilization, custom chips, and lower cost per token. And capex has to stop surprising higher. And I think this all is quite possible! Demand still looks very strong, and management seems very aware of the capex/FCF problem. If they can pull it off (and again I think they will), Microsoft could end up with a huge new stream of high-value AI revenue on top of their existing business. It is their "killer app."

kriptonicx

Bleh. I think I stand by what I said. It's only been two years and DBX is now trading at an even more attractive valuation of 8.5x cashflows. Earnings are not growing, but the valuation is continuing to improve. If it goes back to it's previously 13x FCF valuation then you'd be looking at a similar return to AAPL over that two year period. While AAPL in that two years has reaccelerated earnings and their valuation has expanded. Maybe AAPL can sustain that growth (I wouldn't bet against them), but it's a very full valuation imo. If DBX see growth reaccelerate it could easily 2-3x. If they can just hold earnings then you'll probably be looking at a decent 8-9% annual return. I suppose it also depends on what "underperform" means given the entire software sector has taken a beating over the last year... I was wrong, but not sure about "dead wrong". It's always easy to leave comments like this after the fact.

Pristine_Eye_8361

They’re cheaper than the majority of the mag7 by forward PE (and PE excluding the ridiculous investment “gains” from GOOGL/AMZN). This doesn’t even consider price to FCF yield, which it’s clearly the cheapest in that regard.

Jeff__Skilling

I mean...do they have the credit capacity? At a $54 / share take out price with 50% coming from diluting common equity, that leaves total debt burden from the deal on RKLB's balance sheet of around ~$3bn? Have trouble seeing a path to additional multi-billion dollar super levered M&A deals in the near term unless these guys are shitting out FCF hand-over-fist

Kablamo92

I'm a chartered accountant - that's not how it works. Capex hits the balance sheet and has no impact on the profit/loss statement. It's debit AUC credit cash / accruals. Depreciation does hit the P/L eventually, which is what I was referring to when I said "when the asset's in use" but by this point, the company is generating more revenues from the asset anyway. On your latter point re cashflows, this is not an issue for MU. They are already substantially cash generative and have very little debt so they aren't spending money beyond their means. Look at their FCF yield and how their net cash position has grown YoY.

DealerDefiant9392

The question is really what’s the most probable earnings result over the next few years. Could earnings drop 80%? Well yeah, but you could say that about any company as a theoretical worst case scenario. Charter is a cable company with a telecommunications arm. Cable has been dying, that’s true. The question is how many subscribers can they lose before it cuts into cash needed for buybacks? Can Spectrum mobile earnings continue to increase and how much do they offset that? The reality is that they would have to lose millions of subscribers a year before the buybacks are threatened, and that’s not including spectrum possibly offsetting this through growth or even the Cox merger expanding their footprint. Charter seems like one of the most hotly debated stocks right now. If management’s guidance is right and the Capex build drawdown happens on time, that frees up a lot of FCF to execute their strategy which would be very shareholder friendly.

MarbleMuffin

P/E vs Historical P/E PRICE VS FCF PEG DCF Whether forward indicators are still looking good after a massive drop. Analyze whether the moat still holds while outlook is depressed. Buy into fear and sell into greed https://edition.cnn.com/markets/fear-and-greed Easier said than done, but that's what I do Index funds are nice if you want passive returns but you are capping risk and reward Individual stocks obviously increase risk and will also in crease reward Just a matter of your risk tolerance, and also how much you are willing to research and spend on investing too

FutureMassive69

The mag7 are currently all ruining what made them special, going from low capex high cash flow money machines to extremely high capex no FCF with a highly uncertain return on that investment. Ai with be great for consumers but bad for the businesses. Competition is for losers

Inevitable-Poetry447

High FCF, pricing power relative to peers, real estate giant. They will pay steady divs and could have 30+% upside by EOY 2027

MaximumDiscipline843

your fundamentals aren't wrong, but i think you're answering "is the business great" when the market is actually pricing "can they execute and convert it to cash". those are different questions. the thing your PEG framing skips is free cash flow. Q1 2026 operating profit was up but operating FCF was actually negative (around -€285M) because of huge upfront payments, inventory buildup and working capital. so earnings are growing fast, cash isn't keeping up yet. that's a big reason the multiple looks "cheap" — the market is discounting execution risk, not doubting the growth. and execution risk is real and recent: the stock dropped \~18% in a single day last week on reports germany is scrapping the F126 frigate program rheinmetall was lead contractor on. it's already down \~30% from january highs on exactly this fear — that the spending headlines won't fully convert into signed, delivered, paid contracts. so the bear case isn't really "defense slows down", it's "the backlog is real but turning €73B of backlog into recognized revenue and actual cash is slower and messier than the EPS curve implies". worth noting the flip side though — an entity tied to the CEO bought \~€4M of stock at these levels in june, which is at least a signal insiders think it's oversold. you're not missing the growth. you might be underweighting how much the market cares about cash conversion and procurement execution vs reported EPS

Prudent-Corgi3793

At the end of 2020, BABA was trading for an unjustifiable P/E >50 and a P/S approaching 10. Now the P/E is less than 15 and the P/S is under 1.5, but the risk is its capex crushing its FCF, just as it is with the US hyperscalers.

AChocolateHouse

The thing is they Wendy's doesn't need to do well. They just need to do 'normal'. The bar is extremely low when the P/S of the stock is less than 1, and FCF yield is at like 17%. I agree on not trusting reddit. Do your own research always. I was in this stock way before the reddit craze. Even if wsb/reddit is wrong 90% of the time, 10% of the time they're going to stumble on a genuinely undervalued stock. I believe this is one of those moments.

thelegendJimmy27

Nobody outside of uneducated regards on reddit like yourself thinks MSFT will issue shares. Memory prices have already spiked, and they still have positive FCF. They can continue to spike and FCF would still be positive. Even if FCF goes negative for 2 to 3 quarters assuming an unrealistic worst case scenario for memory prices, MSFT can comfortably use its balance sheet and issue debt to cover it. Let’s see how many shares they issue over the next 2 years moron.

ThirdWaveCat

FCF is negative, debt is spiking, talent pipelines are turned off, and tech CEOs are the only people claiming this isn't bubble. If this bubble doesn't burst it will be because a meteorite ended us.

AChocolateHouse

> A 6.7x FCF multiple isn't automatically cheap if FCF keeps declining. > Won't decline. This is Wendy's we're talking about, not Lehman brothers. >International expansion only creates value if the new stores have attractive unit economics. Duh. They know that. >The buyout angle is speculation, not a catalyst until an actual offer exists. Peltz, a billionaire, filed legal paper work saying he was working on a buyout. I don't know what more you need. This is not speculation. >Most importantly, it never explains why Wendy's will start taking share again in one of the most competitive industries. A new CEO alone isn't an investment thesis. They never lost any share in the first place. They just got pressured like all fast food when people felt a bit of a pinch because of inflation.

TheGrimSpecter

Great DD overall, but I think there are a few assumptions that deserve a closer look: * A 6.7x FCF multiple isn't automatically cheap if FCF keeps declining. * International expansion only creates value if the new stores have attractive unit economics. * The buyout angle is speculation, not a catalyst until an actual offer exists. * Most importantly, it never explains why Wendy's will start taking share again in one of the most competitive industries. A new CEO alone isn't an investment thesis.

thelegendJimmy27

MSFT has $78B in cash, generated $125B+ in operating cash flow so far for FY26. Last quarter they generated positive $15.8B FCF (even after deducting capex). They can easily sustain this level of capex. Even if they couldn’t they would finance it with debt long before they offer a single share to raise cash. You are truly regarded.

tarcus

Has promise for a turnaround but FCF not great and 11% dilution from what I'm reading. I might pick up a contract worth though. I love a good shake lol

SpongEWorTHiebOb

Cloud growth and perception that they caught up in AI. However, it’s showing weakness and is 13% below its high. They have lost very talented AI personnel. FCF may go negative in coming quarters and they issued more shares and long term debt. Personally I think MSFT is the better option based on valuation, similar cloud strength and they are still far from going FCF negative.

Personal_Repair_3579

Better than I expected. Revenue actually grew this year - small, 2.6%, but it finally stopped shrinking. OCF tripled. Interest coverage went from 2.4x to 10.8x. The business is in noticeably better shape than when I ran the numbers before. The problem is the stock kind of knows that already. It ran so hard that the valuation is now doing some heavy lifting - EV/Revenue is sitting around 39x on pretty modest growth, and last quarter FCF was basically zero. So yeah, the turnaround is more real than I gave it credit for. I just wouldn't be chasing it at these prices personally.

mdh1119

Oh I'm not saying the valuation makes sense. I went long because I expect Google to do what it has always done, between the browser I'm writing this on, maps, search, gemini, waymo, youtube, future "moonshots" and its diversified holdings in all the major AI companies, which will ensure that even when the hardware bubble pops they will see the upside of the AI itself. But the market is going to do what it is. It seems many are skeptical of the FCF death among the Mag 7 and until they actually start seeing the glimmers of growth in returns on their CAPEX they'll probably continue having these bouts.

ThirdWaveCat

How far can FCF go negative before Bingo demands his money back

Lingweenie2

JACK is most likely cooked. WEN has genuine appeal, more iconic items, and more culturally in tune and beloved. JACK also has negative equity and a bunch of debt. FCF currently ain’t looking good to tackle that. WEN produces way more cash flow and revenue. JACK essentially has basically nothing going for it. In my opinion, easily one of, if not the shittiest fast food chain out there. I wouldn’t be surprised one bit it’s in a death spiral straight to bankruptcy. It’s the one of the two way more destined to die. Unless some larger company buys it out and guts/overhauls it.

allnamestaken4892

Demand will drop as the hyperscalers have literally run out of money, their FCF is negative.

jemicarus

The Dow is pretty much half big tech. The hyperscalers are burning FCF to buy GPUs that they don't have the electricity to run, and they're buying that too.

Extension-Temporary4

At this price point I actually find it interesting.  I actually like snap. It’s a worthwhile shot in the dark at this price point.  $1.1 billion in cash and $2.8 billion in cash and cash equivalents. $3.5 billion in total debt, comprised primarily of long-term convertible senior notes.  Total Assets: $7.5 billion. Revenue from Advertising: $1.24 billion (81% of total top-line revenue). But, advertising grew at a modest 3% year-over-year rate. Not great but growing.  Revenue from Subscriptions & Other Streams: $285 million (up 87% year-over-year). 25 million paying subscribers and has achieved an annualized revenue run rate (ARR) of over $1 billion.   Total Revenue: $1.53 billion, an overall increase of 12% year-over-year. Net Income: ($89) million Net Loss. Improvement from $140mm net loss last year.   Adjusted EBITDA: $233 million (up 115% year-over-year).  Operating Cash Flow: $327 million   Free Cash Flow (FCF): $286 million (up 150% year-over-year) Days Sales Outstanding - DSO: clients typically pay within 60 to 75 days. Large brand advertising agencies up to 90 days. Don’t love this but fine, at least they are paying.    Days Payable Outstanding - DPO: 45 to 60 days. Again, don’t love that they are paying faster than they are bringing it in but understandable.  Year-over-Year Growth Expectations:  10% to 15%  Global Daily Active Users (DAUs) reached 483 million (up 5% year-over-year), and Monthly Active Users (MAUs) stand at 956 million. Cost Structural Changes: Management initiated a lean restructuring plan designed to slash its annualized cost structure by over $500 million in the second half of the year. Plus, if not for Specs R&D they would be profitable - a very capital-intensive hardware play. Specs are a drag on R&D costs but represent their primary long-term hedge against mobile OS platform changes. If specs fail, and they scrap the program technically they could convert into a pretty lean business that quickly goes into the black.  Obviously there’s more to discuss but at a high level it’s not an awful business and it is trading at an attractive price point. They have valuable data (not just for advertisers but for training LLM’s), they have valuable IP and they have goodwill. As others have noted, Evan is the problem. He would never agree to sell but if he did, I could see someone buying for the arbitrage opportunity. I think it’s interesting. 

Extension-Temporary4

I actually like snap. It’s a worthwhile shot in the dark at this price point.  $1.1 billion in cash and $2.8 billion in cash and cash equivalents. $3.5 billion in total debt, comprised primarily of long-term convertible senior notes.  Total Assets: $7.5 billion. Revenue from Advertising: $1.24 billion (81% of total top-line revenue). But, advertising grew at a modest 3% year-over-year rate. Not great but growing.  Revenue from Subscriptions & Other Streams: $285 million (up 87% year-over-year). 25 million paying subscribers and has achieved an annualized revenue run rate (ARR) of over $1 billion.   Total Revenue: $1.53 billion, an overall increase of 12% year-over-year. Net Income: ($89) million Net Loss. Improvement from $140mm net loss last year.   Adjusted EBITDA: $233 million (up 115% year-over-year).  Operating Cash Flow: $327 million   Free Cash Flow (FCF): $286 million (up 150% year-over-year) Days Sales Outstanding - DSO: clients typically pay within 60 to 75 days. Large brand advertising agencies up to 90 days. Don’t love this but fine, at least they are paying.    Days Payable Outstanding - DPO: 45 to 60 days. Again, don’t love that they are paying faster than they are bringing it in but understandable.  Year-over-Year Growth Expectations:  10% to 15%  Global Daily Active Users (DAUs) reached 483 million (up 5% year-over-year), and Monthly Active Users (MAUs) stand at 956 million. Cost Structural Changes: Management initiated a lean restructuring plan designed to slash its annualized cost structure by over $500 million in the second half of the year. Plus, if not for Specs R&D they would be profitable - a very capital-intensive hardware play. Specs are a drag on R&D costs but represent their primary long-term hedge against mobile OS platform changes. If specs fail, and they scrap the program technically they could convert into a pretty lean business that quickly goes into the black.  Obviously there’s more to discuss but at a high level it’s not an awful business and it is trading at an attractive price point. 

theflash1234

\> What prevents semis from squeezing mag7 to improve their margins even higher though? They maybe/are already doing that. Mag7 is spending all their FCF and issuing bond debt to fund this. It's still early stages. They will eventually see some return and calibrate their spending to match the returns/margins. Until that happens I doubt any of them will mess up their balance sheet beyond repair to chase this dream. Right now they can afford to spend and so they are spending. Not spending is an existential crisis. Eventually with more data on ROI, spending irresponsibly will become the existential crisis. \> Seeing as CAPEX is absolutely non-negotiable (clearly) and no competition is willing to enter the market and cut semi's margins? Mostly because the arcane and super complicated technology of FUCKING RAM MANUFACTURING is clearly beyond grasp of anyone but micron&co? Maybe go watch a youtube video on semi production. It's anything but arcane. \> Somehow, they evaporated from the markets, because \[reasons\] Quantity of RAM needed by hyper scalers vs what retail customers were buying for personal use is a few magnitudes different. I am sure you were already aware of this. Secondly hyper scalers need HBM which consumes \~3x more manufacturing capacity to produce vs the standard DRAM.

Cav829

"What makes it even more interesting is that the underlying businesses have never been stronger." Sorta.... META is still pretty limited to being a giant ad machine. MSFT's non-Azure side of the business is not doing as hot as it once was. And as for Amazon, their FCF has gone to shit. I feel really good about them long-term, especially AMZN, but I'm not so sure this is a "generational buying opportunity."

theflash1234

\> with no end in sight The end is amount of cash hyper scalers can spend on the build out. Eg. If hyper scalers are combined spending 1T a year then that's \~ the revenue all the semis can expect. Once the ROI on AI is materialized (whatever # that maybe) the semis will be find their plateau. The hyper scalers will start focusing on their margins and FCF once again.

ptwonline

The backlog in orders is why they all greatly accelerated capex for buildout instead of just using a part of their FCF to do it more slowly and safely: the market is there already and you could potentially capture and retain significant marketshare if you can build capacity faster than competitors giving you both shorter-term and longer term revenue and earnings growth. It's a complete no-brainer...unless demand collapses because AI ends up a huge failure in terms of productivity vs cost, or a competitor comes around that is so vastly superior even your established customers want to jump ship.

rhetoricalcriticism

How many times must we learn to just buy the dip- and FCF is golden

Optimal_Image5192

I’ve been thinking a lot about this recently. I commented this exact concern on someone else’s post and everyone downvoted me :(. But I think frontier labs and other hyperscalers must be experiencing immense margin compression cause they are the customers for the entire chain. Again I can be wrong and a lot of things can change, but optics and narrative define price action imo. I think that if all these hardware bottlenecks keep up-charging the people that are building the models, that's great for all the $MUs and $NVDAs, but the people who design these AI models have to pay the price. Now if OpenAI, for example, goes and tries to sell these models to customers like you and me or more importantly enterprises, they have to convince them to buy their products and integrate them. The way to convince them is by claiming it will save them a LOT in operational costs. Now if the prices for their supply chain keep going up every quarter, at some point OpenAI will have to up charge their consumers. This will make adoption so much slower than it already is. If you're bearish your bet is that the adoption and the ROI for hyperscalers will be slower than the time these companies can remain solvent. If hyperscalers collapse, the whole supply chain and bottlenecks, all that is over. I think we probably end up in a situation where Nvidia and Micron take a stake in these hyperscalers/frontier labs from all the FCF they’re generating. Mutual benefit type of deal ? Idk, but this has been concerning me for past few days, and I think this is why market has been choppy even after the print yesterday and PCE coming in-line.

iLov3musk

These companies are spending their entire FCF on AI this is not close to metaverse and the fact you think it is shows your misinformed

_hiddenscout

It clears those two hurdles I talked about. They are like CSU spin off, but they acquired like niche vertical software in Europe. Think like a billing company for the Polish government. Clears the two hurdles I was talking about. Plus international exposure. Also solid FCF growth.

JabCrossE4E5Quark

What is their forward FCF to Market cap? We are in a bubble where company spend is being artifically reduced on balance sheets because of accounting of depreciation.

Fit-Marionberry5248

Its not a typical value trap Value trap is like real estate holdco with lower FCF due less rentals and ricing rates.  The consensus PT from H1 is ~8 from recent rerates and ppl say 7.5 is ”meme baghold”  Yeah, right 

MitchCurry

On a basic rDCF, assuming 7.5% FCF margins and -1% annual dilution, they are priced for -4.5% revenue annually over the next decade. I cut my losses a few months ago after holding for several years, simply because I'm trying to re-focus my portfolio since I have less time to follow individual companies and CHWY didn't make the high conviction cut... ...but these prices? Man, it's really tempting to get back in.

DoobsNDeeps

Wendy's has a chunky FCF yield, so if they can hold onto anything near their historical margin profile, while maintaining CPI levels of growth, then this doesn't look too shabby. The BS has a lot of debt, but it's all long dated at low rates, so not really rate sensitive. Question is can the CEO turn it around now, because if the revamp works then this must go up. I'll see ya behind the dumpster.

MitchCurry

Only if those earnings are repeatable over a sustained amount of time. I look more towards the FCF yield which is shockingly low. For a company with no economic moat, I'm very happy keeping my MU exposure strictly to my QQQ and VOO holdings.

piszczel

Consult the P/FCF and then realise that their capex will have to be deprecated over next few years. They're not a buy yet. Maybe at 300

drew-gen-x

$VTI +0.41% $VXUS +1.35% $EWY + 4.07% $EWJ + 1.45% Guess which index is underperforming b/c it has over 30% market cap concentration in the AI cap ex hyperspenders in it?? US stock indices outperforming the world no longer works if the Mag 7 are spending their entire FCF, plus adding debt, plus diluting their shares. In the past 15 years or so those stocks provided tailwinds for $VTI b/c of stock buybacks. Google, Microsoft, Amazon, Meta , etc are definetly NOT doing stock buybacks right now.

That-Requirement-233

* Very favorable exposure to OpenAI Opposite of favorable * Very strong Azure cloud growth Almost all of it OpenAI agreements * Enterprise software remains strong. Governments are actively moving away from microsoft products, if you know how much inertia government systems have, you know this is a huge deal * Despite the initial flop of Copilot, it's been improving a lot in recent months. Anecdotally, I know of a lot of people across a wide variety of professions that have started using it and are satisfied with the results. Sucking for years and then improving is worth hundreds of billions already spent to just put a wrapper on Claude/Chatgpt? * They are beginning to roll out custom AI chips to compete with Nvidia. Will they have that classic 2020s microsoft touch of sucking? Who's footing the bill for the R&D of these? Who even asked microsoft, "we want to buy custom AI chips from you"? Will they be able to compete with Nvidia? * Capex is well balanced, IMO. Not excessively aggressive like Google or Meta, but still significant enough to maintain growth while avoiding excessive risk. They are saving enough free cash flow to cover dividend and a small amount of buybacks without relying on Debt. So not enough to actually gain an advantage, but too much to destroy FCF and float share dilution as a possibility, great. * Shift from fixed cost billing to usage based billing on their AI products will likely result in substantial revenue growth. Sign of desperation, nobody wants to use copilot or its related products. And serious users hate usage based billing, just look at what's happening to Claude * I can easily see MSFT doubling in value in 1-2 years with how cheap they are right now. You would have loved investing in Polaroid and Xerox.

zbern

Such a cool company and the financials look really good. PEG less than 1, D/E less than 1, and P/FCF around 9. Assuming you have a position, congrats! Also, really nice layout on this post. It's pleasing lol.

Waiting4Reccession

I'd rather they have just taken a loan or used their FCF edit: especially since they gave buffet a massive discount to the share price at the time for no reason, fuck that guy.

groceriesN1trip

Once their CAPEX chills out, their FCF will explode

Riven97

You bought Mag7 so I assume u r a ber. Let me say something you will understand. When the bubble pops, Mag7 have spent all their FCF and have zero recourse. Semis is the only one taking home cold hard cash.

AttitudeGrouchy33

The missing piece is usually not the transcript. It is context. If the model does not know what you expected before the call, it defaults to that useless balanced-summary voice. For earnings I’d want to feed it: - prior quarter notes - current consensus / guidance - your actual thesis for owning the stock - the few numbers you care about - what would make you sell or reduce Then force output into deltas, not vibes: guidance old vs new, segment growth, margin change, FCF, buyback/debt, management language that changed, and “what would change my mind.” A generic chatbot will keep hedging because it has no portfolio context, no risk budget, and no memory of why the position exists.

zbern

Act as a cynical, no-nonsense institutional equity research analyst. I am going to paste an earnings call transcript. Your job is to strip out all corporate jargon, management hand-waving, and fluff. Do not give me a "balanced summary." Do not tell me "it depends on my risk tolerance." Do not use filler words like "strong," "solid," or "challenging" without immediately following them with the exact numbers. Extract the data and format your response into these exact sections: ### 1. THE HARD NUMBERS * Revenue: [Actual figure, YoY and QoQ growth %] * EPS: [Actual figure, YoY and QoQ growth %] * Consensus Beat/Miss: [Only if explicitly stated in the text; otherwise state "Not explicitly mentioned"] ### 2. MARGINS & EFFICIENCY * Gross Margin: [Exact % or basis point expansion/contraction] * Operating Margin: [Exact % or basis point expansion/contraction] * Free Cash Flow (FCF): [Actual FCF figure and FCF Margin % if calculated/stated] * Inventory vs. Sales: [Did inventory growth outpace or lag revenue growth? Provide the exact metrics given] ### 3. GUIDANCE: THE COMMITMENT * Action: [State clearly: RAISED, LOWERED, REITERATED, or NO GUIDANCE PROVIDED] * The Specifics: [Provide the exact old vs. new ranges for Revenue, EPS, or margins. If management gave qualitative outlooks, quote them directly on their targets] ### 4. THE Q&A SMOKEGAN * The Hardest Question: [Identify the single toughest or most skeptical question asked by analysts during the Q&A] * The Answer/Dodge: [How did management answer it? State whether they gave a concrete operational answer or if they dodged it with vague language] STRICT CONSTRAINT: If a specific metric or comparison is not mentioned in the text, write "NOT IN TRANSCRIPT." Do not extrapolate, infer, or guess. Give me the raw operational reality. --- Try that prompt then paste the transcripts

dreggers

You do realize that mag7 is approaching $0 FCF? Where is the infinite money printer going to come from?

thedudman69

They definitely deserve it. How can you think it’s a “bubble pop” moment? They SMASHED earnings expectations. I mean it wasn’t even a modest beat. They had more FCF this quarter than revenue for the entirety of 2025! A bubble isn’t a bubble when the earnings are there to back it up!

AChocolateHouse

WEN ain't a gamble it has a P/E of 8, a P/S less than 1, and a P/FCF of like 11, and a dividend of 8%. Those numbers are less risky than Amazon stock

ryzetard

i mean uhhh, maybe they got oversold but this is not a value play, this is a gamble new c suite can somehow turn this around. they been reporting shrinking revenue, margins, profits and FCF for like 3 years now?

Fancy_Cattle_5914

Yeah, it's not like their FCF is enough to cover any and all expansions...

Pristine_Eye_8361

Metas revenue growth was negative YOY and they were burning cash. An 8 PE there was somewhat reasonable. MSFT is FCF positive and growing revenue 15-18%.

FlyingCats17

Are you going to time the drop with one of the few AI companies that is massively FCF positive?

tradematesHQ

The dilution math is a fun thought experiment, but Trademates rates this AVOID and SPECULATIVE for a reason. The company lost $4.9B in 2025 with $13.9B negative FCF, and the $2T valuation is entirely dependent on Starship hitting its milestones. Even if the float math works out, the fundamentals are a dumpster fire.

PureCod9290

Handies behind the dumpster dies not generate FCF

OcularShatDown

That’s not what dilution means in this context. A change (decrease) in the percent ownership of the company your equity shares represent is dilution. FCF is also a measure of cash flow prior to debt payments, so there wouldn’t be an effect to that specific metric. There’s no dividend, so that’s less important, anyway. Growth is the only thing shareholders want here and theoretically this funding should help achieve that, assuming the funds have a strategic purpose.

robotlasagna

How does a bull look at senior secured debt and see this as not diluting the shareholders? That's literally money that gets taken out of FCF

_hiddenscout

Which company and how you are valuating. Looking at SIVE: [https://stockanalysis.com/quote/sto/SIVE/statistics/](https://stockanalysis.com/quote/sto/SIVE/statistics/) PS ratio is 100 and the company makes no money. This is speculation in my opinion and not investing. Not saying you can't make money, but think about this as an abstract. You are buying a company that loses money and the asset has gone up over 2000% in 1 year. Just seems bad imo lol. With AAOI  [https://stockanalysis.com/stocks/aaoi/statistics/](https://stockanalysis.com/stocks/aaoi/statistics/) [https://finviz.com/stock?t=AAOI&p=d](https://finviz.com/stock?t=AAOI&p=d) Same situation. Company is losing money. PS is still pretty high and it's hard to look at the PEG or P/FCF since it's losing money. What fundamentally looks sound in either in these names?

New-Association693

MH i not think bro... Sector: Healthcare Industry: Biotechnology \---------------------------------------- ======================================== FINANCIAL HEALTH REPORT: ADTX ======================================== FINAL FINANCIAL HEALTH SCORE: 0.00 / 100 FINANCIAL HEALTH RECOMMENDATION: 🟥 Re-evaluate / Exit \---------------------------------------- VALUATION SCORE: 0.00 / 100 VALUATION RECOMMENDATION: 🟥 Overvalued \---------------------------------------- SCORING BREAKDOWN: \- P/E Valuation Score: 0.00 (Actual: inf) \- P/FCF Valuation Score: 0.00 (Actual: inf) \- EV/EBITDA Valuation Score: 0.00 (Actual: -0.12) \- ROE Financial Score: 0.00% (Actual: -743.61%) \- OperatingMargin Financial Score: 0.00% (Actual: -612542.22%) \- NetProfitMargin Financial Score: 0.00% (Actual: -1305608.79%) \- ROIC Financial Score: 0.00% (Actual: -227.14%) \- DebtEquity Financial Score: 0.00% (Actual: 53.60%) \- Combined EPS Growth Score: 0.00% (Historical: 0.00%, Forward: 0.00%)

Lopsided-Magician-36

Simple answer FCF is actual cash in the bank. With billions in FCF you can either purchase a competitor or analog business or buyback stock

Lopsided-Magician-36

Shhhhh these folks don’t understand FCF plays. I bought in once I realized NFLX is positive 25 billion in FCF this year alone.

Jacker247

so ? Net Debt / EBITDA is 5.5x, FCFF ST Debt is 239M and FCF is 1079M

Riskismyapellido

I AM READY BABY, full send those FCF generating monsters

p8inKill3r

You may be early, but you’re not wrong. Meta's OCF ($180B) exceeds its total projected CapEx ($135B), **Meta covers 100% of its annual AI spend out of cash flow in real-time, every single year, with roughly $45 Billion in positive FCF left over** for share repurchases and dividends.

AcanthaceaeBoring487

Read their financials again. It is included in financing cost not in FCF.

Lazerys

>Investors getting spooked by the capex >News over the weekend relating to a new chinese model being released which is comparable to SOTA models from western companies But these two will solve each other? If Chinese models are cheap and comparable to SOTA with enough compute to actually distribute them globally, then it makes sense for Big Tech to cut down on CAPEX. As they cut down on CAPEX, FCF will explode and they become massive profit machines again.. with added AI benefits and compute. The problem is, then China takes the lead on AI - which quickly becomes a matter of national security. There is no real option to cut down on CAPEX. Futhermore, if AI manages to turn a profit, massive investments will mean massive returns.

WearyCanary8035

So it’s a 9 percent divvy, 20 percent FCF yield, no near term debt bomb, and Peltz already in the kitchen…and the market’s still pricing it like it’s dying. Either this is a beautiful value trap or the laziest “buy, drip, forget” boomer buffet on the market.

LarryStink

Spcx will dilute in the next month, meta is weighing that option, with credit and FCF tapped out, the others will have no other choice to issue equity if they want to continue the capex run.

HunterMichael92

He talked about buying a company that's large and if EBAY is not his baby, he may try to buy back his old baby. Chewy is expected to continue producing $350m+ of FCF for years to come while AI companies burn billions at exorbitant values. I'll take profitable over full valued and risky anyday. I'm all in for now.

jnas_19

Azure growth plateaued in recent quarters despite the numerous amount of Capex increases. Been at 39-40% YoY for 4 quarters straight which is high historically but comes at a cost. Compare that to Google who is leading much more in AI tech and their acceleration in cloud growth is night and day. Sure Microsoft is growing but a lot of that growth is tied to OpenAI and there’s tons of sustainability questions. Don’t expect their FCF to stay like this going forward

Legitimate-File-248

Revenue, EPS, Op Income, Azure growth all GOING UP. I have not a damn clue what you’re talking about. Oh also they’re the only hyperscaler that is FCF positive as well. You’re not wrong about the sentiment but that’s actually it. It’s purely manipulation since they lump this stock into the software batch.

TheRandomDividendGuy

I agree with 'WHY TEAM' Current market is really hard for saas and you need to pick saas that makes profit, high FCF, high growth, high ARR and so on. Why TEAM! thats good question.

Pretend-Chocolate587

FCF

No_Cell6708

Auxly's FCF margin is better than SNDL's gross margin bruh

FailingEfficiency

Except they aren’t printing cash. AI is eating it all. AI spend is like 120% of FCF with questionable profitability, which is exactly what happened during the dot com era. All these companies are spending more to “keep up with competition” in AI, which may never make money. AI might end up being like an airline, no differentiation between products, high spend to operate, low profit, a great benefit to people but a terrible investment.

_hiddenscout

Very fair point. I mean they are still cash generating machines and still some of the best businesses in the history of the world, but investors will be turned off as they continue to burn all their FCF. It's also interesting too, since a lot of these companies are now owning more and more hard assets. I still think there is going to be some point in the near future where CAPEX spend is going to be cut. Like there is still issues with plenty of data centers not being built, so no idea if the money sits or gets used. We are still really early in this AI story, so I'd expect some pullback in investment at some point. I can also be wrong and these companies can continue just to pour more and more money into it. It's just really interesting living in a time where we are seeing something like the railroads being built in terms of spending.

piszczel

80bn stock dilution is not good news. Their P/FCF is 70. SEVENTY They are not cheap if you exclude their investments into spacex and anthrpic, they're trading at like 45PE or something stupid. It is not a cheap stock by any metric

LDNBrickTop

Agreed, he’s the time to load up, once it starts running as the FCF story deteriorates in the industry it’ll be a steady graph up

Milswanca69

I believe strongly in PayPal as a value and FCF play. They have a $40 bn market cap, no net debt, and are generating a steady $5bn in free cash flow per year. They’re repurchasing shares at a massive rate ($6bn this year and more into the future) which accelerates the FCF yield. I also view it as a strong acquisition candidate.

FarSolid7870

Trailing earnings alone is not the way to look at SNs valuation. PEG, FCF, Price to sales are better indicators. SN isn’t operating as a mature business yet so operating margins and earnings do not reflect what future cash flow will look like

JabCrossE4E5Quark

Because they have no FCF and are diluting.

Beneficial-Ad-7771

Software premium is gone due to AI productivity. Most of these tickers had moats because it would take too much time and money to build a rival competing product. Today you can build most of these sites and do quickly which is what Anthropic has been doing lately. If companies can now replicate what took years and years to build, the only value these companies have now will be on their ARR and FCF. The product these companies have are basically commodities today.

Commercial_Seat_3704

Borrowing costs will be high for a long time and since these dickhead CEOs are torching their FCF on the AI buildout they are going to have to dilute just like Google did

_hiddenscout

Hyperscalers should. They are spending a ton of money, but they still generate a ton of FCF. I get the idea of them needing/wanting to invest into the future or next big thing, but feels like the speed in which they are doing it is not sustainable. Yeah one of my big things is looking at quick ratio and debt levels before I make any investment. It's hard to go bankrupt when you have no debt or can sustain your debt.

drew-gen-x

Another new ATH for $VXUS (World ex US) this morning. You have to watch where the money is going. Reddit's fave AI cap ex hyperscalers are spending their entire 2026 FCF plus even more debt plus diluting their shares and sending the majority of that cash to Samsung, SK, TSMC, ASML, etc. Add in the USA weaponizing the USD. 1st it was Biden freezing Russian foreign assets held abroad in USD and then DJT w/ his assnine tariffs. Foreign capital is being repatriated from US debt & stocks back into their home foreign economies out of necessity and now these foreign economies are showing massive growth.

IntrepidFile2593

Interesting thesis on the consumer sentiment angle — worth digging into the numbers though. LULU scores 32/100 on our research tool right now, which is deep in “avoid” territory. The issues: EPS is down -9.4% YoY, FCF dropped -41.8%, and the company guided to flat-to-down revenue for the full year. Stock is -31% below its 200-day MA with RSI at 36 — not really showing accumulation yet. Your macro thesis isn’t wrong (upper middle class spending recovery), but the margin pressure may be structural, not just cyclical. Also worth noting there’s a CEO transition underway until September. Could be a value trap at $115 rather than a bounce setup. I’d want to see at least one quarter of margin stabilisation before getting comfortable. Free research here if useful 👇 https://picksmith.co/free-research/2026-06-17-lululemon-athletica.html

rebuildingblocks

I also like COWS - [https://amplifyetfs.com/cows/](https://amplifyetfs.com/cows/) \- for a portion of a long term investment. It's an ETF with a slightly different angle (strategy is focused on high free cash flow (FCF) companies that pay and have historically grown dividends.)

an_PR

Bro you probably bought the bottom on a stock with one of the lowest sentiment. 10 times earnings, lot of FCF going into buyback, a war chest of cash,… If they do a few good things right over the next 12 months, this is 50% higher or more. Just stop thinking about it and reevaluate in a year or two.

BubblyStation30

I think Redditors generally don’t understand what fundamentals means. They think it means the current financial state of a company, what its revenue, earnings, FCF was in the past several quarters. They do not understand that stock prices are more determined by expectations of future free cash flows. If you understand this fact you realize that for firms like SpaceX it’s essentially meaningless to say “the fundamentals don’t make sense for the valuation” because the business is so incredibly dynamic and has such a huge potential window of retaining a competitive moat that it’s essentially impossible to characterize the distribution of possible future free cash flows.

Rav_3d

Fundamentals don't matter to this stock. It trades on hopes and dreams, not EBITA and FCF.

drew-gen-x

Until the AI cap ex hyperscalers stop spending their entire 2026 FCF plus extra debt and keep diluting their stock. none of them are buys IMHO. Buy what they are spending their money on. Look at $SOXX, $CAT, $VXUS (Samsung, SK, TSMC, ASML). I tend to look that all this cash is moving from the USA to Pacific Asia area. Nvidia ain't making any of these chips in the USA. The $SOXX has moved too far too fast so I like $VXUS. Follow the flow of money.

Iron_Yuppie

Yeah, my issue is less “is SpaceX overvalued?” and more “what would even tell us if it was?” If this were anchored to some metric — forward revenue, EV/revenue, EBITDA, FCF, Starlink subs, launch cadence, cost per kg, whatever — then at least you could draw a map. You could say: at this multiple, it needs this much revenue; at that multiple, it needs this much margin. But at $2.5T, it feels like it has moved past any way to say "ok, now it's grown into its valuation". It’s not aerospace, and even if you tried to treat it like AI infrastructure / ElonWS / CoreWeave, the implied scale required is enormous. So then the question becomes: why is $2.5T the right number? Why not $250B? Why not $25T? Once the valuation is detached from measurable business metrics, it becomes almost impossible to reason about the future stock price. I’m not saying the story is wrong - and i believe wholeheartedly in the vision of transforming humanity (with SpaceX)/demolishing telecoms industry (with StarLink)/more competition for Compute (with EWS). I actually buy the “railroads to space” too! I just don’t know how to invest other than "Elon historically makes stocks go up."

Agitated_East4908

(First, I apologize — English is not my native language, so I used translation help for parts of this.). \----------------------------------------------------------------------------------------------------- 1. The Core Fundamentals: Narrative vs. Reality The bear case on Asana for the last two years has been "Generative AI will replace mid-tier project management software," and that thesis pushed short interest to extreme levels. But Q1 FY2027 (quarter ended April 30, 2026, reported May 27–28, 2026) cuts directly against it: \* Revenue beat: $205.1M, up 9.5% YoY — above the high end of management's own guidance ($202.5M–$204.5M). \* EBITDA near breakeven: -$2.35M for the quarter (-1.1% margin), the narrowest loss in the company's history as a public company. \* Record non-GAAP operating margin: Non-GAAP operating income hit $23.6M (11.5% margin) — up from $8.1M (4% margin) in the same quarter last year. Company-confirmed record, +720bps YoY. \* GAAP losses shrinking fast: GAAP operating margin went from -23.4% to -7.4% of revenue YoY. \* Real cash generation: $40.2M in operating cash flow and $34.4M in adjusted free cash flow (17% of revenue) for the quarter. \* NRR (net revenue retention): 96% en base a últimos 4 trimestres; 97% in-quarter, mejorando por 4° trimestre consecutivo. Esto es clave con la narrativa bajista de "AI mata a Asana" se sostiene en que los clientes se van — la métrica de retención muestra lo contrario, una inflexión. \* Clientes "core" (>$5K anual): 26,103. \* AI Studio: clientes que gastan $100K+ casi se duplicaron QoQ (base chica, pero ritmo de adopción rápido). \* P/S aprox 2.2 (versus MNDY 3.10 | TEAM 3.7) \* EV/Sales 2.01 (versus MNDY 2.25 | TEAM 3.6) AI integration, not just AI talk: Asana closed the acquisition of StackAI ($75M upfront cash + equity earn-outs) the same day as earnings — a no-code AI-agent/workflow platform meant to let Asana's agents actually execute work across enterprise systems (ERP, CRM, ITSM), not just plan and track it. This isn't a "dying SaaS name." Margins, cash flow and GAAP losses are all moving in the right direction at the same time revenue is still growing high single digits. \----------------------------------------------------------------------------------------------------- 2. The Share Structure: A Genuinely Illiquid Float This is the part most people screening on Finviz alone will get wrong, because Asana has a dual-class share structure: Class A common stock (ticker ASAN, the only class that trades): 164.36M shares — this is what Finviz shows as "Shs Outstanding," and it's correct for Class A, not for the company as a whole. Class B common stock (10 votes/share, converts 1:1 to Class A, almost entirely insider-held, does not trade): 69.54M shares. Total combined shares outstanding (per the 10-Q for the period ended April 30, 2026): 233.90M — this is the number used for market cap, EPS and the weighted-average-share figures you'll see on Yahoo Finance. Because only Class A trades, the relevant float for squeeze mechanics is the Class A float — and that's exactly what Finviz's short-interest stats are built on: \+ Insider ownership 60.47% Combined Class A + B, dominated by Dustin Moskovitz \+ Institutional ownership 44.84% \+ Public float (Class A) 91.12 M Shares \+ Short Interest 32.15 M Shares \+ Shoar Float 35.32% \+ Days to cover aprox. 5 days So: insiders control \~60% of the company, the free float is \~40% of total shares, and over a third of *that specific Class A float* is sold short. That's the setup — not an error in Finviz's data, just a dual-class structure most retail screeners don't account for. So: insiders control \~60% of the company, the free float is \~40% of total shares, and over a third of that specific Class A float is sold short. That's the setup — not an error in Finviz's data, just a dual-class structure most retail screeners don't account for. Dustin Moskovitz is no longer Asana's CEO. He stepped down in July 2025; Dan Rogers (formerly of ServiceNow) is now CEO, and Moskovitz moved to Board Chair. He's still by far the dominant shareholder — his last Schedule 13D/A (August 2025) showed \~129.8M shares, roughly 58% on an as-converted basis, and he's continued buying on the open market under a 10b5-1 plan since. The 60.47% "insider ownership" figure is mostly him, just not in the CEO seat anymore. Asana has an active buyback program of approximately US$199.4 million (expanded in February 2026) on Class A shares—the only class that can be borrowed. If the company continues to repurchase shares, it mechanically reduces the loanable float, which puts pressure on short sellers over time, regardless of the price. Asana tiene posición de caja neta positiva (157 millones USD) \----------------------------------------------------------------------------------------------------- 3. The Structural Asymmetry (Days to Cover) With average daily volume of 6.70M shares, the short ratio sits at 4.81 days — it would take nearly five full sessions of pure buying volume for current shorts to cover, and that's before accounting for how little of the float is actually liquid given \~60% insider/Class B control. Technically, the stock is base-building: price is above both the 20-day (+1.1%) and 50-day (+11.0%) moving averages, while still well below the 200-day (-28.7%) — consistent with an early-stage recovery off the 52-week low ($5.38), with the stock currently around $7.43 (52-week high $15.71). \----------------------------------------------------------------------------------------------------- Conclusion ASAN's setup: a founder-chairman who still controls roughly 60% of the company, fundamentals (margins, EBITDA, FCF) that directly invalidate the "AI kills Asana" bear case, and a heavily crowded short position concentrated in a structurally thin Class A float. I'm not playing this for a momentum pump — I'm here for the structural turnaround and the mechanical squeeze risk that shows up if/when valuation starts to catch up to the fundamentals. \----------------------------------------------------------------------------------------------------- My Positions 1. Spot: 5% of total portfolio in common shares. 2. Options: LEAPs — $ASAN calls expiring 2028. Disclaimer: Not financial advice. Do your own research.

tradematesHQ

Trademates rates this AVOID and SPECULATIVE. The $7M market cap and negative equity are hard to ignore. They're burning through cash with no path to profitability, and the bear case is bankruptcy or massive dilution within 4 months based on -$23M FCF against $7M cash. The $250M facility sounds great until you realize they might not survive long enough to use it.

Jasonmilo911

For the record, I've been permabullish, and I'm not bearish overall. I also agree that AI development is in its infancy. What I'm saying is, TO ME, the AI capex boom trade is a terrible one going forward. 90% of spending on many of these recent high-flyers is coming from 5/6 companies that have pledged to spend over 700B this year. So far, such spending has been relentless and has created capital structure issues (hundreds of billions of new debt, now equity, and depreciation costs to come) and cratered FCF. All forward assumptions take for granted that such spending from the hyperscalers will be almost a trillion next year, and that it will grow from there in perpetuity. The yield is not yielding, and the math isn't mathing. Can it go on? Yes. Can it go on for many more years? Also yes. Though unless something fundamentally changes, AI in its LLM form is very cool and very useful, but with very bad unit economics. Hyperscalers don't want to be the ones subsidizing it all and stuck paying the price. At some point, spending will be dramatically cut. When that happens, you are going to see a lot of -20% days in a short period of time.

SnooHedgehogs5162

https://preview.redd.it/3dl8zdj5nk7h1.jpeg?width=1024&format=pjpg&auto=webp&s=ec1401630f4d8fd5b2b2d56c1daf367502f8bae6 Aletheia Capital raises its SK Hynix price target to KRW 5.3 million Based on: 10x CY27E FCF 10x P/E This implies 125% upside from the current share price.

TheRedditModsSuck

Look at SPCX revenue (18.67B in 2025), pretend that's free cash flow, assume 30% growth rate over 10 years, do not even discount, add values together... Still doesn't make $2.5T. With these ridiculous assumptions, FCF would only be $250B in the 10th year. All of these ridiculous assumptions and I *still* can't justify the valuation. That's crazy.