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I mean PLTRs SBC was also ridiculous it's still not great but they're making a dent at least
Not sure what point you're trying to make. If a company has positive FCF because of SBC it is not profitable and shareholders are footing the bill.
Great Company only issue I have is SBC. I think Jeff Greene is great
Not really. If you see the add backs in adjusted earnings, they always add back SBC. That is not to say that you should treat SBC like free money. There is a dilutive effect that you should account for in valuation
Fore shareholders SBC is a cash expense though.
lol I remember back when PLTR went public and ppl shit on them so much for their high SBC but the real fraud for SBC is Snowflake.
Over half of OpenAI’s projected 2025 revenue is paid out in pure SBC to employees. Now tell me about profits again…
Not with the massive SBC in their fcf. They keep increasing it yearly
I usually flip the question from *“what’s cheap?”* to *“what’s mispriced relative to durability.”* In this environment, a few fundamentals tend to get overlooked: * **Balance sheet strength**: Net debt and maturity profiles matter more than earnings beats when rates stay higher for longer. * **Return on incremental capital**, not historical ROIC. Many companies look “cheap” because past returns were inflated by zero-rate conditions. * **Earnings quality**: Free cash flow vs accounting EPS. A lot of “value” disappears once you normalize working capital and SBC. * **End-market exposure**: Cyclical weakness vs structural decline gets confused a lot. Temporary volume pain ≠ broken business. * **Expectations, not narratives**: Stocks get undervalued when expectations reset faster than fundamentals deteriorate. Sector-wise, I see more opportunity in **boring cash generators** than story stocks — areas where margins are already compressed and capital discipline is improving, rather than sectors priced for a rapid rebound. To me, a stock is “undervalued” only if: * downside is limited by balance sheet + cash flows, and * upside doesn’t require heroic assumptions to materialize. Most screens find cheap numbers. The real work is figuring out which ones still have *economic staying power*.
Don’t forget to mention that the outstanding share count of AAPL is down nearly 45% in 12 years while META and GOOGL is flat, in spite of the buy backs. SBC is a hell of a drug. Lots of share buy backs for no actual impact to share count. Yikes.
My problem with Adobe is the Net Income. It is expected to grow around 2% in 2026. SBC is too high and growing, slowing down the effects of buybacks. Once you factor that in, the buybacks are the only hope and they will slow down. What happens next?
In what would is it certainly underpriced. It has a P/(FCF - SBC) ratio of 72 and it's up 57% YTD. Do you think that's normal in any way? Of course it isn't.
It's a 3.6T market cap company that's up 57% YTD and has a P/(FCF - SBC) ratio of 72. It's a terrible time to buy the dip.
SBC is 4% of AAPL earnings.
Your conclusion is flawed and based on a few cherry picked changes going one way. There have been many changes and the SBC change has been in effect since 2010. Current PE of 31 is historically high since this date. See https://www.multpl.com/s-p-500-pe-ratio/table/by-year Also the S&P 500 valuation multiple based on sales is also at an all time high: https://www.multpl.com/s-p-500-price-to-sales I’m sure the price to free cash flow multiple of the index is at or close to a record too. The Buffet indicator from Gemini AI: As of late 2025, various sources place the indicator well above historical norms, at around 220%, a record high. This has coincided with Warren Buffett's Berkshire Hathaway consistently being a net seller of equities and building a record cash position in recent years, actions that align with the indicator's warning signs All these valuation metrics indicate an expensive index and support the current PE multiple and the conclusion that the index is trading at a high premium.
Yes valid. Goodwill is impaired if the underlying business/stock price crashes vs its original valuation. But acquired intangibles are not goodwill, those certainly are amortized and drag down earnings, inflating PE. Goodwill stopped being amortized since the 90s, it used to be amortized over decades. It isn’t anymore, that’s a small boost to earnings, and is only adjusted on impairment. But the increase in acquired intangible assets and changes in SBC accounting far outweighs any tailwind to earnings from goodwill rule changes.
Yes - there have been many changes to accounting, this post wasn't mean to be a geek out on accounting but an approachable read for the most impactful changes. I acknowledge goodwill is no longer amortized. Yes - this is a boost to current earnings reporting vs historical but that is a small impact compared to current SBC expensing and the amortization of acquired intangible assets. Goodwill was amortized over 40 years prior... and i disagree regarding your point on revenue recognition standards loosening. There is a much more defined recognition of revenue today, companies of the past were able to defer revenue recognition to 'game' when it would be most effective. Now revenue recognition is matched to product transfer and to contract obligations being met. Yes, this moves the revenue recognition earlier often but its much more in line with accounting matching principles. There will always be 'judgement' rules for companies to attempt to manipulate earnings, thats why you need to reseasrch companies and look at financial statements. GAAP isn't a perfect system. Circular financing is a real concern right now. I agree. Again, company specific mainly revolving around OpenAI and their deals. I think there are problems with that. Regarding semis - I mean, I am talking about the aggregate SP500 market as a whole. There will always be company specific nuances. Show me a company that reports zero cost of goods sold. Fabless companies dont net revenue against payments to TSM.
SpaceX has a lot more SBC than AAPL
If you look at AAPL FY 25 Q4, they had $13b SBC for the total year. At $4t market cap, that is less that 1/3 of 1 percent; doesn't move the needle. TLDR - Heavy dillution typically only occurs in early stage or if the company is distressed.
I believe that there was a misunderstanding. SBC stands for stock based compensation in the context of this post
Share buybacks that simply offset SBC are shit buyback
Their valuation is insane (20x P/S) for the 25% revenue growth. Also, their SBC amount is nuts
For tech stocks, SBC expenses tend to mean revert. This is because of the standard practice of having a vesting schedule, typically 4 years. When stock is granted, it's typically targeted at a total dollar amount based on recent stock prices. If the stock keeps growing, old granted stocks that vest will vest at a higher price, and impact earnings more at an accounting level. But newly granted stocks will be based on the current target price. So if Oracle stock keeps taking a beating, the SBC will tend to become lower, or grow more slowly. I wouldn't read too much into SBC growth given the run-up this year.
>I look at one stock: Tesla (TSLA). Michael Burry, the "Big Short" investor, recently called the company "ridiculously overvalued," citing shareholder dilution from stock-based compensation (SBC) and no buyback program. Imagine how much money a person would have lost if they shorted Tesla every time someone called it overvalued over the past 6 years. It's a breathtaking thought.
$GOOG + $AAPL will pump into infinity. combined together, they do $180b in buy-backs a year. total MC = $7.7B. $AMZN wont move until it stops BOLDY JEFF BOZO dilution + SBC needs $50b a year buy-backs ASAP
My math doesn’t make sense? Why? Because it doesn’t fit your narrative? 2020 12.87 billion (15.2%) 2021 15.8 billion (22.67%) 2022 17.61 billion (11.54%) 2023 19.41 billion (10.24%) 2024 21.51 billion (10.8%) 2026 projected 25.87 billion (9.21%). Your math skills are severely lacking or you’re saying bullshit because of your bias. That’s deceleration of 30-50% with revenue over the last five years. In regard to free cash flow—did you even check the financial statement? You can clearly see net income jumped from unusual items. It’s a crazy outlier from the previous years which explains the “FCF growth” if you normalize it like any sane investor would. Then no-they did not grow FCF at 47% Lastly, spending all their FCF on buybacks with deceleration is ADBEs management waving the white flag. They spent 12 billion on stock buybacks with 5 billion SBC adjusted free cash flow. What the actual F? That’s more than double what they make. That won’t continue. Plus, buying back 20% of stock over the next 2 years is 10% returns a year. Which brings me back to the point. Buy the SP500 for the same or better returns with much much less risk.
I thought his point about Palantir's contracts being based on getting software installed was very interesting/plausible. Investors tend to look at consulting revenues like that and assume that they are "sticky" and won't go down. There wasn't anything else I thought was useful. His point about stock buybacks really just covering off SBC is basic shit.
I’ve felt that SBC has gone from an incentive pay program to pretty much letting the c suite cash out and print money. That goes double if the company has gotten its name in the news and retail attention. The entire thing needs to be reimagined and brought back to a performance based incentive bonus.
Tesla valuation is based on expectations of robotaxi and Optimus. People are investing in Tesla based on future growth, not SBC that happened 5 years ago. Over the TTM share count went up .83% In 2024 share count went up .37% In 2023 Share count went up .29% In 2022 share count went up 2.63% Between 2020 and 2022 Elon was awarded his 2018 comp plan. Burry saying Tesla share count has been going up 3.5-3.7% over the last few years is a flat out lie. Can easily find the share count % on macrotrends.net. Share count at the start of 2021 was 2.661 Billion not 1 billion. Either way, if you believe Tesla will be successful in expanding robotaxi, then it is currently undervalued. If you don't believe Tesla will expand robotaxi, then you call it a meme stock. Investors are not looking at current valuation because robotaxi and optimus is a much bigger business then EVs.
The buybacks just slightly offset SBC. They are still net diluting. It's not so much returning capital to shareholders as it just reducing SBC based dilution.
BURRY ( PART 2 ) ATTACKING $NVDA AND SBC wow!!! [Cassandra Unchained on X: "The Tragic Algebra of Stock-Based Compensation. Part 2 of my response to Nvidia’s talking points sent to its Wall Street analysts to rebut my arguments. I make an example of Nvidia because, frankly, they make a really good example. https://t.co/lLUZYDD4bU https://t.co/IxwX6l5Vun" / X](https://x.com/michaeljburry/status/1995339280307073426)
What is this path to profitability? Seems like cutting R&D and SBC is one way but doesnt seem like they will do?
>I think Burry claims is simply NVDA grants the shares as Stock-based compensation recorded in balance sheet using date of issuance price say 8$/share in 2018, while NVDA later has to buy it back at 100$+/share with share repurchase from 2018 till 2025. The SBC is about 20B while the cash spent on repurchases is 100B. All these occur while there isn't much reduction in outstanding shares (i.e. not much benefit to shareholders), thus essentially the cost of SBC is 100B not 20B. Not sure if you fully understand how this works or if you're trying to present Burry's skewed view. But stocks issued for RSU grants do not come from buy backs - they come from dillution. That's why during earnings calls you might hear the term "earnings on a fully diluted basis" - it accounts for all the additional shares that the board has granted that could be claimed in the future, such as RSU's. Simple example, board creates a new pool of 1,000,000 shares of restricted stock that will be used for new hires and refreshes for next 2Q. The stock will be granted if the employee meets the requirements and be part of the float. Or it will expire and not be issued if the employee does not meet requirements. It costs the company "nothing" in the sense no cash was spent - it only has the cost of dilution; every existing share is now a smaller slice. When NVDA buys back shares on the open market, those shares are retired to reduce the float. It's really the opposite effect - it makes each existing share a larger slice. But these are distinct levers and again one is using actual cash, the other is not. Oh and buy the way, this is how EVERY other corporation does it. These comments/tweets are just meant to prey on those who don't have deeper understanding. It's like the circular money argument - NVDA has sold near $400b product in past 3 FY. NVDA doesn't have anything near $400b cash to give to their customers only for them to give it back - so the money is coming from drumroll please... elsewhere. NVDA investments are miniscule in the grand scope. Just as MSFT invested "only" $13b in OpenAI, but valuation gains of OpenAI makes that investment worth $125b now. But hypothetically you can only buy $13b of NVDA GPU and Azure services with $13b - again in grand scheme it's drop in the bucket.
You should, Build a tight weekly workflow that screens, reads filings, and tracks catalysts, not headlines. Screen small/mid caps for 15%+ revenue growth, rising FCF, gross margin expansion, net debt/EBITDA <2, SBC <10% of sales, and >$1M avg daily dollar volume; add 3–6 month relative strength. Use WhaleWisdom for new 13F positions, OpenInsider for cluster buys, and TradingView alerts for earnings, guidance, and 52‑week highs. Read 10-K/10-Q/20-F for liquidity, S-3/ATM dilution, and cash runway. I use Koyfin for factor screens and Quartr for quick call listening; Ask Edgar helps me speed-read filings and flag dilution. Tag FX and ADR details, set a USD base, and cap risk at 0.5–1% with stops. Simple, repeatable process and risk rules win.
Michael Blurry is on my front porch right now holding graphs up to the ring cam and shouting something about SBC dilution
I think Burry claims is simply NVDA grants the shares as Stock-based compensation recorded in balance sheet using data of issuance price say 8$/share in 2018, while NVDA later has to buy it back at 100$+/share with share repurchase from 2018 till 2025. The SBC is about 20B while the cash spent on repurchases is 100B. All these occur while there isn't much reduction in outstanding shares (i.e. not much benefit to shareholders), thus essentially the cost of SBC is 100B not 20B. But using SBC to keep top world talents working for you is pretty much a norm in Silicon valleys. And the appreciation in shares since issuance is exactly what motivate the employees and align their interest with companies. I don't think it should be counted as a bad practice or even fraud in accounting. It is pretty much a standard practice in Mag7.
Market already did and got debunked. Burry doesn't understand anything about software or hardware. Look at how Jensen addressed all his talking points 1 by 1 regarding circular financing, higher inventory level, and depreciation. And he immediately pivoted to SBC on NVDA. Freaking NVDA's SBC is 2.9% of their revenue. Pltr's SBC is 13% last I checked, whereas the industry standard for software is around 20%. These 2 companies' costs barely went up while growth has been skyrocketing. Even if we do drop to like 120, that's just an even better entry point. Going from 900 to 400 PE after Q3 earnings was no joke. If we stay at this range for a few more quarters, pretty soon, the valuation talking point would be dead as well.
Ur motivated SBC workers are pumping nvidia stock lets go
I mean SBC expenditures are obviously super high following the 10x+ - this will normalize as pre 2023 grants fully vest and drop back down to understandable levels.
lol cope with ur losses beach! Using the google AI - The evidence on whether stock-based compensation (SBC) motivates employees is mixed and inconclusive, with studies supporting both positive and negative/neutral effects. The outcome often depends on the type of SBC, the employee's role, the company's culture, and broader economic factors.
Moronic example, Google is notoriously shit motivating and retaining top tier talent for a variety of reasons. And one of them is they pay less SBC than other tech companies You couldn’t pick a more regarded example and somehow still get it wrong
What u mean doomer shit all I said is u don’t know how SBC works - I did not express an opinion on the stock regard
Nvidia has made more employees millionaires than any other by far, the fuck are you saying? They can recruit the best of best because of their SBC. Companies who just pay salary lose their best people, this shit has been proven countless times Zoom out on the chart, I first bought into nvdia two splits ago. wtf have you been doing?
Funnily enough it would probably have been massively value accretive if they took on debt to pay their employee bonuses; dont get me wrong, that sounds ludicrous and is not something I'd have been amused by as a NVIDIA shareholder in say 2019. But even more funnily, that would've destroyed way less value than what they ended up doing. A A prudent reminder to always deduct SBC from FCF to estimate the cash that can be returned to shareholders via dividends/buybacks ***while being actually accretive on a per share basis.***
That is not how it works lol u don’t know what SBC js
Not that huge, but maybe ~25% higher. Well, without having done any forensic accounting, I think it comes to the fact that shares have appreciated wildly since they were issued and they are now aggressively buying back shares at an elevated valuation. It’s value desctructive. P/(GAAP)E correctly accounts for SBC; the buybacks appear on the cash flow statement. Assuming the share price permanently stays at this level or goes higher from here, the buybacks are not value destructive in hindsight – arguably, the share issuances were – but if the price declines, the buybacks will prove to have been value destructive.
Pro-tip if you find yourself harping about SBC and dilution you have likely suffered from thesis drift and should cut your losses.
So they bought back stock to offset SBC and that didn’t help shareholders?
Michael Burry is trying so hard to crash NVDA. He is showing something related to how NVDA is manipulating the investors. **Since the beginning of 2018, NVDA earned about $205B net income and $188B free cash flow, assuming all cap ex was growth cap ex. SBC amounted to $20.5B. But it bought back $112.5B worth of stock and there are 47 million MORE shares outstanding. The true cost of that SBC dilution was $112.5B, reducing owner's earnings by 50%. /rant**
The edge here is dissecting quality of earnings and traffic/customer concentration for GAMB, then sizing the bet like it’s fragile. Actionable checks I’d run: 1) Footnotes on revenue: split of CPA vs rev-share, receivables aging, and credit risk by customer; if two sportsbooks are >30% of revenue, that’s a red flag. 2) Traffic durability: pull Similarweb and Semrush trends, separate brand vs non-brand organic, and model a Google core update hit (say -20% organic) against EBITDA. 3) Cash conversion: OCF vs net income after SBC, earnout payments, capitalized content/intangibles, and amortization; see if “beats” rely on adjustments. 4) Regulatory sensitivity: state promo caps and UK/EU changes; note seasonality (NFL). 5) Dilution/insiders: shelf filings, RSU overhang, insider sales. Set tripwires (e.g., non-brand organic down 15% QoQ or any client >35% rev) to cut size. For idle cash while waiting, I use Fidelity T-bill ladders and Marcus for HYSA; I’ve also used Gainbridge for a fixed-term annuity when I wanted a multi-year guaranteed rate. Bottom line: judge earnings quality and traffic fragility first, then keep position small with clear exit triggers.
Jesus all of your strikes are so high and expirations so near term. I’m sitting on Sept 2026 670 C that took hits, but slowly buying the dip. Last few days it drops -2% to -3% and recovers as market closes. Gotta give Zuck a few months to ensure share price and SBC stays competitive
FCF - SBC is currently negative. Perhaps instead of spending money like crazy they should return capital instead in the form of a dividend. The "Oh, but they're reinvesting for growth" narrative is never quantified. The longer it takes to see meaningful FCF, the greater it has to be, as future cash flows are discounted.
FCF- SBC is what matters and it’s not so hot for Meta.
Thanks to all those who engaged with my rough draft of my base case scenario, and thanks to those who called me a retarded moron. I now want to start crowdsourcing feedback on my bull case, and a trigger warning for the trolls out there - it is bullish. *For context on how I see AGI impacting Nebius's outlook, and some more qualitative thinking behind these numbers, please check out my longer form thoughts here:* [https://rootcapital.substack.com/p/nebius-q3-results-and-are-we-in-a](https://rootcapital.substack.com/p/nebius-q3-results-and-are-we-in-a) https://preview.redd.it/45cquiuh591g1.png?width=2656&format=png&auto=webp&s=43000caf25a2eb7a40ce60c7233e486f8de7fe0b [](https://preview.redd.it/nebius-2030-the-art-of-the-possible-v0-kzgcub1h491g1.png?width=2638&format=png&auto=webp&s=20da8542680fca8a63325c2e052534b63b22a558)The valuation assumes: * **4GW Active Power by 2030** (management has hinted at securing more contracted power, in this model I assume we contract an extra 1.5GW, and bring it online by 2030.) * **Deprecation as a % of revenue tapers hard** \- this reflects the fact that older GPUs aren’t useless - they simply move down the value chain. Nebius can still monetise them on inference for years beyond the four-year accounting life. Sure, they can't be used for training, but they will be used for lower complexity inference tasks. * **Net margin expands to 17%**, in line with the likes of AWS in the present day. Nebius's head start as an AI native cloud platform pays dividends, and it becomes one of the go to providers for AI workloads. (Customer mix is not hyperscalers, but more ad-hoc workloads from mid-caps). * By 2027, the business is producing **enough cash to scale without repeatedly tapping shareholders for more dilution**. It still accounts for modest SBC, but no 25 million share sales. Feedback of course is welcome, but please remember this is a bull case for a reason. You can check out my earlier base case if you want the conservative view, but this is optimistic for a reason.
IXHL filings on 11/14/25 show three things: * Form 4: CFO got 869k restricted shares. No selling. * 10-Q: Cash jumped to $73M after earlier raises. Burn ~9M/quarter. Balance sheet clean, no debt overhang, no bad surprises. R&D down from timing, G&A/SBC up. * S-8: Registers 69.5M shares for the equity plan (evergreen). Not a raise, not immediate dilution. ** Reverse split: No mention, no plan, no hint anywhere in the filings.
CRWV is worth 0. They are essentially an off book shell company for NVDA to dump GPUs and for other hyperscalars to rent/lease compute for. They will never be profitable. Their balance sheet is so fucking atrocious its a miracle they were able to even IPO. Oh wait, their IPO almost failed and only succeeded because NVDA backed it, who already had invested in it, and funds them so they can buy chips back from NVDA. Oh, and CRWV uses their GPUs as collateral for debt, which they are doing BS depreciation on to overstate the value. And I bet you that CRWV is using the same GPUs as collateral for multiple loans. And dotn even get me started on their SBC. They are a 0 and will be in ch7 or ch11 the second there is a hint of slowdown in the AI mania
CRM true P/E is around double what's advertised due to massive amounts of SBC
A modestly better quarter from Curaleaf with results ahead of expectations, modest growth, and some margin expansion, although underlying cash flow generation and balance sheet quality remain entirely reliant on their challenge of 280e obligations. The domestic business stabilized after several quarters of declines while the international business continues to grow (up 12% QoQ and 55% YoY) to $46M (the largest of any cannabis operator). Similar to others, their uncertain tax position is rapidly ballooning (now $510.2M) and their $95.3M in reported YTD operating cash flow is actually negative when you factor in those unpaid 280e taxes making the legal challenge top-of-mind. Looking ahead, Cura should continue to see growth in the international segment while the domestic business has few immediate catalysts outside of growth in NY and select store openings. Full review: **Revenue:** QoQ: $314.5M to $320.2M / YoY: $330.5M to $320.2M *Up 1.8% sequentially and down 3.1% YoY was better than expected ($317M), as the US business held stable while the international business grew 12% sequentially and 55% YoY to $46M. Cura opened 4 new stores during the quarter (2 in OH and 2 in FL), stared an MSA with a Maine store, and acquired the remaining ownership in Cura International (now 100% owned).* **Adjusted EBIDTA:** QoQ: $65.5M to $69.3M / YoY: $75.3M to $69.3M *Up 5.8% sequentially and down 8.0% from last year was also ahead of expectations ($66M), with margin up to 21.6% in Q3 from 20.8% last quarter (although down from 22.8% last year). Still behind most Tier 1 peers but good to see improvement.* **Gross Margins:** QoQ: 48.5% to 49.9% / YoY: 48.6% to 49.9% *Nice improvement here at a good level as management highlighted efficiency improvements.* **Operating Expenses:** QoQ: $149.3M to $155.7M / YoY: $151.3M to $155.7M *Increase here sequentially and YoY largely due to higher SG&A and SBC, offsetting margins gains to an extent.* **Operational Cash Flow:** QoQ: $6.7M to $4*8.4*M / YoY: $40.3M to $48.4M *As always, have to look at tax payments dynamics for proper read through. Adjusting for unpaid taxes, OCF was -$8.2M in Q1, -$20.3M in Q2, and +$9.4M in Q4 for -$19.1M YTD. CapEx spend was $16.6M and now $47.9M YTD.* **Cash:** QoQ: $102.3M to $107.5M / YoY: $90.0M to $107.5M *Positive OCF offset CapEx spend. Cura also paid down some debt with a new credit facility. Debt stands at $543.7M, Income tax payable of $19.9M, and now an uncertain position of $510.2M*
their ceo bought 300k this company does 200 million usd of SBC a year, CEO has 50 million usd of stock as is. That's cool he's fucking with algos but it doesn't really tell you anything about what he thinks about the business
A steady Q3 showing for Cresco as revenue stabilized sequentially (although down quite a bit YoY), while margins were largely stable slightly ahead of expectations. Minimal cash generation limits the company's ability to play offense, although they do have small pockets for growth (new stores in OH, Kentucky cultivation launch, and product launch in Germany) while larger AU catalysts in Florida and Pennsylvania remain uncertain. FYI- Waiting on the full financials to be released to get cash flow dynamics still. Full review: **Revenue:** QoQ: $163.6M to $164.9M / YoY: $179.8M to $164.9M *Up slightly sequentially but down 8.3% YoY, just head of expectations ($164M). Cresco opened 1 new store in OH during the quarter and initiated cultivation in Kentucky, and also highlighted a product launch in Germany for their first foray into international markets.* **Adjusted EBIDTA**: QoQ: $40.9M to $39.8M / YoY: $51.3M to $39.8M *Down slightly sequentially and a significant 22.4% from last year, although this was better than consensus of $37M. Margin drops to 24.1% here from 25.0% last quarter and 28.5% last year. $4.4M in one-time costs, $2.4M in impairments, and $2.3M in SBC removed from this figure.* **Gross Margins:** QoQ: 50.9% to 48.1% / YoY: 52.0% to 48.1% *Down sequentially and YoY although still at a relatively solid level.* **Operating Expenses:** QoQ: $57.9M to $59.2M / YoY: $64.8M to $59.2M *Note i removed impairments to compare apples to apples. Up a bit sequentially but nicely down from last year, much needed considering top-line declines.* **Operational Cash Flow:** QoQ: $8.8M to $6.2M / YoY: $49.4M to $6.2M No financial statement yet so have to wait to see what tax dynamics look like. **Cash:** QoQ: $146.6M to $78.7M / YoY: $156.6M to $78.7M *Again waiting on the financial statements for exact dynamics but looks like OCF and CapEx largely offset each other, and then the big drop in cash came from a debt refinancing where they retired their old $360M facility while raising a $325M new term loan.*
A steady Q3 showing for Cresco as revenue stabilized sequentially (although down quite a bit YoY), while margins were largely stable slightly ahead of expectations. Minimal cash generation limits the company's ability to play offense, although they do have small pockets for growth (new stores in OH, Kentucky cultivation launch, and product launch in Germany) while larger AU catalysts in Florida and Pennsylvania remain uncertain. FYI- Waiting on the full financials to be released to get cash flow dynamics still. Full review: **Revenue:** QoQ: $163.6M to $164.9M / YoY: $179.8M to $164.9M *Up slightly sequentially but down 8.3% YoY, just head of expectations ($164M). Cresco opened 1 new store in OH during the quarter and initiated cultivation in Kentucky, and also highlighted a product launch in Germany for their first foray into international markets.* **Adjusted EBIDTA**: QoQ: $40.9M to $39.8M / YoY: $51.3M to $39.8M *Down slightly sequentially and a significant 22.4% from last year, although this was better than consensus of $37M. Margin drops to 24.1% here from 25.0% last quarter and 28.5% last year. $4.4M in one-time costs, $2.4M in impairments, and $2.3M in SBC removed from this figure.* **Gross Margins:** QoQ: 50.9% to 48.1% / YoY: 52.0% to 48.1% *Down sequentially and YoY although still at a relatively solid level.* **Operating Expenses:** QoQ: $57.9M to $59.2M / YoY: $64.8M to $59.2M *Note i removed impairments to compare apples to apples. Up a bit sequentially but nicely down from last year, much needed considering top-line declines.* **Operational Cash Flow:** QoQ: $8.8M to $6.2M / YoY: $49.4M to $6.2M No financial statement yet so have to wait to see what tax dynamics look like. **Cash:** QoQ: $146.6M to $78.7M / YoY: $156.6M to $78.7M *Again waiting on the financial statements for exact dynamics but looks like OCF and CapEx largely offset each other, and then the big drop in cash came from a debt refinancing where they retired their old $360M facility while raising a $325M new term loan.*
A steady Q3 showing for Cresco as revenue stabilized sequentially (although down quite a bit YoY), while margins were largely stable slightly ahead of expectations. Minimal cash generation limits the company's ability to play offense, although they do have small pockets for growth (new stores in OH, Kentucky cultivation launch, and product launch in Germany) while larger AU catalysts in Florida and Pennsylvania remain uncertain. FYI- Waiting on the full financials to be released to get cash flow dynamics still. Full review: **Revenue:** QoQ: $163.6M to $164.9M / YoY: $179.8M to $164.9M *Up slightly sequentially but down 8.3% YoY, just head of expectations ($164M). Cresco opened 1 new store in OH during the quarter and initiated cultivation in Kentucky, and also highlighted a product launch in Germany for their first foray into international markets.* **Adjusted EBIDTA**: QoQ: $40.9M to $39.8M / YoY: $51.3M to $39.8M *Down slightly sequentially and a significant 22.4% from last year, although this was better than consensus of $37M. Margin drops to 24.1% here from 25.0% last quarter and 28.5% last year. $4.4M in one-time costs, $2.4M in impairments, and $2.3M in SBC removed from this figure.* **Gross Margins:** QoQ: 50.9% to 48.1% / YoY: 52.0% to 48.1% *Down sequentially and YoY although still at a relatively solid level.* **Operating Expenses:** QoQ: $57.9M to $59.2M / YoY: $64.8M to $59.2M *Note i removed impairments to compare apples to apples. Up a bit sequentially but nicely down from last year, much needed considering top-line declines.* **Operational Cash Flow:** QoQ: $8.8M to $6.2M / YoY: $49.4M to $6.2M No financial statement yet so have to wait to see what tax dynamics look like. **Cash:** QoQ: $146.6M to $78.7M / YoY: $156.6M to $78.7M *Again waiting on the financial statements for exact dynamics but looks like OCF and CapEx largely offset each other, and then the big drop in cash came from a debt refinancing where they retired their old $360M facility while raising a $325M new term loan.*
It didnt kill earnings they had high cost Positive Revenue +100% YoY to $1.27B Adj. EBITDA $742M, +177% YoY Net income $556M, +271% YoY Gold subscribers 3.9M, +77% YoY Total Platform Assets $333B, +119% YoY Negative Total operating expenses $639M, +31% YoY Adjusted OpEx + SBC outlook increased to ~$2.28B for 2025
Damn 5% down AH i Positive Revenue +100% YoY to $1.27B Adj. EBITDA $742M, +177% YoY Net income $556M, +271% YoY Gold subscribers 3.9M, +77% YoY Total Platform Assets $333B, +119% YoY Negative Total operating expenses $639M, +31% YoY Adjusted OpEx + SBC outlook increased to ~$2.28B for 2025
Solid Q3 showing from Trulieve: revenue was in-line with expectations considering the seasonally weaker quarter in AZ/FL while margins came in nicely above expectations. The FL machine continues to operate at a high caliber despite price declines and increased competition in the state, as the company again leads the charge on spending ahead of another AU initiative in the state ($34M spent YTD). The cash flow profile and balance sheet continue to be dictated by their ongoing challenge of 280e with strong press release numbers and now an indication to pay down the majority of their debt in Q4, but alongside significant unpaid taxes that continue to accumulate under the UTP (now $616M). Looking ahead, few changes on the horizon for most of their core markets with potential for adult-use in FL/PA although certainty on those states remains murky. Full review: **Revenue:** QoQ: $302.1M to $288.2M / YoY: $284.3M to $288.2M *Down 4.6% QoQ and up 1.3% YoY, in-line with analysts consensus of $288M during the seasonally weaker Q3 in FL/AZ. Trulieve opened 1 new store in OH during the quarter, and relocated 1 AZ store so largely working off the same base.* **Adjusted EBIDTA:** QoQ: $110.6M to $102.7M / YoY: $96.1M to $102.7M *Down 7.1% sequentially but up 6.9% YoY, nicely ahead of expectations of $96M. Industry-leading margins remained strong at 36% in the quarter, down from 37% in Q2 but up from 34% last year. Note that 6.3M in campaign contributions (now $33.7M YTD), $8.8M in one-time costs, and $5.8M in SBC were removed from this figure.* **Gross Margins:** QoQ: 61% to 59% / YoY: 61% to 59% *Down slightly QoQ and YoY but still at very strong levels.* **Operating Expenses:** QoQ: $130.3M to $127.6M / YoY: $172.7M to $127.6M *Nice cost control sequentially and a big drop YoY (largely due to a $48M campaign expense last year). Removing the campaign expenses, OpEx was $121.3M here compared to $125.9M in Q2 and $124.3M last year.* **Operational Cash Flow:** QoQ: $86.1M to $76.8M / YoY: $30.3M to $76.8M *Good headline number but always have to factor in unpaid taxes. Tax-adjusted OCF was +$20.2M in Q3 and now $+42.5M YTD ($76.2M if you factor out the campaign contributions). This compares to +$37M in the first 3 quarters of 2024 and +$99.7M if you factor out campaign contributions so actually down this year apples-to-apples. CapEx was $12.3M in the quarter and $40.8M YTD so just above break-even on FCF when factoring in unpaid taxes.* **Cash:** QoQ: $392.6M to $449.2M / YoY: $238.8M to $449.2M *Cash rise continues driven by positive OCF, although the uncertain tax position along with it. Debt stands at $477.5M with Trulieve indicating they will pay off $368M of notes in December. The uncertain tax position now stands at $616.3M and will continue to rise*
$S is definitely moving like CRWD did back in its early scaling phase. Market’s sleeping on how fast their margins flipped and how sticky that ARR growth is. Only caution; watch SBC and cash flow trends next couple quarters; that’s what’ll decide if the rerate actually sticks.
Look at FCF - SBC. Big Tech is a lot more expensive than it looks. Also, why are we comparing Big Tech to Dot Com startups? Big Tech is much more comparable to the Four Horsemen of the Dot Com bubble: Dell, Cisco, Microsoft, Intel. These companies were all very profitable and ushering in a new era of mass communication. Their stocks still fell dramatically. The equivalent of Dot Com startups are all the unprofitable shitcos around now, and there are plenty of them. A bubble doesn’t have to be an exact repeat of the past to be very similar in spirit and absolutely still a bubble.
Look at FCF - SBC, not net income.
Forward estimated PE is around 15 and even adjusted for SBC the free cash flow yield still sits at around 5%. Nothing in the numbers are signaling stagnation in growth (which the current valuation suggests). In this current market with high valuations adobe is looking like a low risk stock with a likely decent upside. I doubt investors will lose money on this stock when looking back at todays price of 350$ in the end of 2026.
P to FCF - SBC is a stupid metric Completely uncorrelated with returns.
When SBC is 63% more than your R&D costs you’re not a company, you’re a compensation mechanism masquerading as a company.
R&D was 420m in q1. They could simply cut that instantly if they wanted. That's without talking about cutting SBC which they've been progressively doing, monetizing storage which is one of their big costs etc.
There is no lie that is constantly spread that is more pernicious than this: u/NationalTranslator12 >Oh yes, the myth of the "cash on the sidelines". If I have "cash on the sidelines" and I buy assets from you, you now have that same "cash on the sidelines". Cash does not disappear, it moves hands. The amount of cash does not depend on assets being cheap or expensive. I can't believe how many people parrot misinformation like this. What they are saying is only true in an instant of time under a very specific constraint: * A stock is being sold from one investor to another investor with cash. In reality, shares are issued CONSTANTLY in the form of SBC. Options, RSU, unvested shares becoming vested. This is not just cash sitting there. This is salary and compensation that gets spent. This is even more true if a company does a shelf offering. Newly available cash from equities is often absorbed by newly issued corporate debt as well. All of this money goes directly back into the economy, it doesn't go back to MMFs necessarily. If a company is doing buybacks, the opposite is true. Shares are being fully retired and the cash pile *gets larger*. But it is definitely not the case that the cash pile getting larger means nothing or that it is not available to buy dips.
There is no lie that is constantly spread that is more pernicious than this: u/NationalTranslator12 >Oh yes, the myth of the "cash on the sidelines". If I have "cash on the sidelines" and I buy assets from you, you now have that same "cash on the sidelines". Cash does not disappear, it moves hands. The amount of cash does not depend on assets being cheap or expensive. I can't believe how many people parrot misinformation like this. What they are saying is only true in an instant of time under a very specific constraint: * A stock is being sold from one investor to another investor with cash. In reality, shares are issued CONSTANTLY in the form of SBC. Stock options, RSU, unvested shares becoming vested. This is not just cash sitting there. This is salary and compensation that gets spent. This is even more true if a company does a shelf offering. Newly available cash from equities is often absorbed by newly issued corporate debt as well. All of this money goes directly back into the economy, it doesn't go back to MMFs necessarily. If a company is doing buybacks, the opposite is true. Shares are being fully retired and the cash pile *gets larger*. But it is definitely not the case that the cash pile getting larger means nothing.
Their SBC is quite high but not that bad, it only looks bad because you're seeing the share count increase whereas their peers with comparable SBC do enough buybacks to shrink the float. The difference with Amazon is they can't afford buybacks because they're reinvesting so much cash. Personally, I'll take the bet that they're reinvesting that cash effectively like they always have done.
Amazon is a great for employee compensation via SBC but no so great for shareholders. I started buying AMZN over 10 years ago when it was around $500 pre-split but at this point I'd rather buy Google, MSFT, Apple, Nvidia and maybe even Meta as those companies are actively reducing shares outstanding.
The issue with Amazon is their SBC as their shares outstanding keep going up diluting shareholders and lack of buybacks. At least most of the other big tech companies are reducing share count.
Forward P/Es are nonsense when expectations are unrealistically high and analysts can’t even accurately forecast one quarter ahead. If you look at FCF - SBC, the story is very different for Big Tech. They’re not reasonably priced at all if the return on all that capex isn’t there.
SBC as a percentage of revenue has declined precipitously over the years. However, it is still too high. One of the main issues, though, is their margins are too low. Their infrastructure bills are very high, and they could probably save a ton of money and goose the margin if they could negotiate better rates. Their contract comes up for renewal in ‘27. Alternatively, they could form a partnership with a big tech company and used their scaled-up infrastructure in exchange for maybe allowing data access? Lots of low hanging fruit for them to pick.
Stole this from someone on X. Not exactly what you’re looking for but it is extremely thorough: “You are an equity research analyst. Produce a rigorous, source-backed investment memo on {Company} [{Ticker}] with a clear Buy, Hold, or Sell call. Rules for research and writing 1) Use only verifiable, recent sources. Prioritize official filings, earnings materials, investor presentations, regulatory documents, reputable industry data, and high quality media. Cite every non-obvious fact with a link and date. 2) Separate facts from interpretation. Tag each paragraph as Fact, Analysis, or Inference. 3) Use precise dates. Avoid vague time references. 4) Quantify claims. Show math for derived metrics. Use tables where helpful. 5) Note uncertainty. Call out missing data and state assumptions. Deliverables A) Executive summary (8 to 12 bullets): snapshot, thesis, rating, price targets and time frames, key drivers, key risks, near-term catalysts, and what would change the call. B) Full memo with sections 1 through 15 below. C) Appendix: source list with links and dates, data tables, and a simple operating model. 1) Thesis framing (purpose: define what must be true to create value) - State the core investment question in one sentence. - List 3 to 5 thesis pillars that would make the stock attractive. - List disconfirming evidence to test that could break the thesis. 2) Market structure and size (purpose: size the prize and trajectory) - Quantify TAM, SAM, SOM. Segment by product line, customer size, industry, and geography. - Identify growth drivers: regulation, replacement cycles, macro activity, technology adoption. - Estimate current penetration and runway. Compare against peer adoption curves. 3) Customer segments and jobs to be done (purpose: map who buys and why) - Describe mix by size band and industry. Identify buyer roles and budget owners. - Detail core workflows and pain points. Explain mission criticality. - Assess switching costs and vendor lock-in by segment. 4) Product and roadmap (purpose: evaluate product-market fit and durability) - Summarize core modules and adjacent products. Call out differentiators. - Compare depth vs breadth versus best point solutions. - Explain implementation time, integrations, configurability, and typical time to value. - Provide quality and reliability signals: uptime, incident history, mobile performance. - Roadmap credibility: stated milestones versus delivery track record. 5) Competitive landscape (purpose: position the company) - Identify direct and indirect competitors by segment and size. - Compare pricing, packaging, and feature gaps. Include switching friction and contract terms. - Summarize win or loss reasons from reviews, case studies, and disclosed data. 6) Go-to-market and distribution (purpose: test scalability of new-logo engine) - Break down demand sources: inbound, outbound, partner referrals, marketplaces. - Sales productivity: ramp, quota attainment, conversion rates where disclosed or inferred. - Role of channels and partnerships: integrations, OEMs, platforms. - Services and customer success model. Training and community as moat. 7) Retention and expansion (purpose: quantify durability of revenue) - Report gross and net dollar retention by cohort and segment if disclosed or estimable. - Explain logo churn drivers and timing. Provide a churn curve if possible. - Identify expansion vectors: seat growth, module attach, usage-based add-ons. - Discuss contract length, renewal mechanics, and price increase policies. - Include reference-call insights or credible review synthesis. 8) Monetization and embedded finance if applicable (purpose: understand usage economics) - Revenue streams and pricing model. For payments or fintech: share of customers active, GTV penetration, take rate by tender type, blended margin, cost stack, fraud exposure, and who holds credit risk. - Revenue recognition: gross vs net. Seasonality and cyclicality. - ARPU uplift from usage products. Payback on onboarding. 9) Unit economics and efficiency (purpose: test scalability with profitable growth) - CAC, payback period, magic number, LTV to CAC by segment if available or estimable. - Contribution margin by line: software vs usage vs services. - Cohort profitability and cash contribution over time. - Implementation and support cost over customer lifetime. 10) Financial profile (purpose: link operations to financial outcomes) - Revenue mix and growth by component. Gross margin by line. Operating leverage path. - Rule of 40 and efficiency trends. GAAP to cash flow bridge. - Leading indicators: billings, RPO, backlog. - SBC, dilution, and share count trajectory. - Liquidity, working capital needs, and path to FCF breakeven and target margin. 11) Moat and data advantage (purpose: assess defensibility) - Workflow depth and data lock-in. Network or ecosystem effects if present. - AI or analytics differentiation with measurable outcomes. - Integration footprint and practical switching costs. 12) Execution quality and organization (purpose: evaluate management and operating cadence) - Leadership track record and stability. Org design and succession. - Engineering velocity: release cadence, defect and incident rates where available. - Customer sentiment: CSAT, NPS, peer review sites, and community signals. 13) Risk inventory and mitigants (purpose: make downside explicit) - Macro, regulatory, competitive, operational, and concentration risks. - Payments, credit, or compliance risks if relevant. - Implementation complexity and time-to-value risks. - For each risk, propose leading indicators and mitigations. 14) Valuation framework (purpose: value with cross-checks) - Public comps table: growth, gross margin, operating margin, Rule of 40, EV to revenue, EV to gross profit. Normalize for any usage or payments reporting differences. - DCF with explicit drivers and sensitivity bands. - Cross-checks: cohort NPV math, S-curve adoption, unit economics to enterprise value sanity checks. 15) Scenarios, catalysts, and monitoring plan (purpose: set expectations and triggers) - 12 to 24 month bear, base, bull cases. Specify NRR, new logos, pricing or take rate, margins, SBC, and share count. Assign probabilities that sum to 100 percent. - Near-term catalysts: product launches, pricing changes, partnerships, market entries, M&A, regulatory outcomes. - Early warning indicators: churn spikes in small cohorts, backlog slippage, uptime incidents, pricing pushback. - What would change my mind: three positive and three negative triggers. Output format - Executive summary - Rating with price targets and time frames - Investment thesis and variant perception - Detailed sections 1 through 15 - Tables and charts embedded - Source list with links and dates - Appendix with model assumptions and calculations Quality bar - No generic claims. Back important statements with numbers and citations. - Label any speculation as Inference. - Be concise and structured. Prefer bullets and tables.
Ported my 10x GME it into PLTR at $29 then watched it drop back to $15. PLTR is in my wheelhouse professionally (head of corp dev in enterprise software). My biggest dollar loss and it was entirely preventible. I knew the metrics, liked what I saw, and liked the future. I felt I was getting taken advantage of with dilution and SBC and got mad at leadership and left. Stupid patience, I need to fricken learn a bit of it. Still hurts.
Till next quarter. Then SBC going to fuck you up lol
I'm not an expert on this company, but just glancing through through their financials it seems kind of weird that they aren't profitable on a GAAP basis (i.e. positive net income). They're staying solvent via SBC, which is giving them positive cash flow. But looking at the income statement, I don't get the massive expense numbers for SG&A and R&D. In particular, on the SG&A expense, why are they spending so much to generate a dollar of sales? I could be wrong, but it seems likely to me that they could do some internal cost cutting and start operating at a profit, and cut down on the SBC as well.
Evan Spiegel has been using SNAP investors as a piggy bank since day 1. He has too much control and no one can stop him due to the structure of the holdings. He is greedy and the stock based compensation at the company is also OUT of Control. He needs to be shown the door and the next CEO shouldn’t become a billionaire by being granted hundreds of millions in SBC. These greedy CEO’S. Karp was doing the same thing with PLTR.
SBC going to cook investors again
Point 3 doesn't really work like that. E.g. MSFT hasn't done a direct offering recently, perhaps since IPO. Last year they had $12B in stock based compensation with $17B in stock buybacks. To the extent a rising stock price helps incentivize mgmt and key employees, that is good. But SBC is really a non cash expense so it shows up in P&L but added back in cash flow. You can say a strong stock price allows a company to have a currency to make better acquisitions, but MSFT can't really buy much of anything these days. Sometimes, like NFLX back in the day, companies leveraged their stock price in their debt borrowing via convertible notes, so that's a decent use case. Overall, there isn't a direct flow from additional capital in secondary markets to internal uses of capital. Theoretically there is via more capital in secondary markets --> more liquidity --> lower liquidity premium --> lower cost of equity --> lower credit spreads in debt markets --> lower overall WACC. But that probably works best for small highly illiquid stocks to begin with that aren't part of standard indexes that get regular flow.
You could release it once every decade, it wouldn't change much in long term planning, people would just frontload bonuses etc and spend the rest of the time getting it back, except now markets would be hyper inefficient because financial models do better with more data End result being that you wouldn't know if a company is burning too much cash or giving too much in SBC until a bankruptcy hit you out of the blue The only real way to force long term plans is to cap bonuses relative to tangible GDP effect, and even that is not airtight
huh? DKNG is profitable and cash flow positive just by one look at their financial statements. that’s also including SBC
CHWY has no moat, operates in a competitive market, and has a 2% net income margin. They also have one of the highest-paid CEOs on the planet and love to dilute their shareholders with continued SBC.
SoFi is the only Fintech bank that combines a Charter bank, a Financial technology payment processing platform, and Cyberbank Core capabilities. A great portion of its revenue is from fee services. It has acquired different companies throughout the years to become the most diversified Fintech Bank. It is not here to play the catch-up game, and acquisitions are the most efficient and fastest way to get crucial items on board. It'll take years to build them in-house if it is even possible. The first to dominate all the functions/products will be the winner, and the winner takes most. It is probably the fastest growing Fintech Bank in US. The CEO is motivated to reach a $45 (90-day average) target PBC (Performance-Based Compensation) by June 1, 2026, to earn over $289 million in SBC.
Can't remember who put Kelly Partners Group (KPG.AX/KPGHF) on my radar ( u/_hiddenscout? ) but I'm finally ready to pull the trigger. They roll up smaller accounting firms into the larger, more efficient business. Their trademarked Partner-Owner-Driver (yes, they actually trademarked the phrase) is where KPG buys 51% interest in the operating business while the operating partner(s) retain 49%. KPG targets smaller accounting firms that primarily service small- and medium-sized businesses, generally firms generating in the range of A$1MM - A$3MM. They never use shares to buy companies and pay no SBC so dilution never occurs. Generally, the companies they purchase thrive with access to the technology, marketing, and other shared resources the parent company can offer. Through 2022 they focused only in their home country of Australia. However, in 2023 they purchased their first US-based firm and in 2024 they purchased 50.1% of Kudos International, which was itself a sort of roll-up company as they had 55 firms across 48 countries. This all has led to non-Australia revenue going from A$582,000 in FY2023 to A$21MM in 2025. Anyway, thanks to whoever put this on my radar many months back. It was a fun deep dive and I think it'll be a long-term market beater for me.
Snap is paying currently $1B/year in SBC, and it's only got a market cap of $12B. It's gotta come from somewhere, and that somewhere is your pockets.
SBC and head counts are two major issued within the company. Not sure if the CEO even cares
look at the SBC of this piece of shit company - you might as well just give your money to their founders instead of buying the stock, its the same thing at this point.
Good call OP. Declining revenues. Flat vehicle sales. Declining profitability. Increasing shares outstanding. 40% SBC. 177x FWD PE. 0.3% FCF Yield. 6% profit margins. BUT, Elon said they will be worth $6T and he will create humanoid robots and eventually have a (driverless) robotaxi network ... maybe, once they get the tech figured out. What could go wrong?
No it's not, period. Your understanding of SBC is fundamentally flawed. Buying back shares reduces equity and concentrates company value onto fewer shares. It's a payout to shareholders, a dividend payout without tax if you will. Your %ownership of the company goes up. It also reduces equity and therefore increases ROE/ROCE "It's a EPS lever" is a very dumbed down way of looking at it.