Technology

Rumble
Rumble Jonathan Poland

Rumble (RUM) is a video sharing platform that was founded by Chris Pavlovski in 2013. It aims to provide an alternative to the more established platforms like YouTube, emphasizing free speech and offering a creator-friendly environment. While Rumble is often associated with conservative voices and creators, it welcomes content from a wide range of perspectives.

One of Rumble’s unique features is its revenue-sharing model, which allows content creators to earn money based on the views their videos generate. This model is designed to be transparent and equitable, giving creators the opportunity to earn a fair share of the platform’s revenue.

Rumble’s user-friendly interface is easy to navigate and offers a variety of categories for users to explore, including news, sports, entertainment, and lifestyle. The platform supports both video on-demand and live streaming, making it a versatile option for creators and viewers alike.

In addition to its primary platform, Rumble Inc. operates other services such as locals.com, which helps creators build their own communities with VOD, podcasts, live chat, polls, and discussions. The Rumble Advertising Center (RAC) is another subsidiary, focused on online advertising management and exchange.

Rumble has seen significant growth in recent years, attracting an increasing number of content creators and viewers. With its commitment to free speech, transparency, and creator support, Rumble continues to establish itself as a strong contender in the competitive world of online video sharing.

as of April 15, 2023
Rumble is very positive on the net current asset front, giving it plenty of capital to get it right. So far, the video network trying to compete with YouTube is bringing plenty of creators that want to chat about topics that YouTube has known to forbid. In the last quarter, Rumble pulled in nearly $20 million in revenue. Average global Monthly Active Users increased 142% to 80 million, a company record, compared to 33 million in the fourth quarter of 2021. Of the 80 million, 65 million were based

Robinhood Markets
Robinhood Markets Jonathan Poland

Robinhood Markets Inc (HOOD) is a financial services company based in the United States that offers a popular investment platform called Robinhood. The company was founded by Baiju Bhatt and Vladimir Tenev in 2013, and its headquarters is located in Menlo Park, California.

Robinhood’s platform is known for its easy-to-use mobile app and web interface that allows individual investors to trade stocks, options, exchange-traded funds (ETFs), and cryptocurrencies without paying any commission fees. The app’s user-friendly design and zero-commission approach have attracted many first-time investors, especially among younger generations.

Robinhood makes money through several revenue streams, such as payment for order flow (PFOF), which is a practice in which the company receives rebates from market makers for directing trade orders to them. Robinhood also earns income from margin lending, interest on uninvested cash, and fees for its premium subscription service called Robinhood Gold, which offers features like instant deposits and access to professional research.

What Is Payment For Order Flow? 

Payment for order flow (PFOF) is a practice in the securities trading industry where a brokerage firm, like Robinhood, receives compensation from a market maker or another liquidity provider in exchange for directing trade orders to them. This practice helps market makers profit from the bid-ask spread while providing liquidity to the market.

Here’s how PFOF works:

  1. A retail investor places an order to buy or sell a security through a brokerage firm.
  2. The brokerage firm routes the order to a market maker or liquidity provider instead of sending it directly to a stock exchange.
  3. The market maker executes the order and often tries to profit from the bid-ask spread or by netting it against other orders.
  4. In return for sending the order to the market maker, the brokerage firm receives a small fee or rebate. This fee is the “payment for order flow.”

PFOF is used by various brokerage firms, particularly those offering commission-free trading. Some well-known brokerages using PFOF include:

  1. Robinhood: As a pioneer of commission-free trading, Robinhood heavily relies on PFOF as a major revenue source.
  2. E*TRADE: This online brokerage firm, now a subsidiary of Morgan Stanley, also employs PFOF to subsidize commission-free trades for its customers.
  3. Charles Schwab: Following the industry trend of commission-free trading, Charles Schwab adopted PFOF as a revenue stream.
  4. TD Ameritrade: Acquired by Charles Schwab, TD Ameritrade is another prominent brokerage firm that uses PFOF.

While PFOF allows brokerage firms to offer commission-free trading, it has been criticized for potentially creating conflicts of interest. Critics argue that this practice may incentivize brokerages to prioritize payments received from market makers over securing the best possible execution price for their customers. However, the SEC regulates PFOF to ensure that brokerages adhere to their legal obligation of providing the best execution possible for their clients’ orders.

as of April 21, 2023
Robinhood is one of the fastest growing companies in the world. It’s barely a decade old and has amassed over 23 million funded accounts on its platform, with 11 million being active monthly. Robinhood also continues to be customer obsessed with new offerings in savings and retirement that are second to none. The issue is how long will it take for the company to grow account sizes from $2,700 to $50,000. That’s the investability question and I think the firm will get there as long as it doesn’t mess up like it did pre-IPO with Gamestop.

Intuit
Intuit Jonathan Poland

Intuit Inc. (INTU) is a provider of financial management and compliance products and services tailored for consumers, small businesses, self-employed individuals, and accounting professionals across the United States, Canada, and globally. The company’s operations span four segments: Small Business & Self-Employed, Consumer, Credit Karma, and ProConnect. The Small Business & Self-Employed segment delivers QuickBooks online services and desktop software solutions, which include QuickBooks Online Advanced, QuickBooks Enterprise, QuickBooks Self-Employed, QuickBooks Commerce, QuickBooks Online Accountant, and a range of payroll solutions. It also provides payment-processing solutions, QuickBooks Cash business bank accounts, and financial resources and financing for small businesses.

The Consumer segment supplies TurboTax income tax preparation products and services, along with personal finance tools. Credit Karma, another segment, provides a personal finance platform offering individualized recommendations for home, auto, and personal loans, credit cards, and insurance products. The ProConnect segment encompasses Lacerte, ProSeries, and ProFile desktop tax-preparation software products, as well as ProConnect Tax Online tax products, electronic tax filing services, and related banking products and services. Intuit markets its products and services through a diverse range of sales and distribution channels, including multi-channel shop-and-buy experiences, websites, call centers, mobile app stores, and retail and other outlets. The company, established in 1983, has its headquarters in Mountain View, California.

as of May 14, 2023

Through the past decade, total revenue at Intuit has increased from $3.9 billion in 2013 to more than $13.6 billion in the last twelve months. During that decade of growth, net income grew as well, albeit slightly less, from $858 million to over $1.9 billion. Intuit saw a rise of $104 billion in market value on just $8 billion in retained earnings. While the company’s latest acquisitions will eventually bear fruit and its legacy products will retain high market share for decades to come, I would be shocked if the company will continue to produce $13 in market value for every $1 it retains. However, let’s say this ratio is cut in half and in the next decade Intuit only grows net profit at the same 8.5% annualized rate as it did over the last decade. It would add north of $18 billion in retained earnings to its books, which could translate into an additional $115 billion in market value. 

Advanced Micro Devices
Advanced Micro Devices Jonathan Poland

Advanced Micro Devices Inc. (AMD) is an American multinational semiconductor company that designs and manufactures computer processors, graphics processing units (GPUs), and other related technologies. The company was founded in 1969 and is headquartered in Santa Clara, California. AMD is one of the leading producers of processors for personal computers, servers, and gaming consoles. Its processors are used in a variety of devices, from laptops and desktop computers to servers and data centers. AMD’s Ryzen and EPYC processors are particularly popular among gamers and data center operators.

In addition to processors, AMD is also known for its Radeon line of graphics cards, which are used for gaming, professional graphics, and machine learning applications. The company’s graphics technology is used by a range of customers, from individual gamers to major corporations. AMD competes with several other semiconductor companies, including Intel and Nvidia. However, in recent years, AMD has gained market share due to the success of its Ryzen processors and Radeon graphics cards, as well as its strategic partnerships with companies like Microsoft and Sony, which use AMD technology in their gaming consoles.

As of March 2023, it employs 25,000 people and in the United States, Canada, China, India, and Europe. It serves original equipment and design manufacturers, public cloud service providers, system integrators, independent distributors, online and brick and mortar retailers, and add-in-board manufacturers through its direct sales force, independent distributors, and sales representatives.

as of March 7, 2023

Advanced Micro is one of those companies that I have seen trade sideways and now is up north of 40x over the last 10 years. It is one of the select few that can produce at scale in the industry. It’s still growing and financially sound, $3 billion in net cash and 45% gross margins on $25 billion in sales. The $130 billion market cap seems low at this point, even after the massive run the stock has made.

Alphabet Inc.
Alphabet Inc. Jonathan Poland

Alphabet Inc. (GOOG) is a multinational technology company based in Mountain View, California, United States. It was created in 2015 as a holding company for Google, the world’s most popular search engine, and its various other subsidiaries. Google, which is Alphabet’s most well-known subsidiary, offers a range of products and services such as the Google search engine, Google Maps, Google Drive, Google Docs, Gmail, and YouTube. Google also produces the Android mobile operating system, which powers a large percentage of the world’s smartphones and tablets. Alphabet Inc. operates globally, with a presence in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. The company is divided into three main segments: Google Services, Google Cloud, and Other Bets.

The Google Services segment provides a wide range of products and services, including ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It also involves the sale of apps and digital content in the Google Play store, Fitbit wearable devices, Google Nest home products, Pixel phones, and other devices, as well as YouTube non-advertising services. The Google Cloud segment offers infrastructure, cybersecurity, data, analytics, AI, machine learning, and other services. It also includes Google Workspace, a suite of cloud-based collaboration tools for enterprises such as Gmail, Docs, Drive, Calendar, and Meet, as well as other services for enterprise customers. Finally, the Other Bets segment focuses on the development and sale of health technology and internet services.

as of March 7, 2023

Just like with Microsoft and Apple, Alphabet is apart of the trillion dollar capitalization club. $60 billion in net income on $282 billion in revenue makes it one of the best companies in technology. The 15x forward earnings multiple may look cheap, but can it 4x sales and profits in the next 10-20 years? Or sooner? If it did, Alphabet would be pulling in $1 trillion in sales and nearly a quarter of a trillion in profit. Now, I realize money is pointless to talk about because the commodity is not what it once was, but those are ridiculous thoughts. It would say more about our society than the health of any one company. I think the same way about almost any organization, especially the TDCC ones. At Google, ad sales drive most of the financials and that’s a problem. Only time will tell if it will finally profit off YouTube.

Microsoft Corporation
Microsoft Corporation Jonathan Poland

Microsoft Corporation (MSFT) is a multinational technology company headquartered in Redmond, Washington, United States. It was founded in 1975 by Bill Gates and Paul Allen, and it is best known for its software products such as the Windows operating system and the Microsoft Office suite. Microsoft is one of the largest technology companies in the world, as of March 2023. It employs over 200,000 people worldwide and has a presence in more than 190 countries. Microsoft sells its products through a range of channels, including OEMs, distributors, and resellers, as well as digital marketplaces, online stores, and retail stores and operates through three main segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

The Productivity and Business Processes segment includes a range of software products such as Microsoft Office, Exchange, SharePoint, Microsoft Teams, Skype for Business, Outlook.com, OneDrive, and LinkedIn. It also offers Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions. Additionally, this segment provides Office 365 Security and Compliance, Microsoft Viva, and professional services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions.

The Intelligent Cloud segment licenses a variety of software products, including SQL, Windows Servers, Visual Studio, and System Center, along with related Client Access Licenses. It also includes GitHub, a collaboration platform and code hosting service for developers, as well as Nuance, which provides healthcare and enterprise AI solutions. The flagship offering of this segment is Azure, a cloud platform that supports enterprise workloads and provides additional enterprise support, Microsoft consulting, and training and certification on Microsoft products.

The More Personal Computing segment includes licensing of the Windows operating system for original equipment manufacturers (OEMs) and other non-volume licensing, Windows Commercial for volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings. It also includes patent licensing and Windows Internet of Things. In addition, this segment provides a range of devices such as Surface tablets, PCs, PC accessories, gaming and entertainment consoles, and other devices. It also includes Gaming, which encompasses Xbox hardware, content, and services, as well as video games and third-party video game royalties. Finally, this segment includes Search, which consists of Bing and Microsoft advertising.

as of March 7, 2023

Okay, this company is massive and continues to be a leader in the technology sector. That said, it’s a $2 trillion company and how much bigger can the pie get at this point? I’m pretty bearish on the entire market right now (with some minor exceptions) and with the amount of money outpacing the value of capital it’s attached to, Microsoft is going to have a hard time growing at 10% a year. It has plenty of cash along with superb revenue and net income numbers. It would be dumb to bet against the company, even if the next decade followed the early 2000’s. I’m not saying that I think it will, just that anytime a company gets this large, the average shareholder should invest via a proxy like VOO or SPY and not directly.

Intel Corporation
Intel Corporation Jonathan Poland

Intel Corporation (INTC) is an American multinational technology company that designs and manufactures computer processors and other related products. It was founded in 1968 by Robert Noyce and Gordon Moore, and its headquarters are located in Santa Clara, California. Intel is one of the world’s largest and most influential semiconductor chip makers, with its products being used in a wide range of devices, including personal computers, servers, smartphones, tablets, and other embedded systems. The company is also involved in developing other technologies such as artificial intelligence, autonomous vehicles, and the Internet of Things. The company has been at the forefront of computer processor innovation for many years, with its Intel Core series of processors being widely used in personal computers and servers. It has also been active in the development of new memory technologies, including 3D XPoint and Optane Memory. Intel operates in many countries around the world and has a diverse workforce of over 130,000 employees.

as of March 6, 2023

$106 billion cap seems like a high number considering income and revenue figures, which have not been impressive. R&D is up and net income is still high, down over the last twelve months, but only a 100% owner would be happy at this price point. Intel booked around $140 billion in earnings over the last decade, but only $35 billion made it to retained earnings. That translated to 216% gain by April 2021. Fast forward to today and the stock is down 60% from those highs. Could it get back to those levels? Sure. In fact, it’s likely the company will, I just don’t like it.

Apple Inc.
Apple Inc. Jonathan Poland

Apple Inc. (AAPL) is a technology company that designs, manufactures, and sells consumer electronics, computer software, and online services. The company was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne and is headquartered in Cupertino, California. Apple’s product line includes a range of popular devices such as the iPhone, iPad, Mac, Apple Watch, and Apple TV, as well as a range of software and services including the macOS and iOS operating systems, the iTunes media player, the Apple Music streaming service, and the iCloud storage and backup service. Over the years, Apple has become one of the most valuable companies in the world (circa 2023). The company’s success is due in large part to its strong brand identity, innovative design, and marketing strategies, as well as its ability to create seamless integration between its hardware and software offerings.

as of March 6, 2023

Apple is currently valued at $2.4 Trillion, in USD. That’s a lot. It has 164,000+ employees and generates nearly $600,000 in net profit for everyone of them annually. That’s impressive. Oh, and it’s continued to grow at about 12% a year in the last 5 years, which is why its stock is up 250% in that time.  There are no secrets to its success – technology products everyone wants to use. It will be around for decades to come, but is unlikely to produce similar results for investors.

Synopsys, Inc.
Synopsys, Inc. Jonathan Poland

Synopsys, Inc. (SNPS) specializes in developing electronic design automation (EDA) software products for designing and testing integrated circuits. Their product offerings include solutions for digital and custom IC design, verification, FPGA design, intellectual property (IP), and system-on-chip (SoC) infrastructure. Their Digital and Custom IC Design solution provides digital design implementation solutions, while the Verification solution offers a range of verification options including virtual prototyping, static and formal verification, simulation, emulation, FPGA-based prototyping, and debug solutions.

Synopsys also provides IP solutions for a variety of applications such as USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy. They offer logic libraries, embedded memories, processor cores, software, and application-specific instruction-set processor tools for embedded applications. Additionally, they provide security IP solutions, IP solutions for the automotive market, and SoC infrastructure IP, datapath and building block IP, and verification IP products. The company offers various tools such as HAPS FPGA-based prototyping systems, virtual prototyping solutions, and Platform Architect solutions for SoC architecture analysis and optimization. They also provide a series of tools for designing optical systems and photonic devices.

Synopsys offers additional services such as security testing, managed services, programs and professional services, and training to help their customers detect and remediate security vulnerabilities and defects in the software development lifecycle. They serve customers in a variety of industries including electronics, financial services, automotive, medicine, energy, and industrial areas.

as of February 22, 2023

A look at the company’s numbers and it’s easy to see why the stock is up big. Since 2013, every dollar in retained earnings has equated to $11 worth of market value. If that number continues, it’s only a matter of time before the company is worth over $1 trillion. That is not likely to happen anytime soon, but the question is this… priced at $54 billion, could it 10x in the next 10 years? No. If the current 16% retained earnings growth rate continues, the top end market cap would be in the $330 billion range. Don’t get me wrong, that’s fantastic growth. In fact, if achieved and you own some stock, please pat yourself on the back. The problem with this is that the total addressable market for EDA solutions is anticipated to reach somewhere close to $20 billion by the end of the decade. Synopsys gets more than 65% of its revenue from this segment. Today, that equates to 50% of the the market. Saying that it can keep that market share, it would be doing around $15 billion in sales by 2030. At 10x sales, that’s a $150 billion valuation… not quite 3x from today’s price.

International Business Machines
International Business Machines Jonathan Poland

International Business Machines Corporation (IBM) provides integrated solutions and services to clients across the globe. The company consists of four segments: Software, Consulting, Infrastructure, and Financing. The Software segment offers a range of hybrid cloud platform and software solutions, such as enterprise open-source solutions, business automation software, AIOps and management, integration, and application servers, data and artificial intelligence solutions, and security software and services. It also provides transaction processing software for banking, airline, and retail industries. The Consulting segment offers business transformation services, technology consulting services, and application and cloud platform services. The Infrastructure segment provides on-premises and cloud-based server and storage solutions, as well as support services and solutions for hybrid cloud infrastructure, and remanufacturing and remarketing services for used equipment. The Financing segment offers leasing, installment payment, loan financing, and short-term working capital financing services. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

as of February 14, 2023

Remember Watson? The AI that crushed Jeopardy? Yeah, neither do ChatGPT users. IBM is a consulting firm, not a technology firm,. It’s closer to Accenture than Apple or Google. That’s the biggest problem it has. That is why the firm only gets $190k per employee on the top line and about $6,000 in bottom line net profit. That’s horrific. Apple generates 100x more per employee. Yet, with a $120 billion market cap, for some reason IBM looks cheap. I want to cheer for this company, but they’ve got to figure out how to become a technology company again.

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