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https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
The Kobeissi Letter
BREAKING: President Trump says he will be announcing new Pharmaceutical tariffs "soon."
We expect next week to be the most volatile week of the year so far.
BREAKING: The S&P 500 erases -$1 TRILLION of market cap and posts its largest daily decline since March 10th.
Next week is officially "reciprocal tariff week" with the S&P 500 now 50 points away from correction territory.
Buckle up. https://t.co/Y4FTZqWgDj
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The Kobeissi Letter
BREAKING: Crypto market cap losses now exceed -$120 billion today as the selloff accelerates across the board. https://t.co/odAbEdevh5
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The Kobeissi Letter
BREAKING: Gold prices cross above $3,100 for the first time in history as economic uncertainty rises. https://t.co/IxQXOVkUVk
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The Kobeissi Letter
BREAKING: Tesla stock, $TSLA, rises as much as +7% as market react to 25% auto tariff news.
Tesla produces 100% of their cars in the US, but some parts are sourced from outside of the US.
Did Tesla win this round of the trade war? https://t.co/rYFLNqky4E
Auto tariffs are HERE:
President Trump's "Liberation Day" will now include 25% tariffs on cars not made in the US.
This is set to add up to +$12,500 to the price of the average new car SOLD, but not MADE, in the US.
So, why are US automakers crashing?
(a thread) https://t.co/WzBjulVZF7
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Finding Compounders
Just some of my “Buyback stocks” watchlist
Which stocks would you add? https://t.co/lKqsaK1Vko
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The Kobeissi Letter
BREAKING: Copper prices in New York hit a record $11,600 per ton on Wednesday.
Prices have risen ~28% over the last 3 months driven by rising tariff uncertainty.
At the same time, copper prices in London have increased 15% and hit ~$10,000 per ton, the highest since June.
As a result, prices in New York are now ~$1,600 higher than in London, the largest difference on record.
This has created an arbitrage opportunity where traders buy cheaper international cargoes and ship them to the US before tariffs are imposed.
However, they risk significant losses if their copper cargoes arrive after tariffs are implemented.
Truly unprecedented times.
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Investing visuals
$CRWD: simply beautiful👌 https://t.co/F2f2LXONkO
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The Kobeissi Letter
BREAKING: General Motors stock, $GM, extends decline to -8.5% on the day as markets react to 25% auto tariffs. https://t.co/X7tqhZzz2V
Auto tariffs are HERE:
President Trump's "Liberation Day" will now include 25% tariffs on cars not made in the US.
This is set to add up to +$12,500 to the price of the average new car SOLD, but not MADE, in the US.
So, why are US automakers crashing?
(a thread) https://t.co/WzBjulVZF7
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The Kobeissi Letter
Auto tariffs are HERE:
President Trump's "Liberation Day" will now include 25% tariffs on cars not made in the US.
This is set to add up to +$12,500 to the price of the average new car SOLD, but not MADE, in the US.
So, why are US automakers crashing?
(a thread) https://t.co/WzBjulVZF7
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The Kobeissi Letter
The key to profitability right now:
Timing and sentiment are everything in this market.
We continue to see sentiment switch from risk-on to risk-off at a rapid pace.
At 9:45 AM ET this morning, we shifted back to shorts in the S&P 500 after holding longs from 5,500.
It was clear that sentiment had become overly bullish and tariff headwinds were underpriced.
Just hours later, and the S&P 500 is -100 points lower as trade war concerns are back.
Below is one of our clients who was able to capitalize on this swing.
Get ahead of sentiment shifts and this market is incredibly profitable.
@TKLSubscribers Just a portion of the wins today 💪💪thank you! https://t.co/bluzlejIT8
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Finding Compounders
Prem Wasta in his shareholder letter shares some sentiments similar to those shared by Warren Buffett and Tom Murphy
Decentralization !! https://t.co/ddgFf2R27N
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The Kobeissi Letter
BREAKING: The S&P 500 officially falls back below 5700 with market cap losses rising to -$700 billion on the day. https://t.co/0jEUsryaOZ
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
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AkhenOsiris
Don is awesome, posts a massive amount of sell-side info while asking 0 in return. No subscription stuff here.Hello Everyone,- DonCorleone77
I am utterly humbled and honored to have been nominated, along with three other fantastic candidates, for the '@Stocktwits Community Member of the Year' award.
The voting ends in a couple of days. If the type work I do here is useful to you, I would appreciate your support in the voting on Stocktwits.
However, if this type of thing is not of interest to you, please don't worry as I don't want anyone to feel pressured into voting. I am sincerely thankful to be in a position to help other people every day and the outcome of a contest won't change that reality.
If you are willing to place a vote, you can do so through the link below. Simply click on it and select 'DonCorleone77.' If you are not a Stocktwits member, you may need to register to vote. Thanks for your support:
stocktwits.com/StocktwitsPol…
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The Kobeissi Letter
US pension funds are buying massive amounts of stocks this week:
Pension funds are estimated to purchase ~$85 billion of US equities in a quarter-end rebalancing, the most since the 2020 pandemic, according to UBS.
This would mark their second-largest buy on record.
Additionally, US target date funds are projected to acquire $20 billion of stocks, the most since 2022.
The majority of rebalancing would be out of bonds and into equities as the market pulled back this quarter.
As a result, we have seen strong upside in stocks this week.
Can the rally hold once rebalancing ends?
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The Kobeissi Letter
BREAKING: US stocks extend declines with the S&P 500 now down over -1%.
See our thread below on what’s coming next in the trade war. https://t.co/XS6mDyedNJ
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
tweet
The Kobeissi Letter
BREAKING: The S&P 500 erases -$1 TRILLION of market cap and posts its largest daily decline since March 10th.
Next week is officially "reciprocal tariff week" with the S&P 500 now 50 points away from correction territory.
Buckle up. https://t.co/Y4FTZqWgDj
tweet
Quiver Quantitative
Senator Elizabeth Warren: "Some people might call that a pre-bribe" https://t.co/OiYOs3uWRW
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Quiver Quantitative
BREAKING: Senator Kennedy just asked the SEC to look into Sam Bankman-Fried's parents https://t.co/GUshrE6MOI
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The Kobeissi Letter
TRUMP'S 25% AUTO TARIFF IMPACTS:
1. Audi: 100% imported
2. Porsche: 100% imported
3. Ferrari: 100% imported
4. BMW: 50% of US sold cars made in US, parts imported
5. Mercedes: 50% of US sold cars made in US, parts imported
6. Stellantis: ~60% of US sold cars made in US, some parts imported
7. Volkswagen: 15% of sales in US with most parts from North America
Widespread price increases are coming.
Auto tariffs are HERE:
President Trump's "Liberation Day" will now include 25% tariffs on cars not made in the US.
This is set to add up to +$12,500 to the price of the average new car SOLD, but not MADE, in the US.
So, why are US automakers crashing?
(a thread) https://t.co/WzBjulVZF7
tweet
Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $ANET 🧘🏽♂️
•NTM P/E Ratio: 32.74x
•10-Year Mean: 31.71x
•NTM FCF Yield: 3.13%
•10-Year Mean: 3.42%
As you can see, $ANET appears to be trading near fair value
Going forward, investors can expect to receive ~3% LESS in earnings per share & ~8% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ANET is a quality business
BALANCE SHEET✅
•Cash & Equivalents: $8.30B
•Long-Term Debt: $0
$ANET has an excellent balance sheet
RETURN ON CAPITAL✅
•2019: 24.8%
•2020: 19.3%
•2021: 22.1%
•2022: 30.9%
•2023: 31.0%
•2024: 29.3%
RETURN ON EQUITY✅
•2019: 34.1%
•2020: 20.4%
•2021: 23.0%
•2022: 30.5%
•2023: 34.5%
•2024: 33.1%
$ANET has great return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $2.41B
•2024: $7.00B
•CAGR: 23.77%
FREE CASH FLOW✅
•2019: $0.95B
•2024: $3.68B
•CAGR: 31.10%
NORMALIZED EPS✅
•2019: $0.61
•2024: $2.27
•CAGR: 30.05%
SHARE BUYBACKS🆗
•2019 Shares Outstanding: 1.29B
•LTM Shares Outstanding: 1.28B
MARGINS✅
•LTM Gross Margins: 64.1%
•LTM Operating Margins: 42.0%
•LTM Net Income Margins: 40.7%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~3% LESS in EPS & ~8% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ANET has to grow earnings at a 16.37% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly less than the (16.37%) required growth rate:
2025E: $2.49 (9.9% YoY) *FY Dec
2026E: $2.96 (18.7% YoY)
2027E: $3.61 (22.0% YoY)
$ANET has a great track record of meeting analyst estimates ~2 years out, but let’s assume $ANET ends 2027 with $3.61 in EPS & see its CAGR potential assuming different multiples
32x P/E: $115.52💵 … ~14.2% CAGR
30x P/E: $108.30💵 … ~11.6% CAGR
29x P/E: $101.08💵 … ~8.8% CAGR
28x P/E: $93.86💵 … ~6.0% CAGR
As you can see, we’d have to assume >30x multiple for $ANET to have attractive return potential
At 29x earnings $ANET has decent CAGR potential
However, we must be aware of the risk that if data center demand cools, we could see downward revisions in already aggressive growth estimates that could lead to a 10% - 15% multiple contraction
While $ANET is an excellent business, it may not have the same level of predictability as other quality compounders, so we should require a greater margin of safety
If I want to own $ANET, I’d likely consider buying in tranches, 1/3 at $80, 1/3 at $70 & 1/3 at $60
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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AkhenOsiris
My nth order thinking goes: if the sticker shock for buying a new car is too much, you might make the move to EV quicker, as a ways to mitigate gas expense.
Or you'll go the used route and keep guzzling gas.
You're welcome.
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The Kobeissi Letter
BREAKING: Mexico’s president says “we are going to give an integral response to tariffs after April 2nd.”
Reciprocal tariffs on the reciprocal tariffs are coming.
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
tweet
The Kobeissi Letter
Is the used car bubble returning?
As President Trump's 25% auto tariffs go live, the average new car will see $3,000 to $12,500 in new costs.
This is set to pushed used car prices higher just as they started falling following the post-pandemic run.
Your used car may actually start appreciating again.
Auto tariffs are HERE:
President Trump's "Liberation Day" will now include 25% tariffs on cars not made in the US.
This is set to add up to +$12,500 to the price of the average new car SOLD, but not MADE, in the US.
So, why are US automakers crashing?
(a thread) https://t.co/WzBjulVZF7
tweet
App Economy Insights
ChatGPT 4o image creation is insane!
Created from scratch with just a screenshot of our newsletter landing page. https://t.co/lHNA8pesGu
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The Kobeissi Letter
BREAKING: President Trump announces 25% tariffs on “cars not made in the United States.”
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
tweet
The Kobeissi Letter
Talk about a change in sentiment:
After being the hottest stock in the market for years, Nvidia, $NVDA, is down another -6.5% today.
It has now erased over $750B of market cap since its high.
As a result, Nvidia is now worth less than both Apple and Microsoft.
What happened to Nvidia?
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AkhenOsiris
Feels like Fed's Musalem has been talking for over 2 hours 😂
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Value Spotlight (Andrew Sather)
Is the carnage in Alibaba over?
ROIC seems to think so. Two things stand out after looking at 5 years of ROIC https://t.co/FTcWZdCyI5
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The Kobeissi Letter
BREAKING: President Trump to announce new auto tariffs at 4 PM ET, per CNBC. https://t.co/XRQfGqR61n
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
tweet
The Kobeissi Letter
The trade war is back:
Markets are expecting Trump's April 2nd reciprocal tariffs day to be the "end of uncertainty."
But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week.
Here's what's coming next.
(a thread) https://t.co/UPfm1lF7dh
tweet