Growth & Total Return Weekly Chat

This is the forum for Growth & Total Return discussion on Seeking Alpha. A new chat begins every two weeks, and all previous blogs are listed in chronological succession on the main chat page. We won’t be doing any comment cleanup in the new chat, and users will always be able to refer back to previous discussions.

More on Today’s Markets:

SoFi Technologies (NASDAQ:SOFI) is no longer the niche digital lender it was in the past. Over the last few years, it has grown increasingly to be a full-stack, vertically integrated financial platform offering lending, banking, investments, credit cards, and infrastructure technology under one digital umbrella. SoFi is evolving from a lending-first disruptor into a diversified fintech platform with powerful earnings potential. In 2024, fee-based segments made up nearly half of revenue, signaling a major pivot toward capital-light, high-ROE growth. With expanding product monetization and strategic execution, SoFi is building a durable engine for long-term compounding.

Assessing newly public companies is quite difficult both qualitatively and quantitatively. It’s difficult qualitatively because they don’t have a long track record. Capitalism is brutal, and has a way of destroying the best laid plans of mice and men. Without a clear track record, investors need to find some other way of gaining confidence that the company has competitive advantages that will allow it to grow and thrive. It’s difficult qualitatively because newly public companies often have noisy or negative earnings. As an investor that places little faith in EBITDA, preferring GAAP earnings and free cash flow, the process of valuation becomes a little opaque. Nonetheless, I think it can be done. I use a version of Peter Lynch’s valuation method for fast growers, updated for the current investing landscape.

Coupang has been growing like gangbusters for years, and we’ll be looking at the growth under the lens of the current, relatively cheap entry point. We’ll be looking at their success this year (on a non-GAAP basis) and also reconciling the very confusing GAAP bottom line this year, which was related both to tax differences and how South Korea handles a fine levied that’s still under appeal. If we were in South Korea, you’d all immediately know who we’re talking about here. It might not be immediately clear for investors elsewhere, however, so as a brief primer on the matter, Coupang envisions itself as becoming the “Amazon of South Korea.”

AudioEye, Inc. (NASDAQ:AEYE) recently reported its Q4 2024 financial results, missing revenue but matching earnings estimates. I previously wrote about AEYE in March 2023 with a Hold outlook due to lengthening sales cycles. While revenue growth has returned, macroeconomic clouds are forming due to the effects of tariffs and downward U.S. federal government spending pressures. I remain a neutral Hold on AEYE on uncertain revenue growth and continued high investment in SG&A.

I gave a buy rating to TKO Group Holdings (TKO) in September last year, with my key thesis being that TKO enjoys a strong secular demand tailwind, and I did not foresee any problems with the UFC/ESPN deal. While the recent share price weakness may have spooked some investors, I actually see it as a buying opportunity. The fundamentals remain intact, and I am more bullish about the likelihood of the UFC/ESPN renewal deal.

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