Most of this week’s content has already been published. In case you missed it:

• Alphabet Earnings Review

• Tesla Earnings Review

• Chipotle Earnings Review

• ServiceNow Earnings Review

• My Updated Portfolio & Performance with a New Holding

Next Week Is Going To Be Hectic:

• SoFi & PayPal Reviews Coming Tuesday.

• Starbucks & Meta Reviews Coming Wednesday.

• Amazon & Robinhood Reviews Coming Thursday.

• Spotify, Microsoft, Apple & Airbnb Reviews (Hopefully all) Coming Saturday. Airbnb may get pushed to the following week.

• Saturday coverage will also include quantitative data & consumer/macro commentary from Visa and Mastercard, as well as brief snapshots for Reddit & Roblox.

Table of Contents

• 1. MercadoLibre (MELI) – Argentina

• 2. Amazon (AMZN) – More False Alarms & India

• 3. SoFi (SOFI) – Miscellaneous

• 4. Duolingo (DUOL) – An Uninspiring Bear Case & A …

  • a. Begrudgingly Giving Citron Way More Attention T …

  • b. 40%+ Pop

• 5. UBER (UBER) – AV Partner Network & the FTC

• 6. Shopify (SHOP) – Growth Levers

• 7. Headlines

• 8. Macro

  • Output Data:

  • Consumer & Employment Data:

1. MercadoLibre (MELI) – Argentina

Argentina represents a little over 20% of MELI’s total revenue and is arguably tied with Mexico for its second most important market. Considering this, economic weakening and rampant hyperinflation in that nation have hindered Meli’s financial performance. They’ve been able to effectively overcome this headwind, but they may not need to for much longer. MELI already posted its fastest rate of growth there in a year during Q4, and more tailwinds seem to be coming. According to that nation’s Secretary of Labor, Employment and Social Security, real paycheck levels set a 6-year high to start 2025. When pairing that with rapidly falling inflation levels (more progress still needed), the consumer there should be feeling relatively better. And that should be good for this e-commerce market share king.

2. Amazon (AMZN) – More False Alarms & India

This week, Wells Fargo and Cowen released notes talking about AWS pausing data center leases globally as demand for its infrastructure waned. These are reliable secondary sources… but I prefer primary sources whenever accessible. Luckily, Amazon’s VP of Global Data Centers took to LinkedIn to directly respond to these notes. He called demand levels strong and said “there haven’t been any recent fundamental changes to expansion plans.” He discussed Amazon constantly weighing various allocations of CapEx and capacity to isolate the best option, but overall investment levels aren’t changing or pausing. Thank you to that VP, Kevin Miller, for this timely response.

In other news, rumors are swirling about a trade deal between the USA and India being in its final stages. Additional rumors indicate that the USA is pushing hard to open that massive e-commerce market for both Amazon and Walmart (WMT). Currently, foreign e-commerce vendors in that nation are banned from selling products made by other companies they control. Amazon leaned on its own wholesale business to supply much of that marketplace. They cannot sell owned 1st-party inventory either and instead have to rely on local sellers to populate its selection. India is massive. India is business-friendly and USA-friendly. India has a rapidly growing middle class and a growing population overall. Gaining full access to this lucrative market would be a material win for both companies. We shall see what happens.

Raymond James downgraded Amazon to hold, but that was before comments made from the USA and China about cutting tariffs.

3. SoFi (SOFI) – Miscellaneous

SoFi added more private market access through a partnership with TemplumHQ. This will include access to Anthropic, which I think is quite material. Gaining access to SpaceX was needle-moving for top-of-funnel SoFi Invest growth, and Anthropic is arguably the most popular GenAI pure-play not named OpenAI.

SoFi officially introduced SmartStart, as a new student loan refinancing option. This allows consumers to make interest-only payments for 9 months, with no fees and the ability to effectively lower total payment due considerably. 

The nice part about SoFi’s immense retail attention is that there are always a ton of eyeballs on everything. Last week, it was folks digging up their source code that showed a crypto launch was imminent. This week, someone noticed a subtle 11 million member disclosure on a random page of their website. That’s a good number, as it potentially represents SoFi’s fastest Q/Q member growth in 18 months. But there’s a large caveat. This was discovered 24 days into calendar Q2. It’s unclear how much of the growth came during January-March and how much came so far in April. Regardless, this leaves SoFi with a great chance to still deliver its best growth in over a year.

Finally, Citizens JMP’s highly regarded analyst initiated SoFi with an outperform rating and a $17 price target. They’re optimistic about growth prospects and the multiple you have to currently pay to own those growth prospects. Smart firm.

4. Duolingo (DUOL) – An Uninspiring Bear Case & A Pop

a. Begrudgingly Giving Citron Way More Attention Than They & Andrew Left Deserve

Citron came out with a bearish note on Duolingo this week. Candidly, based on Andrew Left’s track record and the shady legal trouble he has gotten himself into with shorting, this is not someone I pay much attention to. There are great short sellers out there. He isn’t one of them. Still, I received questions about the post that I wanted to address. I’ll try to do so as respectfully as I can. Left thinks ChatGPT replaces Duolingo’s language learning function. That’s despite ChatGPT language learning functions and GenAI tutors existing for years and Duolingo’s growth trajectory being what you see below.

It’s true that Duolingo is an educational product, but its main use case is still entertainment, gamification and fun. The magic is in helping learn a language while they have that fun. It’s an engaging, addictive, competition-fostering product where 25% of its daily users have used the app for at least the last 365 days straight. Does he really think interacting with ChatGPT replaces that educational entertainment niche? I don’t. That’s like saying “why would I play chess (which Duolingo announced as its newest course this week) when I can just ask ChatGPT what the game is like?” “Why learn how to play pickleball when I can just ask ChatGPT what the rules are?” This person must just hate fun, which is the attribute that has made DUOL so successful. He even compared Duolingo to Chegg and how GenAI destroyed the latter means it will destroy the former. Maybe he thinks ChatGPT came out today for Duolingo but somehow came out a few years ago for Chegg? Otherwise, why would Duolingo be immune to these identical competitive risks for multiple years while Chegg died from them? Counterintuitive and contradictory. 

Other bear cases included saying its multiple is higher than Datadog and Snowflake. That’s mainly true. Duolingo trades for 48x forward FCF. Snowflake also trades for 48x forward and Datadog about 42x forward. At the same time, 2-year FCF CAGR for Duolingo is expected to be 31%, while the other two are expected to be around 25%. Furthermore, Duolingo delivered 1% Y/Y share dilution in 2024 without a buyback, which is slightly lower than the other two.

Lastly, he talked about Duolingo Max being just 0.4% of total users as a red flag. This one made me chuckle especially hard. Do you know why it’s such a low percentage? Because the product is less than a year old and because it has a massive base of 117 million. It has already reached 5% of total subscribers, while subs as a percent of MAUs shot higher last quarter from 8.3% to 8.8%. What a nothing-burger this was.

Meanwhile, Morgan Stanley (who Citron cited in their report as saying things that were “alarming”) initiated Duolingo with a buy rating and a $435 price target.

b. 40%+ Pop

I almost delayed this because of the Citron note and to make it clear this planned move you see below was in no way related to their underwhelming posts. But? I won’t let that firm impact any piece of the investment process. They’re irrelevant to me and I will treat them as such.

On March 11th, I added to my Duolingo stake. The timing happened to be fortuitous. In a little over a month, shares have furiously rallied by 44%. We are still not out of the woods for geopolitical risk and trade wars. Duolingo is arguably my most insulated holding from all of that, but again, nothing is fully immune. As volatility remains very elevated, I have decided to take that piece back off of this position. I want to take advantage of multiple years worth of above market returns in this highly chaotic backdrop as I think this is prudent risk management.  Following the planned trim Monday morning, this will still be a top 10 holding.

5. UBER (UBER) – AV Partner Network & the FTC

Uber is partnering with Volkswagen's autonomous vehicle (AV) subsidiary to deploy “thousands” of autonomous electric vans over the next decade. Testing will start this year and the first commercial deployment will happen in LA next year. The vans will be human-operated at the beginning as it works towards needed regulatory approvals.

When pairing this with the upbeat Waymo commentary from the Google earnings call,  it was a good week for Uber’s AV partner network & competitive positioning. There will be many more positive and negative headlines as AV providers work towards commercialization, but I still expect this to be the de facto demand aggregator of the future. The AV hardware monopoly risk that could have prevented this shrinks with every deployment like this one… and there will be several others across the globe this year from companies not named Tesla. Saying that to people often makes them very surprised. But? We need to look outside of public markets for the true competitive landscape here. Competitors in private markets are a dime a dozen and many are well funded. Some will fail. Some won’t. It’s worth noting that I do expect Tesla to be largely successful in this arena, I just don’t think their 90% market share projection is based in reality. Luckily for bulls, it doesn’t need to be for this to work.

The FTC sued Uber over its Uber One subscription service billing and subscription cancellation friction. I think this FTC action, like most others, won’t amount to much.  Maybe a symbolic slap on the wrist.

6. Shopify (SHOP) – Growth Levers

During the pandemic, Shopify instituted a rule exempting app developers in its ecosystem from its 15% take rate for their first $1 million in annual revenue. Now, the exemption applies to lifetime revenue. I expect this to have zero material impact on developer interest and traction, as the app store fee is still much lower than others. As a result, this should be a subtle boost to revenue growth. That growth should come with a sky-high incremental margin too. This is the luxury of having a mission critical, wildly sticky platform that merchants flock to for handling all parts of their commerce operating system. It makes Shopify indispensable and allows it to do things like this, as well as hike prices for subscription tiers, with zero material churn. That’s not normal… but Shopify is not normal. Special company.

7. Headlines

PayPal and Coinbase are tightening their stablecoin partnership. Coinbase is removing all fees associated with purchasing PYUSD. Coinbase is doing this to “accelerate adoption” and that makes me excited. That’s the highest-quality brand in crypto (by a mile) and it’s determined to support PayPal’s stablecoin journey. They will also work together to debut new joint products. PayPal also launched a new office in Dubai.

Alphabet will require employees to work in the office for at least 3 days per week.

Meta launched its “Edits app” for Instagram content creators. Meta is also launching its highly successful smart glasses across more EU nations.

Apple will reportedly move all iPhone assembly to India and out of China starting next year.

Roth initiated CrowdStrike and SentinelOne as buys and Zscaler with a neutral rating.

8. Macro

Output Data:

• The Manufacturing Purchasing Managers Index (PMI) for April was 50.7 vs. 49 expected and 50.2 last month.

• The Services PMI for April was 51.4 vs. 52.8 expected and 54.4 last month.

• Durable Goods Orders M/M for March rose 9.2% M/M vs. 2.1% expected and 0.9% last month. Likely related to auto order pull forwards to sidestep tariffs. Core durable goods orders (which excludes things like transportation equipment) rose 0% M/M vs.0.3% growth expected.

Consumer & Employment Data:

• New Home Sales for March were 724,000 vs. 684,000 expected and 674,000 last month.

• Continuing Jobless Claims were 1.84M vs. 1.88M expected and 1.88M last report.

• Initial Jobless Claims were 222,000 vs. 222,000 expected and 216,000 last month.