Happy Sunday.
We hope you all had restful and restorative weekends. If you’re still trying to find a great way to spend the rest of your Sunday evening, you should take a listen to this week’s episode of the All In Podcast.
They highlight how Klarna did a wonderful job using generative AI to replace customer service representatives within their business while maintaining the same level of satisfaction per request.
We’re just getting started with artificial intelligence. I know we’ve seen some companies like Nvidia and AMD and others skyrocket in valuation over the last 18-24 months, but that’s just from the raw goods side of the equation.
Of course, the companies selling at the bottom of the supply chain will see the first major boost in favor from the markets — as time goes on we’ll begin to see the companies who are using generative AI to boost productivity in their business get rewarded by the markets as well.
Klarna was the first headline example — begin to expect countless more.
Portfolio Updates:
It’s a new month, which means fresh capital to deploy into the markets. My goal this month to deploy $5K toward the above-shown Dividend Growth Portfolio and $10K toward the below-shown cryptocurrency portfolio.
As you all know, I’m long-term bullish on many of the names inside of the Dividend Growth Portfolio — and will own these names for decades to come. However, the reason I’m allocating more toward cryptocurrency right now (and have been for quite sometime) is because of the underlying catalysts for price appreciation.
Demand via Spot Bitcoin ETFs
Last week there were 30,029 Bitcoin purchased by spot Bitcoin ETF issuers to cover their inflow of assets under management. During the same period of time, 6,160 new Bitcoin were created by miners on the blockchain.
Do you see what’s happening? More Bitcoin is getting scooped up by these massive institutions to cover the demand of their ETFs than is being mined on the blockchain. This is called “Supply and Demand” and we all know what happens to the price of the underlying asset in a situation like this.
Bitcoin Halving Supply Shock
Speaking of supply — every 4 years or so the underlying code that created Bitcoin forces miners to “mine” half as many new Bitcoin every 10 minutes, resulting in a supply shock. These events, dubbed “halvings,” have catalyzed the price of Bitcoin to skyrocket over the following 6-18 months. The next "halving” is slated to take place mid-April.
I can’t predict where the price of Bitcoin is precisely going — but I do have a great feeling about a further trend up and to the right.
I’ll continue to pile money into cryptocurrency, hopefully see the price of Bitcoin, Ethereum, and Chainlink trend higher throughout 2024 and 2025 — then turn my magic internet coins into real-life money.
Feel free to follow along on this journey!
Week in Review — Too Long, Didn’t Read:
HIMS guides to $150M in adj. EBITDA, a new dividend by Salesforce, Celsius is officially a billion dollar business, Musk sues OpenAI, JPMorgan’s Chief Market Strategist predicts stagflation, Apple calls it quits on cars, Core PCE came in as expected, and the newest Q4 GDP estimate was a bit cooler than anticipated.
Key Earnings Announcements:
HIMS guides to $150M in adj. EBITDA, a new dividend by Salesforce, and Celsius is officially a billion dollar business.
Hims and Hers Health (HIMS)
Key Metrics
Revenue: $246.6 million, an increase of +47% YoY
Operating Loss: -$0.4 million, compared to -$11.6 million last year
Profits: $1.2 million, compared to -$10.9 million last year
Earnings Release Callout
“In 2024, we expect to eclipse $1 billion in revenue and deliver our first full year of net income profitability through a continued focus on building personalized and accessible treatments in each of our core specialties.
We believe this approach will meaningfully break down barriers that keep individuals from seeking treatment, which will allow us to bring these unique offerings to tens of millions of subscribers over time.”
My Takeaway
Well, a long-term winner actually turned into a winner — and it certainly took a long-time! Haha. As you all know, I’ve been bullish on HIMS for over two years — pointing toward their operational efficiency, success with advertising, growing subscription base, and expanding total addressable market.
The company reported a solid Q4 beat with meaningfully better-than-expected 2024 guidance as shared above. Management expected revenue to land around $1.2B, implying +36% growth. Adj. EBITDA is expected to land around $120M, over +50% higher than Wall Street’s $72M expectation!
Management highlighted strong traction received by the personalized offerings across all specialties, with over 35% of new subscribers opting for customized solutions in 2023. Looking ahead, management reiterated long-term adj. EBITDA margin goal of 20% to 30% — aiming to hit this target no later than 2030.
The company surpassed 1.5M subscribers in 2023, delivering +48% growth YoY and +8% sequentially. Gross margins ticked up to 83%, reflecting a +4% improvement over last year’s quarter. The company is moving!
As a long-term shareholder, I’ve been on the rollercoaster now for what seems like years — and I couldn’t be happier. I even wrote about the stock publicly on Seeking Alpha late-2022. It’s up +95% since publication, outpacing the Nasdaq by +30% during the same period of time. I’ll remain a very happy shareholder.
Salesforce (CRM)
Key Metrics
Revenue: $9.3 billion, an increase of +11% YoY
Operating Income: $1.6 billion, an increase of +354% YoY
Profits: $1.4 billion, compared to -$98.0 million last year
Earnings Release Callout
“It's been a phenomenal year of transformation for Salesforce with strong performance across all our key metrics, including record cash flow and margin growth. Our total remaining performance obligation ended the fourth quarter at $56.9 billion, an increase of 17% year-over-year.
We’re also thrilled to initiate our first-ever Salesforce dividend and increase our share buyback plan by $10 billion.”
My Takeaway
Woohoo! Did you see that? A newly issued dividend by Salesforce! I’m so dang excited. First Meta Platforms, and now Salesforce!
From a demand perspective, management indicated that the “green shoots” they observed last quarter re: AI and Data Cloud are still continuing into 2024 — indicating a stable and measurable buying environment. The company remains enthusiastic about some of their early renewals to start the year as well as a few underlying catalysts for further growth in 2024 — data cloud, and updated pricing + package changes.
However, 2024 guidance was below Wall Street’s expectations — with +10% subscription revenue growth being -1% below consensus. With that said, Wall Street bulls are cautiously optimistic about continued divergence between current remaining performance obligations and subscription revenue guidance providing some revenue cushion QoQ, and what seems like conservative assumptions for the adoption of new products.
From a profitability perspective, the company ended the year at a 30.5% Non-GAAP operating margin (compared to 27% initial guidance). The company guided to 32.5% Non-GAAP operating margin in 2024 — with free cash flow to come in around at a 25% margin.
I’ll remain a very happy Salesforce shareholder throughout 2024 — the company is doing everything right, margins are ticking higher, cRPOs are continuing to allude to steady revenue growth, and they’re now paying a dividend! I couldn’t be happier.
Celsius (CELH)
Key Metrics
Revenue: $347.4 million, an increase of +95% YoY
Operating Income: $58.9 million, compared to -$32.7 million last year
Profits: $67.8 million, compared to -$28.2 million last year
Earnings Release Callout
“During the fourth quarter of 2023, Celsius delivered record revenue of $347 million and more than $39 million in net income, driven by expanded availability of our products and increased consumer awareness. We continued to drive growth of the category by bringing in new loyal consumers, as well as increasing consumption occasions.”
My Takeaway
Celsius has been a household name for what seems like a few years now since they really began picking up traction during the pandemic. What started with random influencers on TikTok has turned into some of the world’s most recognizable celebrities now promoting this energy drink company to their audiences.
For full transparency, I opened a $4K position in Celsius inside of one of my retirement accounts after watching this YouTube video posted by my friends Chris, Dave, and Jordan on YouTube. If you’re not yet subscribed to their YouTube channel you seriously are missing out. These guys spot trends before anyone else I know and always have a way to trade them.
Celsius saw a wonderfully strong finish to 2023 — with $1.3B in sales (up +102% YoY) while also crossing the incredibly important 10% market share mark in the energy drink sector. The company remains a revenue story, as their sales continue to skyrocket — causing SG&A leverage, increasing their margins.
Wall Street is expecting Celsius to grow +40% compounded annually throughout 2024 and 2025 — landing them somewhere around $2.5B in 2025. Untracked channel for the company continue to be a tailwind — Amazon sales were up +86% with market share reaching 20%. International rollout still seems to be in its early days — with Canada performing very well over it’s first two months of sales.
If you haven’t yet looked into this company, consider doing so — their partnership with Pepsi and favor by Gen Z keep them at the forefront of tens of millions of consumers around the country.
Investor Events / Global Affairs:
Musk sues OpenAI, JPMorgan’s Chief Market Strategist predicts stagflation, and Apple calls it quits on cars.
Elon Musk Sues OpenAI and CEO Sam Altman
Elon Musk has filed a lawsuit against OpenAI and its CEO Sam Altman — claiming they veered from the company's original mission of advancing AI for the benefit of humanity.