David Rosenthal: prediction

Transcript context

…Yeah. The question that I sort of have similar to my DoorDash one yesterday is, let's ignore current valuations and current share prices, and just think about that total $3 billion-ish that's gone in. Let's play it out long-term. Does the business (at some point) have enough power that it generates persistent differential returns? And is this business a cash-generating machine that in the long-term will return lots of cash to the business and its shareholders? I think so. I have reasonable confidence that despite a lot of my reservations around slowing growth, around increasing competition, certainly around valuing this company at $100 billion right now. Unlike DoorDash who’s falling so close to the radar, I don't feel like the end state is sort of a boom or bust. I feel like there exists an end state that they can be a very profitable business even with a reasonable amount of competition in the market. I think there exists a steady-state for this business where they don't need to spend as much on R&D, they don't need to spend as much on sales and marketing, and they're able to spit off cash for years and years and years. I'm not in A+ territory, but I am certainly in a territory when you think about it through that lens. I like that a lot. To me, doing the research, thinking about this, and talking to people—it’s just so clear, this is eBay here. That's what this is. They have the same type of network effect, same dynamics, same cash flow dynamics—this is eBay. A capital [...] business. I agree. I think it's a good point to be an A, not an A+. An A+ would be yes, and they’re already because let's be honest, there's no excuse that this company hasn't already been generating tons of cash. This company does not have the right size of structure right now. They're doing things like the film studio, Places, Experiences, the airline, and building units in people's backyards. It’s nuts. You strip out all that cost and this company—at an efficient operation—would already have been generating hundreds of millions of cash flow. I will be very, very interested to see how that evolves with the changes that they've made to bring in more heavy hitters to their management team. They now have a CFO that has been out there for almost a couple of years. The CFO was the CFO of Amazon's worldwide consumer retail. They've really buffed up the management team with capital allocators. Depending on how they all work together, I think there's real potential here to lean out the business while still growing and realize the great profitable dynamics it could have. Man, what a season.…

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