🤖📈 62% Returns on $OPEN in 2 Months

The article presents Opendoor Technologies Inc. as a highly speculative investment, given its uncertain path to breakeven free cash flow by mid-2024. Despite turmoil in the housing market, Opendoor's high NPS score and its promising mission to simplify home-selling, coupled with a significant partnership with Zillow Group, are highlighted. Key metrics such as unit economics and adjusted net income suggest potential free cash flow progress. While the author admits the investment is highly speculative with unresolved questions, they maintain an optimistic view of Opendoor's future.

Microsoft is positioned to lead in the AI industry, backed by its software assets and protection from competition. Its investment in OpenAI and partnership to integrate DALL-E could boost revenue by $100 billion in 2027, according to an Evercore analyst. Microsoft's strong relationship with government entities and dominance in the Fortune 500, with 95% using Azure, further solidify its potential. The author's bullish price target for Microsoft is $440, though technical analysis is advised to determine optimal buying levels considering potential stock sell-off risks.

Amazon's AWS is expected to grow due to digitization and AI trends. Its retail business, boosted during lockdown, is set to stabilize, aided by faster deliveries and a wider global presence. Despite challenges like unfavorable foreign exchange movements and rising costs, Amazon benefits from a favorable labor market and easing supply chain conditions. It's currently undervalued based on certain financial ratios, suggesting good long-term growth potential. The author sees the stock as a good buying opportunity, especially given its ability to handle short-term macroeconomic issues and the prospects for margin recovery.

PayPal's growth has decelerated, but it continues to repurchase shares, returning free cash flow to shareholders. Despite the company benefiting from e-commerce expansion during the pandemic, its stock trades at 2017 levels, potentially undervalued by Wall Street. PayPal's revenue growth paused in 2022 but is predicted to rebound. Despite a decline in active accounts, the company reported increased operating margins and a 33% growth in non-GAAP EPS. The company ended the quarter with $15.3 billion in cash and investments and raised its earnings expectations, anticipating AI to drive cost savings and performance boosts. Although competition from Apple poses a risk, PayPal may be insulated due to unbranded processing. The author maintains a buy rating for the stock, expecting a high earnings yield and continued share repurchases to drive strong returns, implying a potential 60% upside over the next 12 months.

Chinese EV manufacturer Nio has received a strategic investment of $738.5 million from CYVN Holdings, majority-owned by the Abu Dhabi government, which removes concerns about the company's near-term liquidity. Nio is a leading EV manufacturer in China targeting the premium segment and plans to upgrade its first-generation SUV models in Q2 2023 and launch a new mass-market brand in 2024 while retaining its premium image. Nio has pioneered battery swap technology and plans to build over 4,000 swap stations worldwide by 2025. While still loss-making, the author forecasts an improved outlook for vehicle sales profit due to increased vehicle deliveries, leading to the first profitable year in 2025. Bulls say Nio has successfully built a premium brand image, which will differentiate the company from its mass-market competitors and generate extra pricing power for its electric cars. Bears say escalating battery costs in the past year will put Nio's vehicle margin under pressure and rising competition in the NEV market indicates legacy OEMs will defend their market share with aggressive new model launches. Morningstar's fair value estimate for Nio is USD 14 per ADS, based on the expectation for Nio to continue gaining market share from legacy automakers. Nio may need external financing through equity or debt issuances to fund its expansion plans, which could dilute existing shareholders or introduce restrictive covenants.

Wells Fargo is still under an asset cap imposed by the Federal Reserve and has years of expense savings related projects ahead of it as the bank attempts to get its efficiency ratio back under 60%. Despite this, the bank remains one of the top deposit gatherers in the U.S. and has a large advisory network, which should provide the right foundation to eventually build out a decently performing bank. CEO Charlie Scharf is guiding the bank in a new and positive direction, but the bank needs to consistently hit the expense targets it is laying out and keep making progress with regulators. Bulls say that Wells Fargo has some of the highest rate sensitivity among the big four U.S. banks, and its retail branch structure, advisory network, product offerings, and share in small and medium-size enterprises is difficult to duplicate, ensuring that the company's competitive advantage is maintained. The author is bullish on Wells Fargo's future operating efficiency due to their large tech budget and ability to deploy technological changes across integrated platforms. The bank's key advantage comes from its scale in fixed-cost, fixed-platform businesses and breadth of products offered to clients, contributing to economies of scale and scope and creating switching costs for customers. The author expects Wells Fargo to outperform due to its low deposit betas and successful expense cutting. The previous CEOs of Wells Fargo did not properly invest in risk monitoring or internal controls, leading to sales abuses and living will deficiencies. The current CEO, Scharf, is bringing a more realistic and effective tenure for Wells Fargo.

The author of the text is bearish on Carvana Co. (CVNA) and is shorting its shares. They argue that Carvana is struggling under the challenges of a severe industry downturn and the unsustainable burden of $6.5bn in debt. Despite being virtually the only online option for car buyers during the pandemic, Carvana has never generated sustainable profits or free cash flow. The author believes that Carvana's business of flipping used cars is tough, capital-intensive, and has lousy margins. They also criticize Carvana's management team for lacking seasoned automotive and operational experience. While Carvana's aggressive cost cuts may slow the rate of cash burn, the company cannot generate enough profit to stop negative cash flow due to over $700m in annual interest expense and capex. The author believes that Carvana shares are worthless and should be valued like any other poorly capitalized and cyclical publicly traded auto retailer with subprime exposure.

In this comprehensive podcast, Kevin Mak of Creek Drive Capital discusses his investment thesis on Pagaya Technologies (NASDAQ: PGY), a company leveraging big data and AI to assess creditworthiness beyond traditional FICO scores. Despite its innovative approach and significant role in the AI-driven credit evaluation sector, PGY remains under the radar, presenting a potential mispricing opportunity. Mak highlights the company's robust performance despite its low stock price, which has seen a substantial decline this year, contrasting the S&P 500's growth. He also notes PGY's underestimation by the market, particularly due to its international status and complexities in its operational domain. The company's focus on second-look loans, where it reassesses credit applications declined by traditional lenders, adds to its unique value proposition. PGY's strategy includes forming partnerships with major financial institutions like Ally Financial and expanding into various loan types, including auto and personal loans. Furthermore, PGY's approach to mitigating balance sheet risk through a pre-funded model and its ability to attract ABS investors despite market volatility showcases its financial resilience. Mak also touches upon PGY's venture into single-family home rentals, diversifying its portfolio. Despite the evident risks and uncertainties in such a dynamic sector, Mak's analysis suggests PGY's underappreciated potential in leveraging AI for credit evaluations, making it an intriguing investment prospect.

Cytek Biosciences (CTKB) is a young and growing company that is the leader in full spectrum flow cytometry (FSFC). Despite having a price target 40% above the current share price, Morgan Stanley rates CTKB as equal weight due to the current preference for low-risk mature assets. CTKB's Aurora flow cytometer, featuring full spectrum technology, is built on avalanche photodiodes, which are more efficient and effective at detecting fluorescence and cost a fraction of vacuum tubes. CTKB's mission is to drive costs down for the industry, and they have added the Northern Lights platform optimized for clinical use cases, the Aurora Cell sorter, and a fledgling reagent business, each with a unique angle for lowering costs for users. CTKB is well-positioned in the FSFC market and has a unique angle for lowering costs for users. The flow cytometry market is expected to grow at a CAGR of approximately 7.5% over the next decade, with instruments accounting for 30-35% of sales and reagents and consumables accounting for about 30%. CTKB is expected to have a 21.3% five-year sales CAGR and a 16.7% ten-year CAGR, with EBITDA margins rising from 8.3% in 2022 to 28.1% and 36.3% respectively in 2028 and 2033. Potential risks for Cytek include exposure to funding cycles, a lengthened path to clinical approval, spending on R&D without commercial uptake, competition from other players in the industry, and difficulty in gaining reagent adoption.