Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

The Data Vendor That Talked Itself Out of a Win

ReviewSignal pre-registered a forecast on Shake Shack: at least four of the six customer-experience aspects it tracks would still sit below their 210-day baselines when re-measured on 28 July, two days before the scheduled Q2 print.

On grading day, ReviewSignal's own collection rotation had left the Shake Shack sample 18 days stale — and on that stale sample the forecast would have scored a HIT. Instead they re-scraped 45 locations and roughly 2,000 fresh reviews hours before grading. The fuller data showed a MISS, and that's what they published.

No cherry-picking. No rewriting history. The forecast, methodology and result are all available in the public ledger for anyone to verify.

See the Data

That’s what makes this interesting for investors. Customer experience can change before it shows up in the financials, and ReviewSignal is trying to systematically measure those signals across 780,000+ reviews, 19,000+ locations and 79 consumer chains, updated daily.

You can explore the data yourself with a free sample pack, including a review-level sample, chain-day aggregates, data dictionary, methodology and limitations. No sign-up, no email gate, no call.

Get the Free Sample

Transactions

Mercado Libre (MELI)

I added to my MELI position despite it already being the largest holding in the portfolio. The stock fell 8% after releasing its Q2 earnings, creating another opportunity to add.

Last month, I shared my updated financial model and valuation, which showed MELI was materially undervalued. Its Q2 results largely validated those assumptions, despite the market’s initial reaction.

MELI reported revenue of $10.2 billion, up 50% YoY, marking its first ever $10 billion quarter. Gross Merchandise Volume growth accelerated for the sixth consecutive quarter to 44%.

What is even more remarkable is that MELI is now growing at rates comparable to the Covid lockdown era. Back then, physical retail was effectively shut down and GMV was just a quarter of today’s scale.

Total Payment Volume also continued its upward trajectory, with growth accelerating for the fourth consecutive quarter to 56%.

So, why did the stock sell off?

EBIT margin came in at 7%, down from 12% a year ago. This was deliberate and has been well signposted by management, with MELI investing heavily behind the enormous opportunity it sees ahead.

Some of these investments include PIX discounts and take-rate cuts in Brazil, cheaper shipping, increased credit card issuance and further investment in its logistics network.

The engagement data management shared was also encouraging. Ecosystem users, those using both the marketplace and fintech products, are growing 37% and generate contribution profit that is a multiple of the combined contribution from single-product users.

In my model, I had forecast MELI to deliver revenue of $39.3 billion, up 36% YoY, and EBIT of $3.3 billion, an 8% margin.

The market now expects revenue of $41.7 billion, up 44% YoY, and EBIT of $2.9 billion, a 7% margin.

If MELI can continue to grow faster than I have forecast, the runway for growth is even longer than I originally anticipated.

Take-Two Interactive (TTWO)

Last month I thought I was done buying TTWO for a while. It turns out I was wrong, as the market presented another opportunity to add.

On 27 August, GTA VI: An Extended Look premiered on Netflix in a first-of-its-kind collaboration. Six hours later, the video was released on Rockstar’s YouTube channel, which you can check out below.

The viral nature of the game is becoming even more apparent following the Netflix feature. It flew to No. 1 on the Netflix movie list and according to, Sensor Tower, its viewership compared to Netflix’s previous Thursday audiences on mobile was up 50% and web visitors increased 125%.

This game is going to dominate internet culture like nothing we have seen before.

I still believe the market is massively underestimating the earnings potential GTA VI could create. TTWO has multiple potential revenue streams, including game sales, GTA Online, in-game spending, subscriptions and media, the latter of which Netflix showcased this week.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy Watch List

Rather than reference two existing holdings that are on my buy list this month, I am going to highlight two companies I have been researching recently but have not yet added to the portfolio.

Reddit (RDDT)

This community-driven discussion platform fits my preference for platforms, but the bull case has an interesting layer beyond the advertising business: proprietary human data.

Reddit’s forums represent roughly two decades of authentic, community-voted conversations. That data has proven highly valuable for training LLMs and is genuinely difficult to replicate synthetically.

Google has signed a licensing deal reportedly worth around $60 million a year to train Gemini, while OpenAI has separately licensed Reddit’s data. Reddit is now pushing for dynamic pricing based on how much its content actually improves model performance, rather than flat per-post fees.

It is also suing Anthropic over alleged unlicensed scraping, which reinforces the idea that this data has real and potentially defensible economic value.

The problem is that this remains mostly a narrative rather than a numbers story today.

Data licensing revenue grew 24% to $43 million last quarter, but that still represents only around 5% of total revenue. Google and OpenAI are the two dominant buyers, and Reddit has flagged uncertainty around renewing those arrangements.

Add in softer US daily active users and the decision to stop reporting logged-in and logged-out user metrics from Q3 onwards, and visibility into the underlying engagement trend becomes less clear just as the AI data thesis needs to start showing up in the numbers.

That combination of a compelling structural moat and an unresolved concentration risk is why I am still digging deeper.

AppLovin (APP)

This is the higher-margin, higher-beta idea.

The bull case is straightforward. The AXON model, an AI engine that continually improves ad targeting and bidding as it gets more scale and data, worked spectacularly well in mobile gaming. Management has now opened the same engine up as a self-serve platform aimed at e-commerce, a vastly larger addressable market.

However, the bear case is really a mirror image of the bull case.

The model only works if AXON keeps improving. When it doesn’t, growth can decelerate sharply. That is exactly what happened last quarter, when sequential growth slowed and management acknowledged that these AI gains cannot be scheduled on a predictable cadence.

What is notable is that this hasn’t actually been an earnings problem.

Consensus 2027 EPS estimates rose roughly 8.5% over the course of 2026, yet the stock fell about 48%. The difference is valuation. The market has cut the multiple it is willing to pay from around 35x forward earnings in December to roughly 17x by August.

Investors no longer trust that this growth will be smooth and predictable. As a result, the market is pricing AppLovin more like a cyclical ad-tech business than a compounding platform, even though underlying earnings power has not deteriorated.

Many investors are drawing comparisons with The Trade Desk. Whether that comparison proves accurate remains to be seen.

Next quarter is huge for this company. I expect the stock price to move. It is just a matter of which direction.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

After trimming ASML a couple of months ago, I continue to hold a modest cash position of just over 3%.

At the same time, I have continued to deploy capital into companies where the market has presented opportunities through multiple compression.

With all this going on, the portfolio has once again reached a new all-time high this month.

Times like this are when complacency can set in and you start cutting corners with your due diligence.

Market conditions might change, but your process is the one constant through all of this.

Stick to it.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

NU’s data showed that a customer who generated $0.80 of monthly revenue in their first month would generate more than $27 per month after eight years. That is a 34x increase in revenue per customer.

At the time, I used Q2 2025 data to ask a simple question:

What happens to revenue if only NU’s existing customers mature?

The 123 million customers Nu had could, based on the cohort data, have generated $37 billion of annual revenue by 2030, assuming the ARPAC curve remained unchanged.

One year later, the customers have matured. The ARPAC curve has moved higher and NU has added another 16 million customers on top of the 123 million it had.

The market often focuses on NU’s customer additions but I think the more interesting question is:

What are those customers worth five years from now?

The Cohort Curve Has Moved Higher

The idea behind this analysis is straightforward. NU discloses monthly ARPAC by customer cohort, allowing us to see how much revenue customers generate as they spend more time on the platform. In Q2 2025, the data already looked compelling.

By Q2 2026, NU’s mature cohort ARPAC had risen to $30.80 per month, versus $27.30 in Q2 2025. Overall monthly ARPAC had also climbed to $17.10, up 40% YoY.

NU also finished Q2 with 139 million customers, after adding four million during the quarter.

The company is doing two things at the same time: Growing the number of customers while increasing the amount of revenue it generates from each one.

One year later, the customer base is still extremely young. This is where the cohort analysis becomes even more important. A significant proportion of NU’s customers have not been with the company long enough to reach the higher end of the ARPAC curve.

Think about the difference between a customer generating approximately $5 per month and one generating $25. The customer has not become five times more expensive for NU to serve. They have simply become more engaged. More products. More deposits. More borrowing. More transactions. A greater proportion of their financial life taking place within the NU ecosystem.

At the same time, cost to serve remains around $1, meaning the economics of monetising an increasingly mature customer is extremely attractive.

Share

What Has Changed Since Last Year's Analysis?

1. Mature customers are worth more

When I ran the analysis last year, the mature customer ARPAC was $27.30. The mature cohort reached $30.80 by Q2 2026, an increase of roughly 13% in less than a year.

A customer who has spent eight years on the platform is generating more revenue today than an equivalent mature customer was generating one year earlier.

If the curve itself continues moving higher, simply ageing the existing customer base could actually understate the revenue opportunity.

2. Overall ARPAC is accelerating

The second development is the movement in Nu’s headline ARPAC.

• Q2 2025: $12.20

• Q4 2025: $15.00

• Q2 2026: $17.10

It means NU is not relying exclusively on adding millions of new, low-ARPAC customers to grow revenue. The existing customer base is becoming more valuable too. That becomes increasingly important as the company gets larger. Eventually, customer growth will slow. It is inevitable.

But NU does not need customer growth to remain at today’s levels indefinitely. It can increasingly rely on monetisation of the customer base it already has.

3. The starting point for the 2031 calculation is now much larger

This is the other part of the equation that has changed. Last year’s analysis started with approximately 123 million customers. Today, NU has approximately 139 million. An additional 16 million customers will also mature.

Subscribe now

What Could NU's Customers Generate in 2031?

The simplest way to think about it is to take today’s customer base and move each cohort forward five years, while applying the observed ARPAC curve to each cohort based on its expected tenure.

This is not a traditional revenue forecast. There is no assumption that NU acquires another customer. There is no assumption that the company increases its market share. There is no assumption that Mexico or Colombia suddenly become enormous businesses. It is simply a thought experiment:

What happens if the customers NU already has continue ageing through the existing monetisation curve?

Based on the cohort framework, NU’s existing customer base could generate $47 billion of annual revenue by 2031 as those customers mature.

That would represent 3x the $15.8 billion of revenue NU generated in 2025, before accounting for any contribution from new customers acquired between now and 2031.

The $47 billion figure does not require NU to have 250 million customers. It does not require every customer to become a super-user. It does not require the company to dominate every financial product category in Latin America.

The customer base NU has already built is still working its way up the monetisation curve. Today, a huge portion of NU’s customer base contributes relatively little revenue. The important question is whether those customers stick around long enough to move up the curve. So far, the evidence suggests they do.

In the Q2 2026 analysis, customers with less than three years of tenure represented roughly 40% of customers but only around 24% of revenue. Customers with more than five years of tenure represented approximately 47% of customers but generated 62% of revenue. By 2031, a much larger proportion of NU’s customers will sit in the high-ARPAC portion of the curve.

The company therefore gets a structural tailwind from something remarkably simple: time.

Share

An Important Caveat

The ARPAC curve is unlikely to remain static.

The obvious downside is that credit losses, macroeconomic conditions or weaker customer engagement could prevent mature ARPAC from reaching the levels implied by today’s cohorts.

NU’s revenue is still heavily influenced by its credit business, and the company operates across markets with meaningful currency and economic volatility.

Q2 2026 was another reminder of this. Revenue reached $5.5 billion while the credit portfolio reached $39.4 billion. However, NU’s credit performance still needs to be monitored carefully, with the 90+ day NPL ratio remaining elevated relative to the company’s historical levels.

The ARPAC curve continuing to move higher is arguably more interesting. NU keeps adding products. Credit limits increase. Customers use NU as their primary bank. Mexico and Colombia are still relatively early in their maturation curves. Layer in NU using AI to improve underwriting, collections and customer engagement.

The fact that mature ARPAC increased from $27.30 to $30.80 in less than a year suggests the curve is not even close to a ceiling. The headline numbers are impressive but the more interesting story sits underneath those numbers.

NU has spent years building a customer base. Those customers are now moving through a monetisation curve that becomes dramatically more valuable with time. The company is then adding millions of new customers behind them.

New customers enter at low ARPAC. They become increasingly engaged. They adopt additional products. Revenue per customer rises. The oldest customers become extremely valuable. New customers replace them at the bottom of the curve.

That is a fundamentally different growth model from one where revenue growth depends on continuously acquiring new users. Continuously acquiring new users is expensive unless you are NU of course who acquire the majority of theirs through word of mouth referrals.

Subscribe now

Conclusion

The $47 billion figure is not a prediction of where NU’s revenue will be in 2031. Rather, it is a framework for understanding the embedded value in the customer base.

There are obviously countless variables between here and 2031. NU will acquire more customers. Some customers will leave. ARPAC will change. Credit conditions will change. New products will launch. Regulation will change. Mexico could become significantly more important. The United States could either become a major opportunity or an expensive experiment.

While all of those variables matter, the most important takeaway from the cohort data is simpler.

NU does not need to reinvent the business to generate substantial revenue growth.

A significant portion of that growth is already embedded in the customers it has acquired. Last year, I argued that NU’s existing 123 million customers could potentially generate around $37 billion of annual revenue by 2030. One year later, the customer base is larger, ARPAC is higher and the mature cohorts are generating more revenue than they were when I ran the original analysis.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Fast forward fourteen months, and Uber closed at $78.03 on 10 August 2026. That’s roughly 8% lower than where it was when I last ran the numbers, and about 23% off the highs near $101 it briefly touched last autumn.

What’s interesting, though, is that the business itself hasn’t really slowed down.

Over the same period, Gross Bookings went from $162.6 billion to $193.5 billion (+19%), free cash flow increased from $6.9 billion to $10.0 billion (+45%), and GAAP operating margin expanded from 6% to 11%.

The business kept compounding. The stock didn’t.

That disconnect is what pushed me to go back and rebuild the model from the ground up.

A lot has shifted since last June. Some of it strengthens the bull case. Some of it makes things a bit more complicated than they looked a year ago.

Uber One has now passed 50 million members. Advertising has quietly scaled into a $2.5 billion annual run-rate business. And the autonomous vehicle story, which I treated mostly as a tailwind last year, has become a lot less straightforward.

Waymo is now unwinding parts of its exclusive Uber partnership, first in Phoenix, and now set to do the same in Austin and Atlanta from January 2028.

Uber, for its part, has responded by leaning in rather than pulling back: more than 30 AV partnerships, a $1.25 billion commitment to Rivian, and a $14.8 billion agreed acquisition of Delivery Hero that would almost double its delivery footprint.

Let’s get into it.

Financial Model

I’ve kept the same framework as last year. I project cash flows over ten years, discount them at 10% (reflecting Uber’s strong cash generation but still meaningful execution risk), and apply a 2% terminal growth rate.

A 2% terminal growth rate is applied.

Gross Bookings

Gross Bookings grew 19% in 2025 to $193.5 billion, marking the fifth straight year of 20%+ growth on a constant currency basis.

I’m leaving my long-term assumption unchanged at a 10% CAGR, which gets me to about $516 billion by 2035.

Even with the strong recent performance, I don’t feel the need to push that higher. The base is much larger now, and the AV picture (which I’ll come back to) adds both opportunity and uncertainty.

The main drivers remain:

• Market growth: The global ride-hailing market is forecast to grow at a 10% CAGR from 2026 to 2035, according to Global Market Insights.

• Uber One: Membership has grown from 30 million at the end of 2024 to over 50 million by mid-2026. That’s 20 million additions in about a year and a half. Members now account for more than half of Mobility and Delivery bookings and spend roughly 3x more than non-members.

• Autonomous vehicles: Uber now works with 30+ AV partners (up from 18 a year ago) and expects to be live in up to 15 cities by the end of 2026.

• Geographic + category expansion: Uber is in 15,000+ cities. If the Delivery Hero deal closes, its delivery footprint would nearly double from 49 to 99 markets (though I’m not including that in the model yet given timing and uncertainty).

Take Rate

Take rate came in at 27% in 2025, flat year-on-year, despite continued growth in advertising. Part of that flatness comes down to a UK accounting change that reclassified certain driver payments, which mechanically reduced reported Mobility revenue.

Adjusting for that, I still see the take rate plateauing around 27% by 2035, slightly below the 29% I assumed last year.

What supports it:

• Uber One: More members, higher frequency, and better mix.

• Advertising: Now a $2.5 billion run-rate business, growing ~50% YoY (up from ~$1.5 billion last year).

FCF

Operating margin improved meaningfully, rising to 11% from 6% a year earlier. Free cash flow followed, reaching $10.0 billion versus $6.9 billion, or a 19% margin.

I’ve been a bit more cautious on the forward path.

I now model FCF margins reaching 25% by 2035, down from the 29% terminal margin I used previously.

The reason is pretty simple: Uber is no longer quite as pure an asset-light story as it once was.

The Rivian partnership alone implies up to $1.25 billion of investment into 10,000–50,000 purpose-built robotaxis. The Nuro/Lucid programme adds another 20,000+ vehicles.

Management has described the broader AV effort as a ~$10 billion multi-year programme, with limited near-term P&L impact.

I’m fine taking that at face value for the explicit forecast period. But I’m less comfortable assuming Uber can still reach peak-margin levels from a world where it increasingly has some skin in the physical fleet.

Dilution

A quick note here, because it came up in last year’s comments: buybacks don’t erase dilution in the way people sometimes assume.

Dilution comes from stock-based compensation. That happens regardless of what Uber does with buybacks.

Buybacks are just a use of free cash flow. That cash could otherwise go to dividends, retained balance sheet strength, or acquisitions. So when Uber buys back stock, it’s not creating extra value on top of the model, it’s deciding how to allocate cash I’ve already included in the valuation.

With that in mind, Uber has been buying back stock aggressively, including $3.5 billion in Q2 2026 under a $20 billion authorisation, broadly in line with its ~50% FCF target.

That’s helped offset issuance but I’ve reduced my net dilution assumption from 2.0% to 1.5% annually because the gross SBC-driven share issuance in 2025 was 1.3%.

Still, it’s not neutral. It just means the drag is smaller than before, not gone.

Putting it all together, I get to a fair value of about $118.10 per share, or roughly 51% upside from the $78.03 close on 10 August 2026.

That’s slightly higher than last year, but not because I’ve pushed assumptions. If anything, they’re a bit more conservative in places. The difference is simply that the business has outperformed the prior model.

Subscribe now

Conclusion

The biggest swing factor remains autonomous vehicles, but the story around it has changed quite a bit.

A year ago, I leaned heavily on Uber’s partnership with Waymo as evidence that Uber was well positioned to benefit from AV adoption.

That relationship is now less stable.

Waymo has let its Phoenix exclusivity lapse and has signalled plans to launch its own app in Austin and Atlanta in 2028, effectively ending exclusivity in those markets. Existing vehicles will still operate on Uber’s platform through at least 2028, but the direction of travel is clear.

There have also been reports of friction around economics and safety data sharing between the two companies.

Uber’s response has been to broaden the base rather than rely on any single partner.

It now has 30+ AV partnerships, including Nuro/Lucid (20,000+ vehicles), Rivian (up to 50,000), plus a range of others like Avride, Motional, WeRide, and Wayve.

Management’s framing has also evolved. In the latest results, they described Uber as having “a clear path to becoming the largest facilitator of AV trips globally.”

That’s a shift, from being tied to a few key partners, to trying to sit as the demand layer across the entire ecosystem.

I still think that’s the right strategic direction.

But it does mean Uber is taking on more capital and more operational exposure than the original asset-light narrative implied. That’s part of why I’ve trimmed long-term margins in the model.

On top of that, there’s the Delivery Hero deal: a $14.8 billion all-cash acquisition that would significantly expand Uber’s delivery footprint. It’s expected to be EPS accretive, with high-single-digit accretion by year three.

I’ve left it out of the DCF for now given timing and regulatory uncertainty, but it’s clearly a potential upside lever.

Now, to sanity-check the downside.

If you assume the Waymo split is just the beginning of broader AV disruption in Mobility (which is still about half of Uber’s bookings), you could reasonably cut the terminal value in half—from $174 billion to $87 billion.

Even under that fairly harsh scenario, the model still comes out at about $80.94 per share, which is still slightly above where the stock trades today.

So even in a stressed AV case, you’re not obviously below current price levels.

That tells me the market is already pricing in a fair amount of this risk, possibly more than is warranted given Uber is still growing bookings at ~19% and generating record free cash flow.

I still think the stock is undervalued, and I’m still a buyer.

But the range of outcomes is wider than it was a year ago.

The base case is better. The downside is more real.

And that combination is usually where things get interesting.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Top 10 Rebound Stocks for 2026

Meta once dropped 70%. Netflix: 50%. Amazon: 40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalize on their eventual rebound.

In year one, they initiated coverage on 27 companies, calling ASML (up 135%), AMD (up 152%), and Eli Lilly (up 72%) before the market re-rated them. 10 names in their coverage are still trading below fair value today.

Wolf of Harcourt Street Readers can unlock the full deep dive on all 10 rebound opportunities, free.

Get the Top 10 Rebound Stocks [Free]

Transactions

ASML (ASML)

After contemplating the decision for a while, I decided to trim 20% of my position in ASML this month at €1,633, before the company reported Q2 earnings. The stock has been on an incredible run over the past 12 months since I initiated the position, and by trimming here, I’ve locked in a gain of 150%.

I believe the valuation had gotten ahead of itself, particularly when compared with its historical P/E multiple. As you can see in the chart below, the forward P/E was above 40x when I trimmed.

Later in the month, the company reported impressive earnings, with full-year 2026 net sales guidance upgraded to €43 billion to €45 billion, up from the previous forecast of €36 billion to €40 billion.

While the share price is down about 12% since I sold, the real reason the forward P/E has fallen so much is the significant increase in earnings guidance.

I’m still very bullish on the company’s long-term prospects and would be more than happy to buy back these shares if the market presents the opportunity. If it doesn’t, I’m still holding a sizeable position. It just isn’t my largest holding anymore.

Take-Two Interactive (TTWO)

After initiating my position in TTWO in May, I doubled it in June and added again this month to bring the position to my desired 6% weight on a cost basis.

Unless the stock falls materially over the coming months, I expect this is me done adding to TTWO for a while. I expect the hype to build in the coming months ahead of the November release of GTA VI.

Uber (UBER)

I added to my position in Uber as the stock hit another 52-week low this month.

The primary driver of the recent decline was news that Waymo is exploring an exit from its alliance with Uber. Waymo notified Uber of plans to launch independently in key markets such as Austin and Atlanta by 2028.

This triggered a knee-jerk fear that Uber will be bypassed by autonomous vehicle networks. The market is treating AV technology as a zero-sum game, assuming Waymo wins and Uber loses.

This is where my view fundamentally differs.

AV developers lack consumer distribution, demand matching, and global fleet-routing infrastructure. Uber has built a network of more than 20 autonomous vehicle partnerships. Moving away from an exclusive reliance on Waymo gives Uber the flexibility to act as the primary, asset-light marketplace layer for the global autonomous vehicle industry.

During the month, Uber also agreed to acquire Germany’s Delivery Hero for €12.7 billion in an all-cash deal. While strategically sound, the Street penalised the stock due to short-term margin compression and pressure on near-term cash flow.

The acquisition of Delivery Hero effectively creates a global duopoly with DoorDash, providing significant cross-platform economics. Uber’s 50 million+ Uber One subscribers already use multiple services, including Mobility and Delivery, generating higher booking frequency and stickier cash flows than single-service platforms.

Ironically, the acquisition of Delivery Hero also further diversifies Uber away from the risk posed by AVs, as a greater portion of its revenue and cash flow will come from Delivery and other services rather than Mobility.

META (META)

I added to my Meta position after the stock dropped as much as 10% following the release of its Q2 2026 earnings.

Meta reported diluted EPS of $6.18, well below the Wall Street consensus estimate of $7.22. Its operating margin fell to 31% from 43% a year ago, largely as a result of two massive one-time items, $2.40 billion in legal proceeding charges and $1.18 billion in severance expenses following its 8,000-employee layoff wave.

This appears to be what the market focused on.

However, the core business is accelerating.

Revenue grew 28% YoY to $60.80 billion, comfortably outpacing analyst expectations. This growth was driven by a 14% increase in ad impressions and a 12% increase in the average price per ad.

Added to this, Meta’s user growth continues to chug along even at this enormous scale. Daily Active People across its Family of Apps reached 3.60 billion, meaning nearly half the planet interacts with a Meta platform every day.

Stripping away the one-time $3.58 billion in combined legal and severance charges reveals that Meta’s core business is significantly more profitable than the headline numbers suggest. CFO Susan Li noted that, excluding these unusual charges, underlying operating income would have increased by 9% YoY.

Following the post-earnings selloff, Meta’s forward P/E has fallen to an attractive 16x.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy List

Adyen (ADYEN)

I released my Adyen 2026 Financial Model and Valuation Update below, and this is what has prompted me to put Adyen firmly at the top of my Buy List.

You can read the full report below.

Spoiler: My analysis suggests the stock is significantly undervalued, even based on conservative assumptions.

Mercado Libre (MELI)

Similar to Adyen, I rebuilt my MELI 2026 Financial Model from scratch after the company accelerated growth in 2025, but with a material trade-off in margins.

To summarise, the analysis suggests that the market’s reaction to recent margin compression has gone much further than the underlying cash flow mathematics justify, and that MELI is materially undervalued once more.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

After trimming ASML, I now sit on a cash buffer of over 3%.

Despite the portfolio being at an all-time high valuation, I continue to see plenty of opportunities in this market. While semiconductor exposure has been on a parabolic run this year, sectors such as fintech, software and e-commerce continue to lag. These are the areas where I’m planning to hunt.

Before I sign off for this month, a special word for Amazon, which reported Q2 2026 earnings this month.

The stock surged 15% afterwards and jumped up to become my second-largest holding. The reason was simple: AWS revenue growth accelerated to 37%, the fastest pace in 16 quarters.

This is now a $169 billion run-rate business, despite capacity constraints. The order backlog reached $496 billion in Q2, 2.5 times higher than a year ago.

What an incredible business.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

For context, this is a stock I first pitched in August 2023, at the depths of the sell-off, and one I’ve held through the entire round trip, the 106% rally into March 2025, followed by the sharp decline that came after. If you’ve been holding alongside me, this has been an uncomfortable stretch. But discomfort is often where the most interesting investment decisions are made.

So the question for this update is simple:

Has Adyen become cheap again, or is the market correctly repricing a slower growth future?

This analysis is based on Adyen’s H2 and full-year 2025 results, published in February 2026, together with management’s 2026 guidance and commentary from November’s Investor Day.

The Backdrop

Full-year 2025 net revenue came in at €2.36 billion, up 18% year over year on a reported basis, or 21% in constant currency.

The headline numbers, however, mask the more important story.

Throughout 2025, management reduced its outlook for 2026 constant currency revenue growth twice. Guidance moved from low-to-high 20%, to low-to-mid 20%, before settling at 20-22% alongside the Q1 2026 business update.

That is the primary reason the stock has spent the past year in the doghouse. Markets rarely reward companies whose growth expectations continue to drift lower, even when the absolute numbers remain exceptional.

Underneath the surface, though, the business continued to execute well.

EBITDA margin reached 53%, up from 50% in 2024, comfortably ahead of management’s previous “above 50% by 2026” target and above my own 52% assumption from last year’s model.

Free cash flow conversion came in at 87%, while CapEx remained at its typical 5% of net revenue.

Take rate improved to 17.1 basis points in H2 2025, up from 16.2 basis points a year earlier, driven by a more favourable customer mix.

Processed volume increased 8% to €1.39 trillion, although that figure is distorted by the unwind of one large volume customer. Excluding that impact, processed volume grew 21%, which is the number that matters for the valuation.

Investor Day also provided a glimpse of Adyen’s next growth chapter.

Management introduced Dynamic Identification, an intelligence layer built on trillions of payment transactions, alongside an early push into agentic commerce, where AI agents initiate payments on behalf of customers.

Neither initiative is likely to move revenue meaningfully in the near term, but both fit naturally within Adyen’s single-platform strategy. As AI shopping assistants become more common, merchants will increasingly want to preserve ownership of the customer relationship. Adyen is positioning itself as the infrastructure that allows them to do exactly that.

For 2026, management is guiding for 20-22% constant currency revenue growth, an EBITDA margin broadly in line with 2025, and 550-650 net new hires, primarily across the United States and global technology hubs. It’s another reminder that today’s margins are a management decision, not the ceiling of the business.

Share

Discounted Cash Flow Analysis

I‘m using the same valuation framework as last year: a 10-year explicit forecast, discounted at 10%, with a 2.5% terminal growth rate reflecting Adyen’s long-term ability to price broadly in line with inflation.

Extending the model to ten years remains the right approach. It reduces, although certainly doesn’t eliminate, the influence of the terminal value, where small assumption changes can have an outsized impact on valuation.

Revenue

Revenue is modelled as processed volume multiplied by take rate.

Growth starts at 21% in 2026, consistent with management guidance, before gradually slowing to 9% by 2035. That produces a 10-year revenue CAGR of roughly 14%, down from the 16% CAGR I used in last year’s model.

The reduction is deliberate.

Management’s guidance has trended lower rather than higher throughout 2025. Competition from Stripe and PayPal remains intense. And Adyen’s land-and-expand strategy is now compounding from a much larger revenue base than it was only a few years ago.

For perspective, the global payment processing market is expected to grow from $173 billion in 2025 to $1.05 trillion by 2035, representing approximately 20% CAGR. My assumptions still require Adyen to continue taking market share, just not at an unrealistic pace.

EBITDA

I project EBITDA margin at 53% in 2026, consistent with management guidance.

Margins then expand beyond 54% by 2028, matching management’s long-term target, before reaching 58% by year ten as operating leverage continues to play out.

I’m leaving the long-term margin assumption unchanged from last year. Adyen has never guided towards a return to the 60%+ margins briefly achieved during 2021, and neither am I.

CapEx and Dilution

CapEx remains at 5% of net revenue throughout the forecast period, consistent with both management guidance and the seven-year historical average.

Applying the 87% free cash flow conversion achieved in 2025 produces a free cash flow margin that rises from roughly 46% in 2026 to just over 51% by 2035.

I assume cumulative dilution of 3% over the full ten-year period.

Adyen’s share-based compensation remains modest relative to most US technology companies, partly reflecting Dutch compensation practices. However, this is the assumption most likely to drift higher over time as hiring accelerates in the United States, making it something to reassess each year rather than treat as a fixed input.

Running these assumptions through the model produces a fair value of €1,302 per share.

Against today’s share price of €836, that implies approximately 56% upside.

That is a very different conclusion from last year’s above fair value rating.

The change isn’t because I’ve become more optimistic about the business. If anything, my growth assumptions are now more conservative.

Instead, the share price has fallen far more than the underlying fundamentals have deteriorated, if they’ve deteriorated at all.

Subscribe now

Conclusion

Last year’s analysis concluded that Adyen was a hold, not an attractive place to deploy new capital.

This year’s analysis reaches the opposite conclusion, not because the business has fundamentally improved, but because the valuation has become far more compelling.

At €836, the market appears to be pricing in a much slower long-term growth trajectory than even my more conservative assumptions require.

That doesn’t eliminate the risks.

Management has already reduced its 2026 growth outlook twice, and another disappointment would almost certainly pressure the stock again.

Competition from Stripe and PayPal remains intense.

And while agentic commerce could eventually become an important opportunity, it is still exactly that, an opportunity. Today it represents strategic optionality, not an earnings driver, and I assign it no additional value in this model.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

The stock now sits more than 30% below its all-time high of $2,645, reached in June 2025. More surprisingly, it has fallen even as the underlying business has done something the market seemingly didn’t want: accelerate its growth.

So the key question this update needs to answer is simple: What is MELI actually worth, and has the market overreacted?

The starting point for this analysis is the FY2025 results together with the Q1 2026 earnings release, which gave us the first clear look at where margins are heading under new leadership. On 1 January 2026, founder Marcos Galperin stepped back to become Executive Chairman, handing the CEO role to Ariel Szarfsztejn, a company veteran since 2017. It’s worth keeping that transition in mind as we work through the margin discussion later.

ReviewSignal: Consumer-Review Data You Can Audit

On July 4, ReviewSignal pre-registered a call on Domino's ($DPZ) — built from
public consumer reviews (670,000+ across 18,600+ locations in 79 chains,
updated daily) — and locked it on a hashed, append-only public ledger.

It gets graded July 18. Domino's reports July 20. Hit or miss, it stays up.

No "AI predicts stocks" claims — just observable consumer-experience data and calls you can check yourself.

Want to look under the hood? The €49 Preview Data License is a 5-chain
sample pack with full methodology and coverage notes.

Access Review Signal

The Backdrop

Let's begin with what actually happened in 2025, because it wasn't what most models, mine included, had pencilled in. You can view my 2025 financial model below.

FY2025 revenue reached $28.9 billion, up 39% year over year, almost double the 24% growth my model had assumed at the start of the year. Q4 revenue alone increased 45% to $8.76 billion, and that momentum has carried into 2026. Q1 revenue reached $8.85 billion, up 49% year over year, marking MELI’s fastest growth since Q2 2022.

That’s the good news.

The trade-off has been margins.

Gross margin declined to 44.5% in FY2025 from 46% in 2024, primarily due to a lower free shipping threshold in Brazil and higher funding costs within the fintech business. Operating margin fell from 13% to 11% as MELI invested more aggressively in credit card issuance, first-party commerce, and logistics.

That pressure intensified in Q1 2026. Operating margin fell to 7%, a 600 basis point decline from the 13% reported a year earlier, while net margin dropped from 8% to 5%.

The biggest driver was the provision for doubtful accounts, MELI’s reserve for expected credit losses. This reached $3.09 billion in FY2025, or 11% of revenue, up from 9% the previous year. In Q1 alone, the provision more than doubled year over year, rising from $603 million to $1.24 billion, as the credit card portfolio nearly doubled to $14.6 billion.

Management has been clear that this is intentional. The company is willingly sacrificing near-term profitability to capture share in credit cards, expand free shipping, and continue building out its logistics network ahead of what it believes is a very long growth runway.

Whether that’s disciplined capital allocation or evidence that margin discipline is beginning to slip has become the central debate surrounding the stock. Barclays and Raymond James have reduced their price targets while maintaining Buy ratings. UBS downgraded the shares to Neutral, arguing that margin pressure could persist through 2027. Meanwhile, at least one well-known value investor, best known for The Big Short, reportedly built a position following the Q1 sell-off, believing the market is treating a cyclical margin trough as though it were a permanent impairment.

I don’t think you need to settle that debate to build a sensible valuation model. You simply need to make a reasonable assumption about how long margins remain under pressure and how much they eventually recover, then let the cash flows do the talking.

Share

Discounted Cash Flow Analysis

Future cash flows are projected over ten years (2026 to 2035). One notable change from last year is the discount rate, which I’ve increased from 10% to 11%. MELI’s credit book has grown faster than its balance sheet cushion, funding costs have increased, and the FX and regulatory backdrop across Brazil, Mexico, and Argentina remains highly unpredictable. Together, those factors justify a higher risk premium. Terminal growth remains unchanged at 2%, still toward the lower end of the range given the long term currency devaluation risk across the markets where MELI operates.

Revenue

I project a 16% revenue CAGR from 2025 to 2035, identical to the assumption used in last year’s model over 2024 to 2034. That’s despite 2025 growth comfortably exceeding what I had originally forecast.

Growth is expected to slow from 36% in 2026 to 8% by 2035 as the revenue base compounds into the hundreds of billions and the law of large numbers begins to take effect. Even with that deceleration, the model still implies MELI roughly quadruples revenue over the next decade, reaching more than $120 billion by 2035.

The broader market opportunity continues to support that outlook. A joint Endeavor and MELI report published in early 2026 estimates Latin American e-commerce sales will reach $215 billion in 2026 alone, growing 1.5 times faster than the global average. Argentina, Brazil, and Mexico account for nearly 85% of regional volume. Meanwhile, PCMI’s longer term forecasts still point to the region’s e-commerce market surpassing $1 trillion by 2027. The structural growth story hasn’t changed. If anything, MELI’s 2025 results suggest it is playing out even faster than expected.

EBIT Margin

This is where the model differs most from last year’s version.

Previously, I assumed EBIT margin would remain at 13% through 2025 before expanding steadily to 20% by year ten. Instead, FY2025 came in at 11%, while Q1 2026 fell further to 7%.

Rather than fighting the trend, this model assumes EBIT margin bottoms at roughly 8% in 2026, broadly in line with the current run rate, before gradually recovering to 15% by 2035. That’s 5 percentage points below last year’s terminal assumption.

The downgrade is intentional. Management has signalled no near term margin recovery, while investments in the credit card business, first party commerce, and Brazil’s free shipping programme increasingly resemble a multi-year reinvestment cycle rather than a temporary headwind. I’d rather build a model that’s too conservative than one that needs to be walked back again next year.

Normalised Operating Cash Flow

The distortion I highlighted last year hasn’t disappeared. It’s become even larger.

Reported operating cash flow reached $12.1 billion in FY2025, representing an eye-catching 42% margin. However, that figure is even less useful as a measure of underlying cash generation because it’s inflated by the same accounting dynamic.

The provision for doubtful accounts is a non-cash expense recognised before actual credit losses occur, and it increased 66% year over year to $3.09 billion. Combined with the large working capital swings associated with the credit and payments businesses, reported operating cash flow increasingly reflects how quickly the credit portfolio is expanding rather than the underlying cash generation of the business.

Using the same adjustment methodology as last year, I estimate a normalised operating cash flow margin of roughly 19% for FY2025, essentially unchanged from the prior year’s normalised figure despite the much larger reported cash flow.

It’s also worth noting that MELI now reports its own stricter measure, Adjusted Free Cash Flow, which treats changes in the credit portfolio as a cash outflow. On that basis, FY2025 adjusted free cash flow was just $1.48 billion, reflecting approximately $6.7 billion of net credit portfolio growth, partially offset by $2.35 billion of third party fintech funding.

That approach is more conservative than the one used in my model. I view credit growth in the same way as the company’s broader operating investments, as reinvestment to support future growth rather than a permanent drag on cash generation, provided credit performance remains healthy.

Normalised operating cash flow margin is forecast to trough at roughly 15% in 2026 before recovering to 20% by 2035, below last year’s 25% terminal assumption, reflecting the more conservative margin outlook discussed above.

CapEx and Dilution

CapEx represented 4.6% of revenue in FY2025, or $1.33 billion on $28.9 billion of revenue, up from 4.1% the previous year. I assume a steady 4% CapEx margin throughout the forecast period, broadly consistent with recent history and with the fact that most of MELI’s logistics investment is recognised through operating expenses rather than capital expenditure.

Share dilution has remained minimal. Diluted share count ended FY2025 at roughly 50.7 million, essentially unchanged from 2024, while the company also repurchased a small amount of stock during the year.

That’s a materially better outcome than I assumed in last year’s model, which incorporated 5.4% cumulative dilution over the decade. I’ve reduced that assumption to 4% cumulative dilution, reflecting management’s demonstrated willingness to maintain a disciplined share count despite aggressively investing in the credit business.

Discounting these cash flows at an 11% discount rate, using a 2% terminal growth rate, produces the following valuation:

• Present value of forecast free cash flow (2026 to 2035): $59.9 billion

• Present value of terminal value: $78.7 billion (57% of enterprise value)

• Implied enterprise value: $138.6 billion

Dividing by an estimated 52.6 million diluted shares in 2035, reflecting modest dilution over the forecast period, results in an intrinsic value of approximately $2,646 per share. Compared with MELI’s closing price of $1,843 on 15 July 2026, that implies 44% upside.

Subscribe now

What Actually Changed From Last Year

It’s worth being explicit about the moving parts, because this year’s update landed in a very different place than a simple “roll the model forward” exercise would suggest.

• Growth improved. Revenue grew 39% in 2025 versus my 24% assumption, while Q1 2026 revenue accelerated 49%, the fastest pace in four years.

• Margins deteriorated faster than expected. EBIT margin fell to 11% in 2025 and 7% in Q1 2026, well below the flat 13%, then expanding trajectory I assumed a year ago.

• The discount rate increased. I raised it from 10% to 11% to reflect a faster-growing, more heavily funded credit book, alongside persistent foreign exchange risk across the region.

• Dilution assumptions improved. I reduced cumulative dilution from 5.4% to 4%, reflecting genuinely disciplined share count management.

• Leadership changed. Ariel Szarfsztejn is now CEO, while Marcos Galperin has moved to Executive Chairman. It marks the first CEO transition in the company’s 27 year history, arriving at exactly the moment investors are most focused on capital allocation and margin discipline..

Netting all of that out, my fair value declined only marginally, from $2,749 to $2,646, despite the much stronger revenue trajectory. The margin downgrade and higher discount rate largely offset the growth upgrade.

To me, that’s the honest state of play. The bear case on margins is real, and I’ve tried to reflect that in the model rather than dismiss it. The bull case is that the market has taken the same margin story and knocked roughly 30% off the share price. Once you run the cash flows through a long-term valuation model, rather than reacting to a single quarter’s operating margin, that sell-off looks increasingly disproportionate.

Share

Conclusion

The growth runway for MELI remains enormous. If anything, 2025 provided the clearest evidence yet that its addressable market is real rather than theoretical.

Latin American e-commerce is now on track to reach $215 billion in sales during 2026, growing roughly 1.5 times faster than the global average. The region is still expected to surpass $1 trillion in annual e-commerce volume by 2027. Yet online retail penetration remains only in the mid-teens as a percentage of total retail sales, roughly a decade behind the United States. At the same time, financial inclusion, particularly in Mexico, continues to lag Brazil, leaving Mercado Pago with a substantial runway to expand its payments and credit ecosystem.

The more difficult question this year isn’t whether the opportunity exists. It’s whether MELI’s aggressive investment in credit, free shipping, and logistics represents smart capital allocation that will look obvious in hindsight, or whether it signals a structural reset in the company’s long-term margin profile.

I’ve built this model to acknowledge that uncertainty. Rather than assuming margins return to 20%, I now model EBIT margins recovering to 15% by 2035. I’ve also increased the discount rate by a full percentage point versus last year’s analysis.

Even with those more conservative assumptions, the valuation still points to meaningful upside from today’s share price. To me, that suggests the market’s reaction to recent margin compression has gone further than the underlying cash flow mathematics justify.

MELI has spent more than two decades navigating currency crises, recessions, rising competition, and now its first ever CEO transition. That doesn’t guarantee the next decade will look the same, but it does make me reluctant to bet against a management team that has consistently proven capable of compounding value through periods of uncertainty.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Top 10 Rebound Stocks for 2026

Meta once dropped 70%. Netflix: 50%. Amazon: 40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalize on their eventual rebound.

In year one, they initiated coverage on 27 companies, calling ASML (up 135%), AMD (up 152%), and Eli Lilly (up 72%) before the market re-rated them. 10 names in their coverage are still trading below fair value today.

Wolf of Harcourt Street Readers can unlock the full deep dive on all 10 rebound opportunities, free.

Get the Top 10 Rebound Stocks [Free]

Transactions

Take-Two Interactive (TTWO)

After initiating my position in TTWO in May, I doubled it in June. The thesis is already beginning to play out. Hype is building, and the stock has climbed into double digit gains.

Pre-orders for GTA VI opened on 25 June. While there has been no official announcement from TTWO, analysts estimate the game generated up to $1 billion in pre-orders within its first hour. Several outlets are also reporting that GTA VI has now surpassed 50 million pre-orders worldwide, representing roughly $4 billion in revenue.

Perhaps most impressively, all of this has happened before TTWO has even launched its official marketing campaign.

If you missed my TTWO Quick Pitch, you can check it out below.

Microsoft (MSFT)

I increased my position in MSFT as the stock continued to trade below $400.

Current sentiment reminds me a lot of GOOG last year, and we all know how that turned out. At roughly 20x forward earnings, Microsoft looks reasonably valued for a business of this quality, if not outright cheap.

Amazon (AMZN)

I also added to AMZN as the stock gave back most of its gains and now trades roughly flat for the year.

Last week, reports emerged that AWS will increase prices on GPU instances by 20% from 1 July, following a 15% increase in January. I view this as a very bullish signal.

To me, these price increases suggest AWS remains capacity constrained rather than simply expanding margins. Demand continues to outstrip supply.

SouthernValue published an excellent analysis on what this means for hyperscaler returns on invested capital and the broader AI demand outlook, which I’ve linked below.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Performance

• Q2: +15.9% vs. S&P +18.2%

• YTD: -3.9% vs. S&P +9.5%

Top Contributors YTD:

1. ASML: +82%

2. TTWO: +16%

3. ABBV: +10%

4. RBRK: +6%

5. AMZN: +4%

Largest Detractors:

1. ADYEN: -43%

2. MSFT: -27%

3. SE: -26%

4. NU: -19%

5. META: -16%

Buy List

Mercado Libre (MELI)

MELI was my largest position by a considerable margin until very recently. After ASML’s remarkable 200%+ rally over the past 12 months, it has now overtaken MELI as my largest holding.

While the stock has significantly underperformed the broader market over the past year, it’s important to separate the share price from the underlying business. Fundamentally, MELI continues to execute exceptionally well.

Take Mercado Pago as an example. Annual revenue has grown from $5.0 billion in 2022 to $12.6 billion in 2025, representing a roughly 36% CAGR. That’s faster than almost every global fintech peer, despite already operating at enormous scale.

The chart below ranks the world’s fastest growing financial institutions by annual revenue, with Mercado Pago sitting comfortably at the top.

Take-Two Interactive (TTWO)

When I pitched TTWO in May, I explained that I wanted to build the position ahead of several catalysts that I believed were imminent.

So far, that thesis has played out exactly as expected.

Even after the recent rally, I’d still like to increase the position to around 6% of the portfolio before the excitement surrounding GTA VI reaches full swing.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

Q2 was an excellent quarter for the portfolio, even though I continue to trail the market on a year to date basis.

I’m optimistic about future returns because several of my largest positions, including MELI, SE, NU and MSFT, remain out of favour despite strong underlying fundamentals.

I also came across an interesting chart from the Financial Times that feels particularly relevant given that META, MSFT and AMZN account for roughly 25% of my portfolio.

Forecasts should always be treated with caution, but the market is clearly expecting a meaningful acceleration in free cash flow once today’s heavy AI infrastructure spending begins to moderate. Over the long run, share prices tend to follow free cash flow per share.

That outlook also aligns with the AWS GPU price increases discussed earlier. If hyperscalers are confident enough to continue raising prices, it suggests demand remains exceptionally strong.

The biggest question is how much capital expenditure will eventually normalise. If returns on AI investments remain attractive, why would companies dramatically reduce spending in 2028? It’s a classic chicken and egg problem.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Top 10 AI-proof SaaS Stocks

Constellation: -47%. ServiceNow: -55%. Figma: -81%.

Everyone is now expecting vibe-coded solutions to replace legacy companies with tens of thousands of employees and millions of customers. This is what peak pessimism looks like.

The market is wrong. Under the hood, a few of these “AI victims” are accelerating revenue with AI. We now have a brief moment where sentiment is overshadowing fundamentals.

Rebound Capital has spent months identifying these software beneficiaries — what went wrong, how they hold up against AI, and their current valuation — all in a 33-page, 5,000-word PDF.

Wolf of Harcourt Street readers can now unlock this report for free!

Download the report

Transactions

META (META)

I added to my META position for the second consecutive month. At current levels, I believe it is the best value opportunity within the Mag 7, trading at roughly 18x forward earnings despite a very attractive long-term growth outlook

As I have mentioned previously, AI is already driving tangible results across the core advertising business. Recommendation improvements are increasing time spent on platform, video engagement continues to rise, and better ad targeting is supporting stronger monetisation.

What remains underappreciated, in my view, is the flexibility embedded within META’s AI strategy. Mark Zuckerberg has repeatedly acknowledged that the company may ultimately be overbuilding AI infrastructure, but views this as a necessary risk worth taking. Even in that scenario, META can materially reduce future CapEx while still retaining years of excess data centre capacity. Given how constrained compute remains globally, that capacity could potentially be monetised through third-party demand.

The asymmetry here is compelling. The downside risk appears manageable relative to the scale of the potential AI monetisation opportunity.

Nubank (NU)

I added to NU following the post-earnings selloff after Q1 2026 results. On the surface, this was not a perfectly clean quarter. Gross margin came in at 38%, down from the mid-40s earlier in 2025, while credit loss provisioning is clearly growing faster than revenue on that line. I am not dismissing those concerns, they represent the clearest bear case in the story and deserve close monitoring.

However, once I dug deeper into the numbers, the broader picture remained overwhelmingly positive. In my view, this business is compounding far faster than the market currently appreciates, and the earnings-day weakness created an opportunity.

The headline number tells the story. Revenue reached $5 billion, up 53% year-over-year. More importantly, growth has meaningfully re-accelerated. Earlier in 2025, revenue growth had slowed to 19%, leading many investors to declare the story broken. That narrative now looks increasingly premature. The rebound to 53% growth is a reminder that NU’s opportunity across Latin America remains enormous and largely untapped.

Purchase volume reinforced the same trend, reaching $40 billion in Q1, up 30% YoY, after recovering sharply from the -2% trough in late 2024 that had shaken investor confidence.

The metric that stood out most to me, however, was the operating expense ratio.

General and administrative expenses have now fallen to just 10% of revenue, down from 47% in 2021. Customer service costs sit at 4% of revenue versus 19% in 2020, while marketing expense is only 1% of revenue. These improvements are not cyclical, they reflect a technology-first business model that becomes structurally more efficient with scale.

When revenue is compounding at 53% while operating expenses remain relatively flat as a percentage of revenue, the operating leverage becomes extremely powerful.

I added after this quarter because I believe the market remains too focused on short-term gross margin pressure while underestimating the strength of the operating model underneath.

NU is now generating $15.9 in revenue per customer across a base of 135 million users that is still growing at double-digit rates across largely underbanked markets. This is not simply a digital bank. NU is building the financial operating system for Latin America, while operating with the cost structure of a software company.

That combination is exceptionally rare, and I am happy to remain a patient long-term holder.

InPost (INPST)

I sold my full position in INPST, which represented roughly 5.5% of the portfolio at the time of sale.

The stock was up 45% YTD following the €15.60 per share proposal to take the company private. Since news of the potential takeover emerged, I had largely been holding the position as a hedge given the stock continued trading close to the offer price, at roughly a 1.5% discount.

Now that I have deployed most of my available cash elsewhere, I wanted to raise some capital, and this was the easiest source of liquidity. At this stage, the remaining upside does not justify the opportunity cost of keeping capital tied up.

I also believe that if the takeover ultimately fails, the share price would likely retrace in the short term. The bid has unanimous board support and already has approximately 48% shareholder backing, although 80% tendering is required for completion.

If the bid fails, I would be more than happy to revisit the name in the future. If it does, I do not currently see a scenario where the stock meaningfully trades above the offer price in the near term.

Take-Two Interactive (TTWO)

I deployed a portion of the INPST proceeds into initiating a new position in TTWO.

I already shared a dedicated article covering the full thesis, but in short, this is a catalyst-driven investment. I believe the launch of GTA VI represents the single largest catalyst in the company’s history, driving a multi-year earnings inflection that transforms the business from a low-profit or loss-making base into a high-margin, record-scale cash flow machine.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy List

Mercado Libre (MELI)

MELI is already my largest position by a significant margin, but that has never stopped me from adding when I believe valuation and long-term opportunity remain attractive. In my view, the market has once again presented that opportunity.

The stock has struggled recently, down 15% YTD and 33% over the past year. Much of this weakness reflects temporary margin pressure caused by aggressive reinvestment into an enormous and still underpenetrated Latin American opportunity.

Q1 2026 results were exceptionally strong from a growth perspective. Net revenue increased 49% YoY to $8.85 billion, the fastest growth rate in nearly four years. E-commerce GMV grew 42%, marking the fifth consecutive quarter of acceleration and the fastest growth since Q1 2021.

Fintech revenue grew 51%, while TPV increased 50%, accelerating for the third consecutive quarter.

However, EPS came in at $8.23, below consensus expectations of roughly $8.8 to $9.7, as management deliberately prioritised growth over short-term profitability.

I put “miss” in quotation marks because MELI does not provide guidance. The company did not miss expectations, analysts simply underestimated the level of reinvestment management was willing to pursue.

This is a familiar playbook. We have seen similar periods throughout MELI’s history over the past two decades. Management consistently prioritises long-term market leadership and ecosystem expansion over near-term margins, and historically that strategy has compounded shareholder value exceptionally well.

Take-Two Interactive (TTWO)

I intend to build my TTWO position relatively quickly over the coming months as I believe the stock could begin moving materially once GTA VI marketing ramps up.

Last week, CEO Strauss Zelnick stated in an interview:

“The next few weeks don’t fall into summer yet, but when summer arrives, Rockstar anticipates beginning the promotion for GTA 6.”

To me, this strongly suggests the official marketing campaign will begin towards the end of June or early July.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

This was a very active month by my standards. I added to two existing positions, exited a full position, and initiated a new one. Cash now sits just above 1%, although I expect to deploy the remainder during June.

I continue to see significant opportunities across the market. Indices may be near all-time highs, but beneath the surface many sectors, particularly software, payments, and e-commerce, continue to lag materially. It remains an excellent environment for active stock picking.

Keep an eye on RBRK this month, with earnings scheduled for 5 June. At one point in April, the stock was down 42% YTD, although it has since staged an impressive recovery and now sits roughly flat for the year.

The stock had largely been punished through broader SaaS weakness, but I believe AI could become a significant long-term tailwind for the business. Perhaps the market is already beginning to anticipate that outcome. We will find out next week.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Contents

1. Introduction

2. The Catalyst

3. The Opportunity

4. Valuation Framework

5. The Moat

6. The Risk

7. Investment Outlook

1. Introduction

If you have been a long-time reader of this newsletter, you know my general philosophy. I do not usually pitch catalyst plays. My bread and butter is finding structural advantages, unloved compounders, and cash-flowing machines with massive moats. I prefer to buy businesses where time is the friend of the company, rather than betting on binary events or product launches.

But every once in a while, the market hands you an obvious mispricing on a plate. Wall Street’s obsession with the next quarter can completely blind it to the massive, transformative cash flow tsunami on the horizon. When that happens, you put away the standard playbook and seize the opportunity.

Yesterday, Take-Two Interactive released its FY26 fourth-quarter earnings and provided forward guidance for the upcoming fiscal year. Unsurprisingly, the stock sold off. The culprit? Management issued notoriously conservative guidance, projecting $8.1 billion in bookings for the fiscal year.

If you look purely at the numbers, without applying any critical thinking, management is effectively guiding for only $1.4 billion more in bookings than last year. In other words, they are telling the market that the launch of Grand Theft Auto VI, a title that has been thirteen years in the making, will only move the needle by a little over a billion dollars.

For the uninitiated, this looks like a growth stall. It appears as though the immense hype surrounding Rockstar Games’ crown jewel is failing to translate into financial expectations. But for those paying attention, this is textbook sandbagging.

In my view, this is one of the clearest examples of expectation management in modern gaming history. Here is why I believe the market is pricing this opportunity incorrectly, and why I am using this post-earnings weakness to initiate a position.

Subscribe now

2. The Catalyst

To understand just how conservative the $8.1 billion bookings guidance is, you first need to understand the scale of what is about to happen.

Later this year, Rockstar Games will release Grand Theft Auto VI. Calling this just a video game release fundamentally misunderstands the intellectual property.

Grand Theft Auto V is one of the best-selling video games of all time, with more than 230 million copies sold globally. It transcended gaming years ago and became a foundational piece of global pop culture.

When GTA V launched in September 2013, it generated an astonishing $1 billion in retail sales within its first three days, setting a world record for the fastest-selling entertainment product in history. One billion dollars in 72 hours.

Crucially, that figure was achieved with a significantly smaller console install base and in a completely different era of digital consumption. Suggesting that GTA VI, launching into a vastly larger and more engaged gaming ecosystem, will only generate $1.4 billion in incremental bookings across an entire fiscal year is difficult to take seriously.

This is what experienced management teams do. They aggressively lower expectations, set a conservative baseline, and position themselves for a multi-quarter beat and raise cycle.

The pent-up demand for this release is unprecedented. We are talking about a consumer base that has spent more than a decade dissecting trailer clips frame by frame and waiting for this exact launch.

Share

3. The Opportunity

The true asymmetric upside of this thesis lies not only in initial unit sales, but in how dramatically the internet, social media, and gaming ecosystems have evolved since 2013.

The amount of money GTA VI is positioned to generate over the next five years could make GTA V’s historic run look modest by comparison.

Consider the state of the world when GTA V launched:

• TikTok did not exist.

• Discord did not exist.

• Instagram was barely three years old and focused primarily on square photos.

• Twitch was still emerging from its earlier iteration as Justin.tv, and livestreaming remained a niche hobby.

Today, gaming is no longer a solitary activity. It is a broadcasted, viral social experience.

When GTA VI launches, it will dominate the global internet. The free marketing loop created by TikTok clips, YouTube Shorts, Twitch streamers, and dedicated Discord communities will act as a permanent accelerant for player acquisition and engagement. Take-Two will not need to spend billions on advertising because the culture itself will market the product.

The shift in distribution is equally important.

In 2013, most GTA V sales came through physical discs sold at retailers like GameStop. Retail partners took a meaningful share of economics, while manufacturing and logistics pressured margins.

Today, the industry has overwhelmingly shifted toward digital downloads. When users purchase GTA VI directly through PlayStation or Xbox storefronts, Take-Two captures materially higher margins. The unit economics are dramatically better than they were a decade ago.

Subscribe now

4. Valuation Framework

Wall Street is currently valuing TTWO based on management’s conservative $8.1 billion midpoint guidance. I believe that framework materially understates the company’s true earnings power.

Given the expanded install base of current-generation consoles and the industry-wide move from $60 to $70-plus pricing for premium titles, it is entirely plausible that GTA VI generates $2.5 billion to $3 billion during its initial launch window alone.

But the real value creation begins after launch.

The initial retail sales will be enormous, but the long-tail monetisation opportunity is where the real cash flow engine emerges. The ancillary revenue streams could be unlike anything the entertainment industry has previously seen:

• In-game spending: The next iteration of GTA Online will almost certainly be designed around modern live-service mechanics, including microtransactions, battle passes, and digital economies. GTA V stumbled into this opportunity. GTA VI is being built for it.

• Licensing and media expansion: As gaming increasingly converges with broader entertainment, the value of the GTA intellectual property should continue to expand.

• Subscription monetisation: Services such as GTA+ could evolve the franchise from a one-time purchase into a recurring revenue ecosystem.

Software scales exceptionally well. Once the massive development costs are absorbed, incremental digital sales and microtransactions flow through at extremely high margins.

If forward bookings ultimately land closer to $9.5 billion to $10.5 billion over the next 12 to 18 months, and EBITDA margins normalise in the 25% to 30% range, TTWO may already be trading at a mid-teens forward EV/EBITDA multiple on its true earnings power.

For a company that effectively owns the highest-quality franchise in interactive entertainment, that valuation looks very reasonable, if not outright cheap.

Share

5. The Moat

Now let’s discuss downside protection.

Even if you completely strip away the GTA excitement, Take-Two still owns an exceptional collection of gaming assets.

The company owns Zynga, a major mobile gaming platform with highly recurring revenue streams. It owns the NBA 2Kfranchise, an annualised cash machine with a deeply entrenched player base. It also owns Red Dead Redemption, another globally recognised blockbuster franchise.

More importantly, this portfolio becomes even more valuable in a world increasingly flooded with AI-generated content.

Over the next five years, the internet will likely be saturated with infinite amounts of low-quality, commoditised media. In that environment, truly differentiated intellectual property becomes more valuable, not less.

Nobody is going to vibe-code a Grand Theft Auto game.

You cannot simply prompt an AI model to create a meticulously crafted, hundred-hour open-world experience with proprietary game engines, deeply interwoven narratives, and decades of accumulated cultural relevance.

The barriers to entry required to build a franchise of this scale are enormous. In my view, the moat surrounding Rockstar’s intellectual property is wider today than at any point in the company’s history.

Subscribe now

6. The Risk

Of course, there is one obvious risk factor: delay risk.

Rockstar Games is famously perfectionist. The company has repeatedly demonstrated that it prioritises long-term quality over quarterly expectations. If management believes the game requires additional polishing, they will delay it.

There is a very real possibility that the planned release slips into early 2027. If that happens, the stock would likely sell off further in the short term as impatient capital exits the name.

But the key distinction is this: a delay does not destroy the demand. It simply shifts the cash flows further to the right.

Historically, delays for Rockstar titles have often increased anticipation and resulted in stronger long-term player engagement after launch.

If this were purely a short-term options trade, a delay could be devastating. But that is not how I am approaching this investment.

Share

7. Investment Outlook

This is not a momentum trade.

I am not buying the hype simply to sell the news into launch excitement. This is a multi-year investment thesis centred on the long-tail monetisation potential of the next iteration of GTA Online.

The real opportunity is the transformation of GTA VI from a blockbuster product launch into a recurring revenue, high-margin ecosystem capable of compounding shareholder value for years.

Right now, Wall Street is focused on heavily sanitised guidance and near-term quarterly optics. I am focused on what may become the most commercially successful entertainment launch in history, backed by an irreplaceable intellectual property moat and operating inside a fully mature digital ecosystem designed to maximise monetisation.

I believe the market is mispricing the opportunity because management has deliberately lowered expectations. I am using this post-earnings weakness to build a position before the underlying cash flow potential becomes impossible to ignore.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

• E-commerce delivered another record quarter, with GMV reaching $37.3 billion, up 30% YoY, marking the strongest growth since Q1 2025. Gross orders rose 29% YoY to 4.0 billion, while the implied take rate increased to 12.1%, supported by exceptional advertising momentum. Ad revenue surged 80% YoY in Q4 2025, with the ad take rate expanding by more than 90 basis points. Shopee’s investments in instant delivery, fulfilment capabilities, and the ShopeeVIP membership programme are already improving unit economics. In Indonesia, instant delivery costs fell 20% YoY despite volume growth exceeding 35%. Brazil remained a standout market, delivering the fastest growth across the business while continuing to operate profitably.

• Digital Financial Services maintained its rapid expansion, with the loan book surging 71% YoY to $9.9 billion, including $8.8 billion on-book and $1.1 billion off-book. Growth was driven by the addition of 4.9 million first-time borrowers during the quarter. Active credit users surpassed 38 million, growing more than 35% YoY, while average loan outstanding per user increased 25% to $250. Brazil became the fourth market to exceed $1 billion in loans, growing more than 250% YoY, supported by the recently obtained SCFI licence, which expands Monee’s service capabilities. Importantly, the 90-day NPL ratio remained stable at 1.1%, highlighting strong credit discipline despite aggressive expansion into new user segments and off-Shopee use cases.

• Digital Entertainment delivered its strongest quarter since 2021. Bookings increased 20% YoY to $931 million, while quarterly paying users reached 73 million, up 12% YoY. Free Fire’s collaboration with Jujutsu Kaisen generated more than 700 million content views, becoming one of the most successful IP partnerships in the game’s history. Arena of Valor also achieved record quarterly bookings in its tenth year, reinforcing Garena’s ability to operate games profitably across genres and geographies over long periods. The paying user ratio improved to 10.9% from 9.8% a year ago, while ARPPU increased to $1.40 from $1.17.

• Total revenue accelerated 47% YoY to $7.1 billion, representing the company’s fastest growth rate in four years, since Q1 2022. Gross margin declined to 44% from 46% a year ago as cost of revenue increased 52%. Operating income reached a record $593 million, rising 30% YoY in absolute dollars, although the operating margin declined to 8% from 9% due to continued investment. Operating expenses grew 43%, while Sales and Marketing expenses increased 52% and rose to 20% of revenue from 19% a year ago. Notably, an incremental $11 million in spending generated an additional $246 million in revenue, underscoring improving efficiency and returns on investment.

• The company generated adjusted EBITDA of $1.0 billion for the first time, representing 9% YoY growth. Overall, the quarter demonstrated strong absolute profitability growth, even as margins compressed due to deliberate investment. Management continues to prioritise market share gains and strengthening competitive moats over near-term margin optimisation.

Contents

1. Financial Highlights

2. Wall Street Expectations

3. E-Commerce

4. Digital Financial Services

5. Digital Entertainment

6. Financial Analysis

7. Guidance

8. Conclusion

Most investors are late to the Mag-7 party.

While these companies continue to get all the attention, Market Sentiment focuses on identifying the second-order effects early.

They were the first to cover the Optics Trade with the basket now up 79%. Their Advanced Packaging Thesis is also now playing out in real time with the portfolio up 75% in three months. They predicted the AI energy bottleneck last year.

Tomorrow, they are launching the Agentic Basket where they cover the second-order winners of the agent buildout.

For the next 24 hours, Wolf of Harcourt Street readers can now unlock full access to Market Sentiment at a special discounted rate.

Get the Agentic Basket

1. Financial Highlights

• Revenue: $7.1 billion (+47% YoY)

  • E-commerce: $5.1 billion (+45% YoY)

  • Digital Financial Services: $1.2 billion (+58% YoY)

  • Digital Entertainment: $697 million (+41% YoY)

  • Other: $44 million (+33% YoY)

  • Sale of Goods: $612 million (+51% YoY)

• Operating Income: $593 million (+30% YoY)

• Net Income: $438 million (+7% YoY)

• Adjusted EBITDA: $1.0 billion (+9% YoY)

2. Wall Street Expectations

• Revenue: $6.64 billion (beat by 7%)

• Earnings per Share: $0.70 (miss by 4%)

3. E-Commerce

Shopee delivered another record-breaking quarter, with GMV reaching $37.3 billion, up 30% YoY, its strongest growth rate in two years. Gross orders exceeded 4.0 billion, up 29% YoY, driven by a 16% increase in monthly active buyers and approximately 12% growth in purchase frequency.

With GMV at $37.3 billion and marketplace revenue of $4.5 billion, the implied take rate reached 12.1%, up from 10.8% in Q1 2025. Achieving take rate expansion alongside rapid GMV and order growth is particularly impressive and highlights Shopee’s strengthening competitive position.

Exceptional Advertising Momentum
Advertising revenue was the primary growth driver, increasing approximately 80% YoY. The ad take rate expanded by more than 90 basis points YoY to roughly 2% of GMV. Both the number of ad-paying sellers and average seller spend increased by around 35% YoY, reflecting the strong ROI sellers are seeing from Shopee’s advertising products.

Importantly, with the ad take rate still only around 2%, there remains meaningful upside. Over the medium term, this could potentially expand toward 4-5% as AI-driven targeting and conversion tools improve further.

Logistics: Deepening the Moat

Shopee’s logistics advantage continues to widen. SPX Express remains one of the region’s largest e-commerce logistics providers, and investments in instant and same-day delivery are paying off.

In Indonesia, instant delivery can now fulfill orders in as little as two hours. Volume grew more than 35% in Q1 while cost-per-order declined approximately 20% YoY. This is a classic example of operating leverage, where higher scale drives lower unit costs.

The company also expanded partnerships with major offline retailers, including convenience chain Indomaret, bringing approximately 7,000 stores onto the instant delivery platform by quarter-end. This helps bridge online and offline commerce, particularly in higher-frequency categories such as groceries and pharmacy products.

Users of instant delivery services continue to demonstrate higher spending and stronger retention, reinforcing Shopee’s ecosystem flywheel.

Fulfillment is emerging as the next major growth lever. Order volumes through Shopee fulfillment centers grew approximately 25% QoQ, improving delivery speed and operational efficiency for sellers.

In Taiwan, Shopee expanded its collection point network to more than 3,100 locations, up nearly 50% YoY. Combined with innovations such as direct-to-locker shipping, which removes the need for additional packaging, buyer waiting times improved 12% YoY. The result was continued double-digit GMV growth in an already mature market.

ShopeeVIP: A Powerful Retention Engine

The subscription-based ShopeeVIP program is becoming an increasingly important driver of engagement and monetization.

Subscribers across Asian markets surpassed 10 million by the end of March, up more than 40% QoQ, while retention rates remained above 80%. ShopeeVIP members consistently show double-digit spending increases after subscribing, reaching as high as 30-40% in some markets.

The program now contributes approximately 20% of GMV across Asia and was launched in Brazil during April, creating another growth lever in Shopee’s fastest-growing market.

Content Ecosystem and Live Streaming
Shopee’s content ecosystem continues to strengthen user engagement.

AI tools are helping sellers create video content without expensive studio setups, lowering barriers to participation. In Southeast Asia, more than 20% of physical goods orders in Q2 originated from live streaming and short-form video content.

Shopee’s partnership with YouTube also remains a meaningful traffic driver, with more than 7 million videos featuring Shopee product links by June, up over 60% QoQ.

Brazil: The Standout Growth Market

Brazil was Shopee’s fastest-growing market in Q1, while also remaining profitable, an increasingly rare combination in global e-commerce.

Active buyers, purchase frequency, and basket size all expanded, supported by broad product assortment, competitive pricing, and improved logistics. Delivery times improved by more than one day YoY, while three additional fulfillment centers increased the total network to five.

These investments enabled Shopee to attract more premium merchants. ShopeeMall GMV more than doubled YoY and now represents approximately 15% of total GMV.

Given Brazil’s still relatively low e-commerce penetration, the long-term growth runway remains substantial.

AI: The Invisible Hand
Shopee’s practical use of AI is already producing measurable benefits.

AI-powered search and recommendation improvements lifted purchase conversion rates by 14% YoY. AI-generated content tools are also helping sellers create more effective listings at lower cost.

On the operational side, approximately 80% of customer queries are now handled by AI chatbots, reducing customer service cost-per-contact by roughly 30% YoY while maintaining strong satisfaction levels.

Looking ahead, Shopee is testing an AI shopping assistant for buyers and a virtual business advisor for sellers, both of which are expected to see broader rollouts over time.

Subscribe now

4. Digital Financial Services

Monee delivered a stellar start to 2026, with the credit business continuing to act as the primary growth engine. The loan book reached $9.9 billion at quarter-end, comprising $8.8 billion on-book and $1.1 billion off-book, representing growth of more than 70% YoY.

The company added 4.9 million first-time borrowers during Q1, bringing active credit users to 38 million, up more than 35% YoY. Average loan outstanding per user increased 25% YoY to approximately $250, reflecting deeper engagement as users establish credit histories and qualify for larger borrowing limits.

The Three-Pronged Growth Strategy

1. Deepening Existing Relationships

   As users successfully repay loans, Monee increases their credit limits and extends loan tenures. This creates a natural progression where borrowers gradually move up the credit ladder and borrow more over time.

2. Acquiring Higher-Quality Users

   Monee is increasingly targeting more affluent users with stronger credit profiles. These customers typically demonstrate better repayment behavior and larger borrowing capacity.

   Early campaigns focused on competitive pricing, higher limits, and longer tenures are already showing encouraging traction.

3. Expanding Off-Shopee Use Cases

   This remains the largest long-term opportunity.

   Off-Shopee SPayLater in Thailand and Indonesia exceeded 20% of the overall SPayLater portfolio by quarter-end. In Indonesia, growth has been particularly strong in higher-value categories such as electronics and two-wheelers, where installment financing plays an important role.

   Personal cash loans, targeted toward reliable SPayLater users, nearly doubled YoY. Despite the strong growth, penetration remains relatively low, suggesting meaningful room for expansion.

Brazil: The Fourth Pillar
Brazil became Monee’s fourth market to surpass $1 billion in loan book size, growing more than 250% YoY.

Growth was driven by a localized product combining SPayLater and cash loans, designed specifically around Brazilian consumer credit behavior. This resulted in strong user adoption and higher repeat usage, with average loan outstanding per user more than doubling YoY.

SPayLater penetration on Shopee in Brazil currently sits at roughly 10% of GMV, still well below more mature markets such as Indonesia, where penetration is already in the mid-teens. This highlights the significant growth runway still ahead.

The SCFI license secured during the quarter further expands the range of financial services Monee can offer and strengthens its long-term positioning in the market.

Asset Quality
Despite expanding aggressively into new segments, geographies, and off-platform use cases, the 90-day NPL ratio remained stable at 1.1%, unchanged QoQ.

This consistency highlights the strength of Monee’s underwriting capabilities and disciplined growth strategy. The relatively short duration of most loans allows management to adjust the portfolio quickly, while real-time optimization of credit limits and loan tenures helps preserve asset quality as the business scales.

Management summarized the opportunity well:

“Expansion into more user segments, off-Shopee use cases, and early markets like Brazil are giving us a much larger addressable opportunity across our portfolio.”

Monee increasingly looks positioned to become a major long-term profit driver for Sea.

Share

5. Digital Entertainment

Garena delivered its strongest quarter since 2021, with bookings rising 20% YoY to $931 million. The performance was driven by the continued strength of Free Fire alongside a record contribution from Arena of Valor.

Quarterly active users reached 667 million, roughly flat YoY. More importantly, quarterly paying users increased 12% YoY to 73 million, while the paying user ratio expanded to 10.9%, up from 9.8% a year ago.

This marks nine consecutive quarters of double-digit paying user growth following several years of decline. ARPPU also improved meaningfully, rising to $1.40 from $1.17 YoY, reflecting stronger monetization across the portfolio.

Free Fire: Eight Years and Still Growing

Free Fire continues to defy the normal lifecycle of mobile games, maintaining more than 100 million average daily active users eight years after launch.

A key reason is Garena’s ability to consistently execute high-quality IP collaborations.

In January, Free Fire launched a major collaboration with the anime Jujutsu Kaisen, generating more than 700 million official content views. The event integrated iconic anime mechanics directly into gameplay, including themed environments and character abilities such as Gojo’s “Unlimited Void.”

The collaboration followed the highly successful Naruto Shippuden partnership in 2025 and further demonstrated Garena’s ability to create culturally relevant gaming experiences that resonate globally.

Beyond IP collaborations, Garena continues refining its localization strategy.

A strong example was the Ramadan campaign. Historically limited to Ramadan-observant regions, Garena expanded the concept into a global “Lost Treasure” event in Q1 2026. Players in relevant markets viewed it as a culturally tailored celebration, while global users experienced it as a fresh desert-themed gameplay event.

The campaign generated more than 120 billion social media impressions, up approximately 70% YoY.

Arena of Valor: Longevity at Scale

Arena of Valor achieved record quarterly bookings in its tenth year of operation, a rare feat in gaming.

The continued success of both Free Fire and Arena of Valor highlights Garena’s unique capability to operate gaming franchises profitably across multiple genres, markets, and time horizons through continuous innovation and engagement.

AI: The Next Enabler

Garena sees AI as an important long-term growth enabler across development, engagement, and content creation.

AI tools are already accelerating asset creation and enabling higher-quality content production at scale. AI-driven game agents may also improve retention by supporting solo players.

Longer term, Garena is experimenting with generative content that could allow players to create in-game assets themselves, although scalability and quality control remain key priorities.

Subscribe now

6. Financial Analysis

Revenue

Total revenue accelerated 47% YoY to $7.1 billion, the fastest growth rate in four years and the strongest since Q1 2022.

The acceleration is particularly notable given Sea’s scale and reflects strong momentum across all three core businesses.

• E-commerce revenue grew 44% to $4.5 billion, driven by GMV growth and improved monetization, particularly advertising.

• Digital Financial Services revenue surged 58% to $1.2 billion, fueled by rapid credit expansion.

• Digital Entertainment revenue increased 41% to $697 million, supported by improved monetization and stronger user conversion.

Gross Margin

Sea reported a gross margin of 44%, down from 46% in Q1 2025.

Cost of revenue increased 52% YoY to $4.0 billion, outpacing revenue growth. The margin compression reflects deliberate investment across instant delivery, fulfillment infrastructure, ShopeeVIP subsidies, and user acquisition.

The business mix remained relatively stable:

• Digital Entertainment represented 10% of revenue

• Digital Financial Services increased from 16% to 17%

• E-commerce declined modestly from 64% to 63%

This suggests most of the gross margin pressure came from e-commerce investments rather than structural deterioration elsewhere in the business.

Notably, both Digital Entertainment and Digital Financial Services improved their gross margins during the quarter. Digital Financial Services, in particular, expanded gross margin from 86% to 89%.

Given that Digital Financial Services is both Sea’s highest-margin and fastest-growing business segment, it is likely to become a larger share of overall revenue over time. If that trend continues, Sea’s consolidated gross margin could potentially exceed 50% over the longer term.

Share

Operating Margin

Sea delivered record operating income of $593 million, up 30% YoY in absolute dollars, although operating margin declined slightly to 8% from 9% a year earlier.

Operating expenses increased 43% YoY to $2.6 billion, slightly below revenue growth but not enough to fully offset gross margin pressure.

Sales and marketing expense rose 52% YoY to $1.4 billion, although it remained relatively stable at roughly 20% of revenue.

The key takeaway is that marketing efficiency continues to improve.

From Q4 2025 to Q1 2026, Sea invested an additional $11 million into sales and marketing, generating approximately $246 million in incremental revenue. This suggests increasingly efficient customer acquisition and monetization across the ecosystem.

Other notable cost trends included:

• Provision for credit losses increased 65% to $466 million, reflecting rapid loan book expansion while remaining manageable relative to growth.

• General and administrative expense rose 32% to $404 million, broadly in line with company growth.

• Research and development expense remained flat at $297 million, reflecting disciplined investment while maintaining innovation capacity.

Adjusted EBITDA

Sea surpassed $1 billion in adjusted EBITDA for the first time, up 9% YoY.

Shopee’s adjusted EBITDA declined from $264 million to $223 million as management prioritized long-term investments in delivery, fulfillment, ShopeeVIP, and customer acquisition. However, improving unit economics suggest this pressure is likely temporary rather than structural.

Subscribe now

7. Guidance

Management does not provide formal quantitative guidance but offered several important qualitative updates.

E-commerce

• 2026 GMV growth target of approximately 25% YoY was reaffirmed.

• Full-year adjusted EBITDA is still expected to be no lower than 2025 in absolute dollar terms.

With Q1 GMV growth already reaching 30%, Shopee appears ahead of pace relative to its full-year target.

Digital Financial Services

• Loan book growth is expected to continue outpacing Shopee GMV growth.

• Expansion into off-Shopee use cases and Brazil remains at an early stage.

• Management remains focused on maintaining stable asset quality while scaling.

Digital Entertainment

Management expects strong momentum at Garena to continue throughout 2026.

Wall Street 2026 Estimates

Current analyst expectations are:

• Revenue: $29.7 billion, up 29% YoY

• Adjusted EPS: $3.91, up 23% YoY

Following the Q1 results, upward estimate revisions appear likely, continuing a trend that has persisted over the past two years.

Share

8. Conclusion

Sea Limited delivered an exceptionally strong Q1 2026, combining its fastest revenue growth in four years with record levels of absolute profitability.

Revenue increased 47% YoY to $7.1 billion, while operating income reached $593 million and adjusted EBITDA exceeded $1 billion for the first time.

At the same time, margins compressed modestly as management accelerated investment across logistics, fulfillment, ShopeeVIP, user acquisition, and off-Shopee credit expansion. Importantly, these investments appear strategic rather than defensive.

All three core businesses are performing well:

• Shopee continues strengthening its logistics, content, and membership ecosystem while maintaining 30% GMV growth.

• Monee is scaling rapidly across new users, geographies, and use cases while preserving excellent asset quality.

• Garena has returned to growth with stronger monetization and sustained user engagement.

Most importantly, the underlying unit economics are improving:

• Instant delivery costs per order declined approximately 20% YoY despite strong volume growth.

• AI chatbots reduced customer service costs by roughly 30% YoY.

• ShopeeVIP members demonstrated 30-40% spending uplifts.

• Marketing efficiency continues improving as incremental spend drives disproportionately higher revenue growth.

These trends strongly suggest the current margin pressure is temporary and tied to investment timing rather than structural weakness.

Management’s guidance reinforces this view. Shopee still expects full-year adjusted EBITDA to be at least in line with 2025 levels while simultaneously pursuing approximately 25% GMV growth.

Perhaps most importantly, Sea is making these investments from a position of strength: strong profitability, healthy cash generation, a robust balance sheet, and leadership positions across all three businesses.

Rating: 4 out of 5. Exceeds expectations.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

• MAPCs grew 17% YoY to 199 million, accelerating from 15% growth in Q4 2025. Trip volumes surged 20% YoY to 3.6 billion while frequency remained strong at 6.1 trips per customer per month, up 3% YoY and sustaining the record engagement levels first reached in Q2 2025. Gross Bookings accelerated to 21% constant currency growth, reaching $53.7 billion.

• Uber One surpassed a major milestone of 50 million members, up from 30 million at the end of 2024, meaning the company added 20 million members in just over one year. Members now account for more than 50% of combined Mobility and Delivery Gross Bookings and spend 3x more than non-members. The program continues to be the company’s primary cross-platform engagement driver.

• Revenue increased 14% YoY to $13.2 billion, or 10% in constant currency. Growth was impacted by business model changes that reduced reported growth by 9 percentage points, or 8 percentage points in constant currency. Mobility revenue rose 5% YoY to $6.8 billion, or 1% in constant currency, while Delivery revenue surged 34% YoY to $5.1 billion, or 28% in constant currency, driven by grocery and retail expansion alongside growing membership adoption.

• Operating income reached $1.9 billion, with margins expanding to 15% from 11% in Q1 2025, representing 57% YoY growth. Free cash flow totaled $2.3 billion, flat YoY, while the company returned a record $3.0 billion to shareholders through buybacks during the quarter. Management also expects insurance cost savings of hundreds of millions of dollars in 2026, with those savings expected to be passed on to consumers to help accelerate US Mobility growth through the remainder of the year.

• Autonomous vehicle deployments increased more than 10x YoY, with Uber on track to operate in up to 15 cities by year-end through partnerships with more than 30 AV companies. New partnerships with Zoox, Nuro, Lucid, and others were announced, while the company also launched Uber Autonomous Solutions, a platform designed to provide fleet management and data infrastructure for AV partners.

Contents

1. Financial Highlights

2. Wall Street Expectations

3. Business Activity

4. Financial Analysis

5. Guidance

6. Conclusion

1. Financial Highlights

• Revenue: $13.20 billion (+14% YoY)

  • Mobility: $6.80 billion (+5% YoY)

  • Delivery: $5.07 billion (+34% YoY)

  • Freight: $1.34 billion (+6% YoY)

• Operating Income: $1.92 billion (+57% YoY)

• Adjusted EBITDA: $2.48 billion (+33% YoY)

• Free Cash Flow: $2.29 billion (+2% YoY)

2. Wall Street Expectations

• Revenue: $13.26 billion (miss by 4%)

• EPS: $0.69 (beat by 4%)

3. Business Activity

Monthly Active Paying Customers (MAPCs)

MAPCs grew 17% YoY to 199 million, accelerating from 15% in Q4 2025. This reacceleration is notable given Uber’s scale and highlights continued momentum in customer acquisition.

Management also noted that cross-platform consumers, users engaging with both Mobility and Delivery, are growing 1.5x faster than overall consumer growth. This validates Uber’s strategy of driving engagement across multiple services.

Trips

Trip volumes reached 3.6 billion, up 20% YoY.

CEO Dara Khosrowshahi highlighted that trip growth in sparse and suburban markets is growing 2x faster than core urban markets globally, representing a significant long-term expansion opportunity.

Frequency

Trips per MAPC reached 6.1 per month, compared to 6.0 in Q1 2025, representing 3% YoY growth.

Frequency has now remained in the 6.0 to 6.2 range for seven consecutive quarters, a meaningful improvement from the 5.0 to 5.5 range seen between 2020 and early 2023. Uber has successfully evolved from an occasional convenience into habitual consumer infrastructure.

Membership

Uber One reached 50 million members, up 50% YoY from roughly 36 million in Q2 2025 and 30 million at year-end 2024. That equates to 20 million net additions in just over one year.

Members now account for over 50% of combined Mobility and Delivery Gross Bookings and spend 3x more than non-members.

Management highlighted several new benefits supporting continued adoption:

• 10% Uber credits on hotel bookings through the new Expedia partnership, covering 700,000 hotels

• Up to 20% additional savings on 10,000+ select hotels

• Global membership benefits for international travelers

• No delivery fees on grocery orders over $50

• Member Days promotional events

Khosrowshahi commented:

“We’ve seen this growth going on for a long time. We’ve kind of wondered when it’s going to slow down. At this point we don’t see it slowing down thanks to the innovation of the team.”

Subscribe now

Gross Bookings

Gross Bookings reached $53.7 billion, up 21% YoY on a constant currency basis, or 25% reported. This marked an acceleration from 18% constant currency growth in Q4 2025.

Mobility Segment

Mobility Gross Bookings grew 20% constant currency to $26.4 billion, continuing to accelerate from prior quarters. Take rates remained above 25%.

Management highlighted a “barbell strategy” supporting growth:

Affordability

• Moto, two and three-wheelers, exceeded $1.5 billion in annual bookings with 40%+ trip growth

• Wait & Save and shared rides continued expanding

Premium

• Comfort, SUV, and Black surpassed $10 billion in annualized Gross Bookings with 35%+ trip growth

• Reserve grew “well in excess” of the core business

• Corporate travel grew nearly 30%

CFO Balaji Krishnamurthy provided important commentary on insurance costs:

“This will be the first year since COVID where we expect to see good leverage on our insurance cost line for the US Mobility business.”

Auto insurance renewals in March produced favorable terms, with management expecting hundreds of millions of dollars in insurance savings during 2026. These savings are being reinvested into lower prices to accelerate trip growth.

Delivery Segment

Delivery Gross Bookings grew 23% constant currency to $26.0 billion, while take rates remained steady at 19%.

This was the fourth consecutive quarter of accelerating growth, driven by:

• Grocery & Retail expansion, with selection growth at its fastest pace in nearly three years

• Rising Uber One adoption, which drives materially higher frequency

• Cross-platform engagement across the Uber ecosystem

Management noted that the Delivery tab inside the Mobility app generated $15 billion in annualized Delivery Gross Bookings, nearly $4 billion per quarter, while also acquiring 30% of first-time Delivery customers.

Importantly, 30% of eligible Mobility users have never tried Delivery, while 75% have never used Grocery & Retail. This represents a massive long-term cross-sell opportunity.

Freight Segment

Freight returned to growth for the first time in nearly two years, with Gross Bookings rising 6% YoY to $1.3 billion.

The segment still represents less than 3% of total company Gross Bookings.

Share

4. Financial Analysis

Revenue

Revenue grew 14% YoY to $13.2 billion, or 10% in constant currency.

However, business model changes negatively impacted reported growth by 9 percentage points. Excluding these changes, underlying revenue growth would have been approximately 23% YoY, much closer to the company’s 21% constant currency Gross Bookings growth.

The revenue mix continues to differ materially from Gross Bookings due to varying take rates:

• Mobility represented 49% of Gross Bookings but 52% of revenue

• Delivery represented 48% of Gross Bookings but only 38% of revenue

Mobility revenue grew 5% YoY to $6.8 billion. The relatively modest growth versus 20% Gross Bookings growth reflects both business model changes and management’s decision to pass insurance savings back to consumers through lower prices.

Delivery revenue grew 34% YoY to $5.1 billion, marking the fastest growth rate since Q2 2022. Growth was driven by Grocery & Retail expansion, rising Uber One adoption, and stronger cross-platform engagement.

Subscribe now

Operating Margin

Operating income reached $1.92 billion, with operating margins expanding to 15% of revenue versus 11% in Q1 2025. Absolute operating income increased 57% YoY.

Sales & Marketing remains Uber’s largest operating expense. This line includes customer promotions, though driver incentives are recorded within cost of revenue.

At its peak, Uber spent nearly 40% of revenue on Sales & Marketing. That figure has now stabilised between 9% and 10% over the past two and a half years, a dramatic improvement in efficiency.

Khosrowshahi also highlighted the growing impact of AI on productivity:

“About 10% of our code now that is committed is built by agents, autonomous agents...if every person in this company can increase their throughput by 20%, 30%, 50%, 100%, then I think metering head count growth and leaning in on AI investment is going to be well worth it.”

Krishnamurthy added further context around the company’s investment strategy:

“On our barbell for Mobility, the low-cost products that we’ve been investing behind, they drive 75% higher frequency than our core products. And on the other end of the spectrum, our higher fare premium products drive 3.5 times higher profit growth for the company.”

Net Margin

Uber reported net income of $263 million, impacted by a $1.5 billion pre-tax headwind related to revaluations of equity investments.

Cash Flow Analysis

Free cash flow reached $2.29 billion, up 2% YoY, with trailing twelve-month FCF now exceeding $9 billion.

Operating cash flow totaled $2.35 billion, while CapEx remained extremely low at just $65 million, reinforcing the strength of Uber’s asset-light business model.

The company also returned a record $3.0 billion to shareholders through buybacks during Q1 2026, part of the broader $20 billion buyback program announced in 2025.

Share

5. Guidance

For Q2 2026, management expects:

• Gross Bookings growth of 18% to 22% constant currency, equating to approximately $56.25 billion to $57.75 billion

• Adjusted EBITDA of $2.70 billion to $2.80 billion, representing 31% to 38% YoY growth

Importantly, guidance remains comfortably within the company’s three-year outlook issued in February 2024.

Subscribe now

6. Conclusion

Uber delivered an outstanding Q1 2026, further reinforcing the strength and durability of its platform model.

1. The Uber One flywheel is accelerating

Uber One reached 50 million members, up from 30 million just one year ago. Members now account for more than 50% of Gross Bookings and spend 3x more than non-members.

With new benefits such as hotel partnerships being layered into the ecosystem, Uber is building a powerful consumer subscription model that competitors will struggle to replicate.

2. Growth is reaccelerating across the business

• MAPCs: +17%, accelerating from +15%

• Trips: +20%, the strongest growth since Q3 2023

• Gross Bookings: +21% constant currency, accelerating from +18%

The narrative that Uber is becoming a mature, slower-growth business increasingly looks outdated. Delivering 20% trip growth at a base of 3.6 billion quarterly trips is exceptional execution.

3. Insurance savings are becoming a major tailwind

Management’s commentary around insurance costs was among the most bullish in years.

With hundreds of millions in expected savings being reinvested into lower pricing, Uber appears positioned for sustained acceleration in US Mobility. Management specifically highlighted improved trends in Los Angeles, historically one of the company’s most insurance-constrained markets.

4. The cross-platform opportunity remains enormous

Management disclosed that 30% of Mobility users have never tried Delivery, while 75% have never engaged with Grocery & Retail.

Meanwhile, the Mobility app already generates $15 billion in annualized Delivery Gross Bookings. The scale of the cross-sell opportunity remains underappreciated and still appears to be in its early innings.

5. AI is improving productivity, not just increasing costs

Uber’s AI investments are already showing tangible operational benefits.

Management disclosed that 10% of committed code is now agent-generated, while engineering productivity continues improving. Combined with moderated headcount growth, this positions Uber to continue expanding margins while still investing aggressively in growth initiatives.

Overall, Q1 2026 demonstrated how far Uber has evolved from its earlier “growth at all costs” era.

The company is now simultaneously compounding growth, profitability, and free cash flow, while maintaining strong strategic focus across AI, autonomous vehicles, sparse markets, and platform expansion.

Khosrowshahi continues to establish himself as one of the strongest non-founder CEOs in public markets. Returning $3 billion to shareholders in a single quarter while still investing heavily for future growth highlights both disciplined capital allocation and exceptional execution.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

The real alpha lies in AI bottlenecks.

Most investors are late to the Mag-7 party. While these companies continue to get all the attention, Market Sentiment focuses on identifying these second-order effects early.

They were the first to cover the Optics Trade with the basket now up 51%. Their Advanced Packaging Thesis is also now playing out in real time with the portfolio up 40% in three months. They predicted the AI energy bottleneck last year.

For the next 24 hours, Wolf of Harcourt readers can now unlock full access to Market Sentiment at a special discounted rate.

Subscribe to Market Sentiment

Transactions

Microsoft (MSFT)

I added to my Microsoft position, as flagged in last month’s review. At the time, the stock was trading at 21x forward earnings, which felt reasonable for a business of this quality.

The company reported FY26 Q3 earnings this week and continues to execute. Revenue grew 18% to $82.9 billion, while net income increased 20% to $31.8 billion.

Uber (UBER)

I added to Uber following its new partnership with Expedia, which allows users to book hotels directly within the app. Over time, this will expand to more than 700,000 properties globally.

Uber One members will earn 10% back in credits on bookings and receive at least 20% off a rolling list of 10,000+ hotels. Vacation rentals from Vrbo will be added later this year, with plans to expand beyond the U.S.

Uber is steadily evolving into a super app, and ironically delivering on much of what Airbnb has long promised. Execution has been strong, and Dara Khosrowshahi continues to stand out as one of the top operators:

“We’re all living through a moment of real cognitive overload: too many apps, too many decisions, too much noise. At the end of the day, our job is to help people reclaim their time, spending less of it managing the logistics of life and more of it actually living.”

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy List

Meta (META)

Meta sold off 8% despite what I view as very strong earnings. Revenue grew 33% to $56.3 billion, and operating income increased 30% to $22.9 billion.

At this scale, that level of growth is remarkable. The key driver is AI. Ad impressions rose 19%, while the average price per ad increased 12%.

Meta’s ad engine has become highly effective, allowing it to serve more ads while also improving performance for advertisers. As a result, businesses are willing to pay more.

Importantly, Meta’s ads don’t feel like a tax on the platform, unlike what you might see on Amazon or Google. They are embedded within the content experience. In many cases, users don’t even realise they’re viewing an ad, and that integration should continue to improve.

Nubank (NU)

Nu will report earnings later this month, which I’m looking forward to.

A company growing revenue and EPS north of 30% would typically command a premium multiple. Yet NU trades at just 16x forward earnings.

While that may look elevated relative to traditional banks, NU operates in a different category. Incumbents tend to grow at single digits and carry heavier cost structures, whereas NU is digitally native.

Viewed as a high-growth platform business, the current valuation looks compelling.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

A relatively quiet month in terms of activity. I deployed the remainder of my cash position after holding a modest balance during the recent portfolio consolidation.

A softer Q1 created several opportunities, which I took advantage of. The portfolio is now fully invested once again.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

10 AI-proof SaaS Stocks for 2026

Meta once dropped 70%. Netflix: 50%. Amazon: 40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalize on their eventual rebound.

Just last year, they identified ASML (up 58%), Google (up 40%), and AMD (up 61%) as ideal rebound prospects.

And now, SaaS is in peak pessimism due to AI-led disruption.

Rebound Capital has identified 10 AI-proof SaaS companies with deep moats in steep drawdowns.

Wolf of Harcourt Street readers can now unlock their exclusive 24-page AI-proof stock report for free!

Download the Report [Free]

Transactions

Evolution (EVO)

I sold my full position in EVO, which was just over 3% of the portfolio at the time of sale. This is a decision I had been sitting on for some time, as the thesis had broken down and my conviction had been fading. When the market presented more attractive opportunities elsewhere, I finally decided to act.

Before moving on, it’s important to go through the post-mortem. When I first published the EVO investment thesis in October 2023, the bull case felt almost self-evident. A business with 70% EBITDA margins, 26% revenue growth, durable network effects, and a near-unassailable position in live casino. It looked like a company you could hold for a decade.

The bull case rested on three pillars:

1. Structural moats. EVO’s advantage came from switching costs embedded in operator relationships, the network effects of the world’s largest live dealer studio network, and IP that competitors had repeatedly failed to replicate at scale.

2. Market growth as a tailwind. The global iGaming market was projected to grow from ~$73 billion in 2023 to over $127 billion by 2027. As the dominant B2B infrastructure layer, EVO was positioned to grow at least in line with the market and historically had grown well ahead of it.

3. Margin durability. A fixed-cost studio model with significant scalability meant each incremental game round carried extraordinary operating leverage. The margin profile was a feature of the business model.

None of these have disappeared entirely. But Q4 again showed that the growth engine has stalled, and in ways that aren’t easily reversed.

Europe is the problem that won’t go away. Channelisation is working against EVO. Ring-fencing measures across key European markets are shrinking the addressable pool, and management gave no credible timeline for reversal. This has been a headwind for several quarters.

Asia has a similar issue, but with a different root cause. Cybercrime, specifically the hijacking of Evolution’s video streams, has been a known issue since 2024. I gave management the benefit of the doubt when they described it as solvable. Twelve months later, the answer on the Q4 call was effectively “slow, methodical progress.”

Meanwhile, the growth that does exist in North America (+9%) and Latin America (+12%) comes with an important caveat. Combined, these regions still represent just over half of Asia’s revenue alone. Even at double-digit growth rates, they cannot offset the structural decline in EVO’s core markets within a reasonable time horizon.

There was one line in the Q4 earnings call that stood out. When asked what it would take for financial performance to finally match operational progress, CEO Martin Carlesund replied: “Just a stable environment. No more, no less.”

That was the tell. When a company’s re-acceleration depends primarily on external circumstances rather than controllable execution, the investment changes. You are no longer underwriting a business, you are underwriting a macro bet on regulatory stability in Europe and law enforcement effectiveness in Asia.

That is not the original thesis.

EVO remains a high-quality operator and will likely continue to generate significant cash and return it to shareholders. But the original thesis assumed double-digit growth with stable margins. Those assumptions are no longer valid, not in Europe, not in Asia, and not at a pace that the Americas can offset. For full transparency, I sold the entire position for an overall 41% loss.

Mercado Libre (MELI)

The capital freed up from EVO found a natural home. As I referenced in last month’s portfolio review, MELI sold off after Q4 2025 earnings on margin concerns. Operating margin compressed to 10% as the company leaned into fulfilment infrastructure, free shipping, and AI tooling across the platform.

I have seen this movie before with MELI: deliberate investment cycles that look like deterioration but turn out to be the foundation for the next leg of growth. When a business is growing revenue at 45%, adding 16 million new buyers in a single quarter, and building an advertising business growing 67%, a near-term margin dip is not a thesis breaker, it is the price of admission. The add was straightforward.

Adyen (ADYEN)

Adyen’s H2 2025 results were solid. Net revenue grew 21% on a constant currency basis, EBITDA grew 23%, and margin expanded to 55%, yet the market punished the stock by nearly 19%. The culprit was processed volume.

Full-year TPV grew just 8% versus 33% in 2024, with the Digital segment contracting 1% in H2, mainly due to the off-boarding of low-margin Cash App revenue. Currency headwinds and softer volumes from APAC-based merchants exposed to US tariff uncertainty also had a negative impact.

The market saw volume deceleration and sold first. I read it differently. Unified Commerce and Platform, the two segments that reflect Adyen’s strategic direction and long-term wallet share, both grew. EBITDA margin hit 53% for the full year, up from prior periods.

The land-and-expand model is working. Existing customers are expanding across geographies and sales channels, India is emerging as a meaningful new market, and embedded financial products, issuing, capital, and bank accounts, are inflecting. Management guided 20–22% net revenue growth for 2026 on a constant currency basis, underpinned by detailed customer conversations rather than top-down aspiration.

A forward EV/EBITDA of 11 on a business with >50% EBITDA margins, a clean balance sheet, and a durable competitive position in enterprise payments looks like an opportunity to me. I added accordingly.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Performance

• Q1: -13.2% vs. S&P -4.6%

Top Contributors YTD:

1. INPST: +43%

2. ASML: +25%

3. NIO: +18%

Largest Detractors:

1. RBRK: -40%

2. SE: -39%

3. ADYEN: -37%

4. MSFT: -27%

5. V: -15%

Buy List

Microsoft (MSFT)

Microsoft is on the buy list for one reason above all others: Azure. During Q2 FY26, Azure grew 39%, with Q3 guided to 37–38%.

What makes the current setup interesting is valuation. Microsoft is trading at approximately 21x forward earnings, well below its five-year average of ~33x. A business compounding operating income at 21%, with Azure re-accelerating and a 47% operating margin, does not often trade at 21x earnings.

The bear case centres on CapEx, and it is a fair concern. Capital intensity is running at historically high levels as Microsoft builds infrastructure to meet backlog demand. But this is the same debate investors had when Amazon was pouring cash into AWS in its early years. Microsoft is now at its lowest earnings multiple since 2017. Even during the pandemic, the stock did not fall this low.

Visa (V)

I recently came across the Death by Claude tool, a SaaSpocalypse survival scanner, and it had this to say about Visa:

“Visa will be processing the payment for your funeral, your grandchildren's funerals, and the funerals of whatever sentient species replaces us. They survived the internet, crypto, Apple Pay, and now they'll survive Claude. They literally just sit between money and collect a toll - they're the final boss of capitalism."

Visa is probably one of the highest quality businesses in the world and is now trading close to the low end of its 10-year valuation range.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

The decision to sell EVO had been made some time ago, but I acted on it this month to free up cash and deploy it into what I believe are more attractive opportunities.

From a performance perspective, this was an ugly quarter and the worst for the portfolio since Q2 2022. From a concentration perspective, the portfolio is now down to 14 positions, which I am comfortable with. There are many opportunities in the market at the moment, both within the portfolio and on the watch list.

I deployed the majority of the EVO proceeds but still have almost 1% in cash. While tensions in the Middle East are having very real impacts on lives and markets, these periods often create some of the best opportunities in equities.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Top 10 Rebound Stocks for 2026

Meta once dropped 70%. Netflix: 50%. Amazon: 40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalize on their eventual rebound.

Just last year, they identified ASML (up 58%), Google (up 40%), and AMD (up 61%) as ideal rebound prospects. The Wolf of Harcourt Street readers can now unlock their exclusive 25-page report on the top 10 rebound opportunities for 2026 for free!

Download the 2026 Report [Free]

Transactions

Sea Limited (SE)

I executed the buy decision in SE that I flagged in last month’s portfolio review. The stock continues to face pressure, despite being largely insulated from the AI disruption narrative. However, the underlying fundamentals remain as strong as ever.

Even more compelling, this growth business now trades at just 25 times forward earnings.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy List

Mercado Libre (MELI)

My largest holding reported earnings this week and delivered another exceptional quarter, with revenue growing 45% year over year and comfortably beating expectations.

Long term readers will know that MELI does not issue guidance. As a result, Wall Street analysts have a poor track record forecasting its results. This quarter was no different. Earnings per share came in below estimates because management chose to invest aggressively for long term growth at the expense of short term profitability.

That is exactly what you want to see.

When a business has a vast market opportunity and a long reinvestment runway, it should be reinvesting as much as possible. I repeat this every quarter, but the message remains the same. The key performance indicators continue to validate the strategy, and I will be looking to make my largest position even larger.

Nubank (NU)

NU also reported a strong quarter and, similarly, was punished by the market. Revenue beat estimates, with growth accelerating for the third consecutive quarter, marking the fastest growth rate since Q1 2024.

Despite its scale, NU continues to add roughly 4 million customers per quarter. Most of that growth still comes from Brazil, even though Mexico and Colombia are growing faster on a relative basis.

Importantly, nearly half of NU’s customer base joined within the past three years. Even so, average revenue per active customer, ARPAC, reached a record $15. That is already 19 times its cost to serve, before considering increased wallet share and monetisation as cohorts mature.

Customers who have been with NU for eight years generate ARPAC of $30.20. As the newer cohorts age, ARPAC should naturally expand.

In a previous article, I modelled a credible path for NU to triple revenue by 2030 from its existing customer base alone. That thesis is steadily playing out. I recommend revisiting that piece if you missed it.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

Investing is often described as an art rather than a science. Nothing captures that better than the discipline of doing nothing.

The past month has been highly volatile, particularly across technology, software, and payments. Yet it has been one of my least active months in some time. That has been intentional. I avoid emotional decisions and prefer to let the dust settle before acting.

I am currently contemplating two potential sales:

Evolution (EVO)
The company reported another disappointing quarter. It was a humbling reminder that situations can deteriorate further than expected.

As I acknowledged in my 2025 Annual Report, holding despite clear fundamental decline has been one of my larger mistakes. My conviction has faded. It is now a question of when, not if, I sell.

InPost (INPST)
Earlier this month, an offer was tabled to take INPST private at €15.60 per share. If completed, this would be deeply disappointing. It would mark the second time the company has gone private, and in both cases minority shareholders would bear the cost.

CEO Rafal Brzoska would see his ownership increase from 13% to 16%, which speaks to where incentives lie. Leverage has been cited as the rationale, but the alignment is clear.

With the current share price around €15.20, the remaining upside is roughly 2.5%. This could ultimately become a forced sale outside my control.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Top 10 Rebound Stocks for 2026

Meta once dropped 70%. Netflix: 50%. Amazon: 40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalize on their eventual rebound.

Just last year, they identified ASML (up 58%), Google (up 40%), and AMD (up 61%) as ideal rebound prospects. The Wolf of Harcourt Street readers can now unlock their exclusive 25-page report on the top 10 rebound opportunities for 2026 for free!

Download the 2026 Report [Free]

Transactions

Microsoft (MSFT)

I finally added to my MSFT position for the first time since 2022. MSFT is one of the anchors of my portfolio but is currently materially underweight.

In the past, I have been too greedy waiting for a lower multiple. The stock recently fell to ~24x forward earnings, which I believe is very reasonable for a business that can continue to grow earnings at double digit rates for at least another decade, supported by powerful secular tailwinds in cloud and AI.

Rubrik (RBRK)

Rubrik was a new addition to the portfolio in 2025 and, in my view, offers a compelling opportunity below $60.

At $56, an inverse DCF implies ~19% annual growth over the next decade. I believe this is entirely reasonable given Rubrik is currently growing revenue by ~50%, even allowing for a deceleration into the ~30% range in coming years. On top of that, the business should benefit from meaningful operating leverage, with expanding free cash flow margins as it scales and matures.

The stock has been under pressure over the past couple of months, largely due to the broader “AI disrupts SaaS” narrative. However, cybersecurity is one of the most insulated areas of SaaS. Backup relies on immutable, offsite, air gapped copies, making third party platforms a necessity for security and compliance.

Backup is subtractive risk management, requiring independence. AI tools are additive. Even with internal AI solutions, enterprises still need trusted third party backup providers, which is exactly what RBRK offers. Importantly, RBRK integrates AI and machine learning for threat detection without introducing substitution risk.

Visa (V)

Last month, I added to Visa and noted the following:

“I added to my position in Visa for the second month in a row. Paying 25x forward earnings for a business of this quality feels very reasonable. The multiple has already expanded to almost 28x in a relatively short period.

With stable, high quality businesses like this, I try to add near the lower end of their historical valuation range. Sometimes there is no need to overcomplicate things.”

The exact same logic applied again this month.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Buy List

Adyen (ADYEN)

Payments has been under pressure over the past few months and Adyen has not been immune. The stock is down ~15% over the past three weeks, yet nothing has fundamentally changed.

I built the majority of my position in 2023 when the stock was cut in half and traded below €700. At that point, the forward EV/EBITDA multiple fell to ~16x. Enterprise Value is the appropriate metric for Adyen given the large amount of cash it holds on behalf of merchants.

While the share price is almost double today, the multiple has once again compressed below 20x for the first time since. This is a high quality business and, at this valuation, I believe it offers an attractive opportunity. I continue to expect >20% top line growth over the next three to five years.

Sea Limited (SE)

It has been a tough three to four months for Sea Limited, with the stock down almost 40% since October 2025.

Fundamentally, little has changed. Sea continues to fire on all cylinders, as shown in its most recent Q3 earnings report towards the end of 2025. I have nothing further to add here that I have not already written, but I would draw your attention to this excellent piece from , which aligns closely with my own view.

The current drawdown appears driven far more by sentiment than fundamentals

GabGrowth

Why I’m Not Worried About $SE Sea Limited’s 38% Drawdown

Sea Limited is in a 38% drawdown from its most recent high in September 2025…

Read more

7 months ago · 32 likes · 2 comments · GabGrowth

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

The portfolio got off to a very strong start to the year, reaching a new all time high. Interestingly, beneath the surface, several themes have been getting hammered, particularly enterprise SaaS and payments.

On one end, ASML and INPST are both up ~30% year to date. On the other, RBRK and MSFT are already down double digits.

This is a great example of how sector diversification creates opportunity. Readers will know that I was buying ASML and INPST throughout 2025 when they were widely disliked. Now that they are back in favour, I am doing nothing.

Conversely, RBRK and MSFT are currently out of favour, and I am buying. There will almost always be one or two sectors under pressure at any given time. That is typically when I aim to do the majority of my buying.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Overall, I am satisfied with the result. Since the 2022 bear market, the portfolio has generated returns of 34%, 15%, and 16% over the past three years. Since inception, the portfolio has achieved a 16% compounded annual growth rate (CAGR), comfortably above my long-term target of 10%.

Subscribe now

Portfolio Turnover

I started 2025 with 18 positions and ended the year with 15, achieving a long-standing goal of consolidating the portfolio. This was accomplished by closing five positions and initiating two new ones.

The new additions were Rubrik (RBRK) and ASML (ASML). I exited PayPal (PYPL), Airbnb (ABNB), Auto Partner (APR.WA), Home Depot (HD), and Texas Instruments (TXN). The rationale behind each transaction has been covered in prior monthly portfolio reviews, so I will not repeat it here.

The chart above is from Portseido’s new Year in Review feature. It highlights that my five most sold positions were the five I fully exited, while the most bought positions include the two new additions.

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Share

Contributors and Detractors

The top-performing stocks in 2025 were:

• Nu (NU) +62%

• ASML (ASML) +55%

• Uber (UBER) +35%

• AbbVie (ABBV) +33%

• NIO (NIO) +17%

Notably, NIO was my worst-performing stock in 2024, down 52%, yet became a top contributor in 2025, albeit still well below its 2024 price. Meanwhile, NU, which was among the strongest performers in 2024, continued its momentum. Some winners kept winning, while certain beaten-down stocks proved to be somewhat oversold.

The worst-performing stock was InPost (INPST), down 37%, followed by Evolution (EVO), down 23%. All other holdings posted positive returns.

Evolution’s struggles extended into a second consecutive year. After being one of the weakest performers in 2024, it again disappointed in 2025. Put simply, shareholders have endured two years of deeply underwhelming performance.

Looking ahead to 2026, InPost appears best positioned for a turnaround. At the time of writing, the stock is already up 30% year to date. Unlike Evolution, InPost’s weakness in 2025 was driven more by narrative than by deterioration in the underlying business. The recent takeover approach caused the share price to surge, validating my view that its valuation made it an obvious target. My preference remains that any offer is rejected, as an acquisition would remove what I believe could be more than a decade of compounding returns for long-term shareholders.

Subscribe now

Dividends Received

Dividends received in 2025 declined 9% year over year, reflecting my continued focus on total return rather than dividend optimisation. Of the five positions sold in 2025, three were dividend payers with yields between 1% and 3%. These were not replaced, as Rubrik pays no dividend and ASML’s yield remains well below 1%.

This was partially offset by strong dividend increases from Visa (+14%), Microsoft (+10%), and AbbVie (+6%). Dividends are pooled with cash contributions and reinvested opportunistically.

Share

Fees

I track fees as a percentage of new deposits, as this best reflects the drag on compounding regardless of portfolio size. The calculation is straightforward, total annual fees divided by total cash deposits.

After a sharp increase in 2023 following DEGIRO’s fee hikes, I made a concerted effort to reduce this ratio. I subsequently opened Trade Republic and Interactive Brokers accounts, both of which offer significantly lower fee structures.

As a result, I am pleased to report that fees as a percentage of new deposits fell again in 2025 to 0.55%. Driving this figure as close to zero as possible remains a priority.

Subscribe now

Newsletter Performance

2025 was a solid year for the newsletter, with a net increase of 2,223 subscribers, bringing the total to 9,329. Growth would have been higher had I not conducted a clean-up in June, removing subscribers who had not opened an email or read on the app in the previous twelve months.

Total subscribers is a vanity metric. I would much rather have an engaged readership, so this clean-up will become a recurring exercise.

Growth was also slower than in 2024 due to reduced activity in Q4 while I took an extended travel break. While the newsletter prioritises quality over quantity, the data is clear, more frequent publishing drives faster subscriber growth.

The audience continues to become increasingly global, with subscribers now spanning 134 countries.

The most popular posts in 2025 were:

1. Rubrik Quick Pitch - 10.4k views

2. Shopee’s Dominance in Southeast Asia’s E-Commerce Market - 10.4k views

3. Portfolio Review - November 2025 - 10.4k views

4. Evolution: Trading Margin for Certainty - 10.3k views

5. NU: Hidden Pressures Under the Hood - 9.9k views

An underrated aspect of the archive is the longevity of evergreen content. The Nu Holdings Investment Thesis remains the most-read post of all time, with over 18k views.

Share

Lessons Learned

1. Buy and Continuously Verify

One of my better decisions in 2025 was exiting Auto Partner in July after reviewing its Q1 earnings. It became clear that the original thesis was no longer playing out due to:

• Stagnating revenue growth

• Gross margins reverting after a period of inflation-driven over-earning

• Margin pressure from minimum wage increases

I concluded that these trends were likely to worsen before improving, and I could no longer say with confidence that the company would return to high-teens revenue growth or restore net margins to 2021 levels. Since the sale, margins have continued to deteriorate and the stock was down a further 25% at one point.

I would reconsider the stock if revenue growth reaccelerates decisively into the mid-teens and there is clear evidence of renewed operating leverage, potentially driven by the new distribution centre. At the time, I did not expect either catalyst before mid-2026.

This reinforced a key lesson, it is better to wait for evidence of reacceleration than to rely on hope.

2. Be More Ruthless

The most common investing mistake is selling winners too early. My issue is the opposite, I often hold underperformers for too long.

Evolution is a clear example. Had I applied the same discipline used with Auto Partner, I would have sold when the business first began to stall. Instead, I assumed the weakness was temporary. Over time, it became clear that the problems were structural, not cyclical, and the stock was punished accordingly.

The correct approach would have been to sell, continue monitoring the company, and wait for proof of a turnaround. Today, I am stuck in no-man’s land. The valuation is undemanding, but there is no evidence (yet) that management can fix the issues or reaccelerate growth.

With the portfolio now concentrated at 15 positions, the performance bar is higher. Entry and continued inclusion must be earned. There is little point in active monitoring if I am unwilling to act when evidence contradicts my thesis.

3. Valuation is Relative to Duration

Arguably, the most profitable decision of 2025 was initiating and building a position in ASML below €700. The biggest gains in high quality investing are often made when the market mistakes a temporary cyclical headwind for a permanent structural decline. Buying ASML at 25x forward earnings established a valuation floor for a business with an extraordinary competitive moat. The catalyst was not just earnings growth, it was effectively buying a call option on the market’s eventual return to reality.

The real alpha sits in the gap between a pessimistic multiple (25x) and a justified multiple (40x). When you buy quality at a fair price, you get paid twice. First, through growth in the underlying earnings power of the business. Second, through the market’s willingness to pay more for each euro of those earnings. Success requires the discipline to ignore macro noise and the patience to wait for the inevitable re rating.

When a company with 100% market share in a mission critical technology like EUV sells off due to macro uncertainty or a lack of 18 month forward guidance, the risk is rarely in the business itself. More often, it lies in the investor’s timeframe. By focusing on ASML’s €33 billion order backlog, driven by multi billion dollar fab builds from TSMC, Intel, and Samsung, and the structural necessity of High NA EUV for the next generation of semiconductors, it was clear the trough reflected a temporary accounting reality.

I did not need to predict which AI chip would win. I only needed to know that whoever did would have to pay the ASML tax to manufacture it.

Subscribe now

That’s it for 2025. Now on to 2026.

Thank you for your continued support and engagement. A newsletter is only as strong as its readership, and I am genuinely grateful to have you on this journey. Wishing you a healthy and profitable 2026.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

The best opportunities exist in uncertain times.

Meta once dropped 70%. Netflix: 50%. Amazon:40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalise on their eventual rebound. It’s a contrarian philosophy so precise that even Michael Burry is a subscriber.

In the last few months, they have identified ASML (up 33%), Google (up 52%), and AMD (up 61%) as ideal rebound prospects. Subscribe today to unlock their exclusive End of the Year Offer.

Subscribe to Rebound Capital

Transactions

Visa (V)

I added to my position in Visa for the second month in a row. Paying 25x forward earnings for a business of this quality feels very reasonable. The multiple has already expanded to almost 28x in a relatively short period.

With stable, high quality businesses like this, I try to add near the lower end of their historical valuation range. Sometimes there is no need to overcomplicate things.

Uber (UBER)

I went a step further with Uber and added to my position for the third consecutive month.

For much of 2025, I regretted the size of my initial position, which I opened in December 2024 shortly before the stock moved sharply higher. While Uber is now in a roughly 20% drawdown over the past two months, the fundamentals remain as strong as ever.

The narrative that autonomous vehicles pose an existential threat to Uber has resurfaced, and this is where my view diverges from the market. I believe autonomous vehicles will evolve into a highly fragmented market with multiple winners rather than a single dominant player. In that scenario, Uber is well positioned to leverage its global distribution network and infrastructure.

We saw further evidence of this fragmentation recently, as Baidu announced plans to launch driverless taxi trials in the UK next year in partnership with Uber and Lyft. As part of the agreement, Baidu’s Apollo Go RT6 vehicles will join the London networks of both platforms in 2026. This marks the first direct competition between U.S. and Chinese autonomous players in a European capital, following Waymo’s recent supervised testing in the city.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

Sign up using my affiliate link here.

Performance

• Q4: -6.0% vs. S&P +3.1%

• YTD: +16.0% vs. S&P +17.2%

Top Contributors YTD:

1. NU: +63%

2. ASML: +54%

3. UBER: +36%

4. ABBV: +29%

5. NIO: +26%

Largest Detractors:

1. INPST: -28%

2. EVO: -11%

Buy List

Microsoft (MSFT)

I highlighted Microsoft last month but did not take action, as I felt Visa and Uber offered more attractive opportunities at the time.

Microsoft continues to trade at around 29x forward earnings, a level that has historically provided reasonable entry points since the stock re rated higher. I remain underweight Microsoft in the portfolio despite significant appreciation from my original cost basis, and it is a name I am watching closely as we head into 2026.

Sea Limited (SE)

2025 has been a rollercoaster year for Sea Limited. At one point in September, the stock was up 85% YTD. At the time of writing, it sits in a 33% drawdown, yet still shows gains of 22% for the year, comfortably outperforming the broader market.

I believe SE is one of the more compelling opportunities within the existing portfolio. The company delivered strong revenue growth and meaningful margin expansion in 2025, with all three business segments accelerating key performance indicators.

The metric that stood out most to me was Sales and Marketing efficiency. Historically, SE was often criticised for subsidising growth, with incremental S&M spend exceeding incremental revenue. Over the past five quarters, that dynamic has flipped decisively.

In Q3 alone, SE invested an additional $141 million in S&M and generated $727 million in incremental revenue, a roughly 5x return on investment. When I see a business with a reinvestment runway like this, I want management to reinvest aggressively.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

From both a portfolio management and newsletter perspective, I was less active in Q4 as I spent much of the period travelling. As an active investor, I view this as an important part of my long term process.

While investing is highly enjoyable, it can also be mentally draining. Stepping away to recharge is not optional, burnout is real, and if left unaddressed it eventually catches up with you. To finish first, you must first finish.

From a performance standpoint, Q4 was a weaker quarter, especially compared to the exceptionally strong start to the year. At the end of Q3, the portfolio was on track for returns of 23%, but we ultimately finished the year at 16%.

Investing is all about expectations. If you had told me at the end of Q3 that I would finish the year at 16%, I would have been a little disappointed. But if you had told me in January that I would deliver that return after 34% in 2023 and 16% in 2024, I would have taken it without hesitation.

Looking ahead to 2026, I continue to believe that some of the best opportunities in the market are already among the portfolio’s largest positions, particularly SE and MELI.

As always, I will share the Annual Report in January, with deeper insights into the portfolio and reflections on the year. In the meantime, readers can revisit the 2024 Annual Report.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

Be greedy when others are fearful.

Meta once dropped 70%. Netflix: 50%. Amazon:40%. Every investor had ruled them out, citing “the companies were done”.

But they all rebounded - Meta: 690%. Netflix: 540%. Amazon: 153%.

Every world-class company suffers deep drawdowns. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalise on their eventual rebound.

In the last few months, they have identified ASML (up 23%), Google (up 52%), and AMD (up 61%) as ideal rebound prospects. Subscribe today to unlock their exclusive Black Friday offer.

Subscribe to Rebound Capital

Transactions

Visa (V)

I added to my position, as flagged in last month’s Buy List. Nothing complicated here. Visa remains a proven long term compounder and the mid 20s forward earnings multiple is reasonable for a business of this quality.

Uber (UBER)

I increased my position after the stock sold off alongside the broader market this month. Earlier in the month, Uber delivered another strong quarter with acceleration across all key operating metrics.

Charts tell the story better than words. As you can see from the visuals, the business is performing exceptionally well and the thesis is unfolding exactly as expected.

Sea Limited (SE)

I added to my SE position following another exceptional quarter. Despite a strong revenue beat, the stock fell 8% due to an EPS miss. When a company is growing at this pace, you actually want it to reinvest as much profit as possible into future opportunities.

Even with heavy investment, SE still posted a healthy 8% operating margin, which shows it is scaling in a sustainable way. A few standout highlights from the quarter:

GMV growth continues with no signs of slowing.

Monee remains the fastest growing segment.

Garena QPUs accelerated and reached their largest cohort since Q4 2021.

Revenue growth has exceeded 30% for five consecutive quarters.

Sales and Marketing efficiency hit new highs, with an extra $141 million driving $727 million in incremental revenue, a 5x ROI.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns.

From 26 November to 1 December, Portseido are offering a huge Black Friday sale with up to 40% off for new customers for three months.

Sign up using my affiliate link here.

Buy List

Microsoft (MSFT)

Microsoft is the longest held position in my portfolio and one of my largest winners. I have not added since May 2022. The stock still is not cheap, but it now trades below 30 times forward earnings, which has historically been a good entry zone since the multiple rerated.

Given the position is only 5% of the portfolio, and much of that weight is due to price appreciation rather than capital invested, I would like to increase it.

Meta (META)

If Microsoft might still look a little expensive, Meta appears far more reasonable at roughly 22 times forward earnings.

Much of the debate around Meta concerns its CapEx and whether the returns will justify such eye watering investment. CapEx has risen from about $2 billion ten years ago to over $62 billion in 2025, with even higher expected in 2026. Yet over the same period, Meta’s return on invested capital has tripled from 8% to almost 23%. Few, if any, would have predicted this a decade ago.

I cannot say exactly how the future will play out, but Mark Zuckerberg remains one of the strongest founder CEOs in the industry. He has better visibility into potential and early returns than any outside observer. Meta’s revenue acceleration in recent quarters is no coincidence and is clearly being supported by these investments.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

I have been less active on the newsletter this month as I have been travelling in Japan. It is my first time here and it has been an incredible experience. The people are respectful and polite, the food is fresh and affordable and the public transport system is unlike anything I have seen elsewhere. It is also a great time to visit with a relatively weak yen.

Trips like this remind me of my why. I invest to buy back time. Being able to take trips like this while I am still (relatively) young and healthy, rather than waiting until formal retirement, matters a lot to me. Without my investment portfolio, I would be more constrained by an employer and might not have the flexibility to travel like this.

Keeping your why front and centre helps maintain discipline and a long term mindset, especially when markets get noisy.

What is your why?

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

The questions ranged from competitive moats to grey market exposure and shareholder communication. The responses shed light on how management views Evolution’s positioning, regulatory challenges, and strategic priorities, while also revealing where the company remains cautious about offering detail.

The Moat

When asked about threats to Evolution’s moat over the next 5–10 years, Linton focused more on internal discipline than external barriers. He acknowledged that “barriers to entry have always been relatively low, while the barriers to success are much higher,” noting the recent exits of competitors who underestimated the difficulty of building first-class live casino products.

The takeaway was clear: Evolution’s advantage is executional, not structural. The company’s moat depends on relentless innovation and an obsessive focus on player experience. “The threat is if Evolution would be complacent and stop pushing the industry forward,” Linton said, framing risk as primarily self-inflicted.

This view is both reassuring and sobering. It reinforces that Evolution operates in a winner-takes-most market where scale and execution drive advantage. Yet it also means the moat is only as strong as management’s ability to maintain its creative and operational intensity.

Online vs. Land-Based

Linton was emphatic that Evolution isn’t competing with Las Vegas-style casinos. “Land-based casinos are a very different type of entertainment than iGaming,” he said, pointing out that physical casinos have changed little in 15 years while online gaming continues to evolve.

More interestingly, he framed Evolution’s real competition as the broader entertainment ecosystem, Netflix, Facebook, TikTok, rather than traditional gaming venues. This helps explain some of Evolution’s product strategy, including its television-inspired game shows and experiments with hyper-casual formats aimed at “a TikTok generation who wants everything faster.”

Whether this framing is entirely correct is debatable, but it reveals management’s product philosophy: entertainment value that transcends gambling, appealing even to non-betting audiences. It’s a vision of iGaming as content-driven entertainment, not just gambling infrastructure.

The Grey Market Elephant in the Room

The most anticipated questions centered on Evolution’s exposure to unregulated markets and the reputational risks that follow. Linton’s responses were notable more for what they didn’t say than for what they did.

He restated Evolution’s standard position: the company is a B2B supplier that doesn’t interact with end users, see player identities, or handle transactions. Regulatory responsibility, he said, rests with operators and their regulators. “It is between the operator and its supervising authority, the regulator, to agree on the terms for which the operator can offer products to end users.”

When asked about balancing short-term revenue from unregulated markets against long-term credibility, Linton offered polished but generic language: “Our goal is to stay ahead of regulatory developments, always doing what is right, while maximising business potential.”

What was missing was quantification of grey market exposure, examples of proactive exits, or discussion of revenue forgone for reputational reasons. While the answers acknowledged the sensitivity of the issue, they offered little transparency.

On management’s previous inability to quantify European black market exposure, Linton clarified terminology: “Unregulated markets do not equal illegal markets,” adding that accessing unlicensed sites isn’t illegal in jurisdictions with open internet access. While technically true, this sidestepped the central question: does Evolution know where its products are being used, and what does that data reveal?

Strategic Focus

Linton was clear about Evolution’s strategic limits. Sports betting? “Not on our agenda for the time being.” Moving into B2C? “We are and will stay a technological content supplier.” That stance is logical, running a B2C casino would demand new capabilities in payments, KYC, customer acquisition, and compliance across multiple jurisdictions. Diversifying would “blur our focus and industry-leading know-how in B2B.”

On U.S. sweepstakes, Linton said it’s “an immaterial part of North American revenues,” stressing regulatory caution over expansion. Evolution operates only where the legal framework is clear. The company sees sweepstakes as “quite popular,” but not a major growth lever.

This strategic conservatism is arguably a strength. Evolution has thrived by doing one thing exceptionally well rather than chasing adjacencies. The risk is that the company might miss opportunities if the market shifts dramatically.

Capital Allocation

With its capital-light model generating strong cash flow, capital allocation matters. Linton reaffirmed Evolution’s framework of balancing dividends and buybacks to suit shareholder preferences, a pragmatic if unspectacular approach.

More intriguing was a question about Evolution’s long-term identity: by 2035, will it look more like the AWS of iGaming (infrastructure) or the Netflix of iGaming (content)? Linton declined to choose, suggesting instead that “I wouldn’t be surprised if we saw completely different types of distributors of our games in 2035 than what we have today.”

It’s an answer that hints at uncertainty about how the industry will evolve, while maintaining confidence in Evolution’s adaptability. Whether that confidence proves justified again depends on execution.

Communication Strategy

One of the most significant updates was the creation of a new Communications department aimed at “taking a more proactive stance in positioning Evolution and what we stand for.” Linton said media coverage has been “too unbalanced and tilted to the negative,” citing the Playtech/Black Cube report and the Georgia strike as cases where “people have not been critical enough about the source when they have read accusations on Evolution.”

The company’s historical approach hasn’t served it well in an environment where perception drives reality. Linton noted that Evolution holds “more than 500 investor meetings per year,” showing strong institutional engagement.

For private investors, however, that statistic underscores rather than resolves the information gap. Hundreds of closed-door meetings with institutions, with little public disclosure, create a two-tier environment. While Linton was right that “answering every question on X would require a different type of organisation and budget,” the asymmetry between institutional and retail access remains stark.

The key question is whether this new department will close that gap or simply refine messaging. Publishing conference transcripts, increasing IR website content, or hosting periodic public calls would be low-cost ways to level the playing field and improve transparency, if management is willing.

What I Learned (and Didn’t)

The Q&A provided useful insight into management’s mindset: confidence in execution, discipline around adjacencies, and recognition that communication must improve. The formation of a dedicated Communications department signals that management understands reputational damage has real costs.

What was missing was depth on the issues investors care most about, data on grey market exposure, examples of regulatory exits, or a framework for assessing when short-term revenue isn’t worth the long-term risk. On those points, the responses were polished but evasive.

For investors, the core tension remains: can Evolution sustain its edge while navigating regulatory complexity and rebuilding trust? Management believes the answer is yes. Whether execution matches that belief remains to be seen.

Finally, I want to thank Carl and the IR team for their time and thoughtful responses. As a private investor, I believe engagement with management shouldn’t be reserved for institutions. With technology enabling greater access, private investors will continue to play a growing role in capital markets and it’s encouraging to see Evolution recognise that.

If you’d like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today’s edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com

Every month, I'll provide you with an update on my portfolio, including all of the transactions, the current allocation, and my buy list. In addition, I'll share a recap of the articles you may have missed from the previous month.

House Keeping

1. Thank you to everyone who completed the subscriber survey a couple of weeks ago. The responses were excellent and gave valuable insight and feedback on the newsletter. Congrats to Rafa who won a copy of Morgan Housel’s new book, The Art of Spending Money.

2. Due to personal circumstances (all good), newsletter editions will be less frequent between now and Christmas. I still plan to publish a couple of articles during this period, but I want to give everyone advance notice. The subscriber chat will remain active and is a great place to engage with the community.

Now, on with the show.

Be greedy when others are fearful.

Ask yourself this…

Would you rather have bought Meta shares for $378 in September 2021 or $90 in November 2022? Both purchases would have seen tremendous growth.

A $1,000 investment in September 2021 would be worth $2,014 today. But a $1,000 purchase when Meta pulled back in November 2022 would be worth $8,300.

Sometimes it can pay to wait for a pullback. Rebound Capital identifies high-quality companies undergoing drawdowns to capitalise on their eventual rebound. In the last few months, they have identified ASML (up 23%), Google (up 52%), and AMD (up 61%) as ideal rebound prospects.

Subscribe to Rebound Capital

Transactions

Mercado Libre (MELI)

I added to MELI after a sell off driven by perceived negative news:

• Brazil: Amazon made its most aggressive move in Brazil since entering the market. From Sept 30 to Dec 3, during Black Friday season, it reset all storage and shipping fees for Fulfillment by Amazon. In short, joining Amazon Marketplace is practically free. We have seen this play before and history shows it takes much more than free shipping to topple MELI’s dominance.

• Argentina: There was fear that President Javier Milei’s party would lose the midterms after losing the Buenos Aires provincial election the prior month. Milei’s party is pro-capitalism and a loss was viewed as negative for MELI. This did not materialise and Milei’s party won.

Earlier this week MELI reported another exceptional quarter. Revenue grew 39%, marking the 27th consecutive quarter above 30%, which is nearly seven years. The story was familiar, MELI beat on revenue and missed on earnings because the company continues to prioritise growth and long-term dominance over near-term profitability.

One example is expanding free shipping, which is core to their long-term strategy. In Brazil the free shipping threshold was reduced from R$79 to R$19 and GMV is already up 36%. Unique buyers grew 29% year on year, the fastest pace since Q1 2021 and the largest quarterly increase ever, surpassing the pandemic peak. Sold items in Brazil rose 42%.

This remains my largest position and the one I have the most conviction in. Even though it is already significantly sized, I prioritise adding during periods of weakness over adding to any other holding

Rubrik (RBRK)

I continued to accumulate Rubrik under $80. As a new position, I want to build it quickly at these levels. Key developments this month:

• The Asahi ransomware attack underlined Rubrik’s relevance. A week later Asahi systems were still down and beer was shipping manually. Rubrik’s immutable backups, recovery, and anomaly detection could have limited damage and restored operations within hours.

• South Korea has had a major cyber incident every month this year. In one case the government lost all data because servers were in one single location with no backups. This is exactly the problem Rubrik solves and the need grows as data volumes increase.

• Chinese hackers breached US cyber firm F5. When even defenders are hit it shows breaches are inevitable and resilience matters.

• Launched Rubrik Agent Cloud, the first product designed to monitor, govern, and remediate AI agents.

• Named a leader in IDC MarketScape for worldwide cyber recovery, which adds external validation.

  

Uber (UBER)

I added to Uber after a 10% pullback earlier this month. I want this to be a much larger position. The pitch at $60 dollars in December was a fat one, so I have been buying above $90 into strength because I still believe it is undervalued. My valuation work from earlier this year pointed to a fair value near $115.

Uber continues to execute well with several positive developments this month:

• Launched JourneyTV Presents, an in-ride entertainment platform with content partners including Time Out. Uber Advertising has strong appeal because it holds high-intent data, it knows where users are and where they are going.

• Acquired Segments.ai to strengthen self-driving through better labelled data. Data quality is a key edge in the autonomy race.

• Signed a long-term partnership with Riyadh Air to integrate Uber services into the airline’s app and loyalty experience.

• Began piloting digital tasks in the United States. Select drivers can earn by completing tasks such as uploading photos to train AI models or submitting multilingual documents. This was already tested in India.

• Partnered with Nvidia to scale a level-4-ready mobility network. Stellantis will deliver at least 5,000 Nvidia-powered L4 vehicles to Uber. Uber will run fleet operations and customer support.

Texas Instruments (TXN)

I sold my full TXN position, which was 2.5% of the portfolio. I shared a full writeup already, but in short it does not fit my investment philosophy. The business and industry are highly cyclical, and I do not believe I can forecast them with confidence. I recorded a 20% profit, but returns were much lower than expected because the earnings trough lasted longer than anticipated. Cyclical industries are hard to value and time, and predictability is often worth paying for.

Subscribe now

Allocation

I’ve been using Portseido to track my portfolio for years, and I highly recommend it. It consolidates all my transactions in one place, while its data visualisation and analytics capabilities guide my future decision-making and, ultimately, enhance my returns. Sign up using my affiliate link here.

Buy List

Visa (V)

Visa stays on my buy list from last month. It delivered another dependable quarter with double-digit growth in revenue, earnings and dividends.

It is one of those true sleep-well stocks thanks to low emotional volatility (looking at you Evolution). At 26x forward earnings, the valuation is reasonable for a business of this quality and reliability.

Uber (UBER)

I am careful not to get price-anchored with Uber. It is still undervalued in my view despite the rally this year. At a 4% position there is scope to increase it materially. I will wait for next week’s Q3 earnings before acting.

Subscribe now

In Case You Missed It

Some of the articles you might have missed during the past month:

Final Words

This was a very active month. I sold one more position and have now hit the 15-position portfolio I have been working toward for over a year. Long-time readers know this concentration was deliberate and methodical. I was not selling for the sake of it, I was waiting for sound reasons to emerge.
Managing fewer positions has been mentally liberating.

I do not rule out further consolidation where the original thesis has broken or is materially different today. Evolution is one such example, though I am not rushing. The Q3 earnings and thoughtful community commentary have given me plenty to consider.

Even after adding to three positions, I ended the month with 4.5% cash, unchanged from last month. With two months left in 2025, I think the portfolio is positioned for a strong finish. Let’s see if Mr Market agrees.

If you'd like to support the work of an independent analyst, you can buy me a coffee. The proceeds will contribute to covering the annual running costs of the newsletter.

Buy me a coffee

Join the community of informed investors – subscribe now to receive the latest content straight to your inbox each week and never miss out on valuable investment insights.

Subscribe now

The Chat is a space designed to facilitate, real-time discussions, share knowledge and debate ideas with fellow investors. Join the conversation.

If you found today's edition helpful, please consider sharing it with your friends and colleagues on social media or via email. Your support helps to continue to provide this newsletter for FREE!

Share

Happy investing

Wolf of Harcourt Street

Contact me

Twitter: @wolfofharcourt

Email: wolfofharcourtstreet@gmail.com