Updates: CPNG, SNOW, YOU

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The Q4 and annual reports keep rolling in! Let’s take a brief look at the reports for 3 more followed stocks: Coupang, Snowflake, and Clear Secure.

Coupang (CPNG)

I’m feeling more and more like we bought at an opportune moment for Coupang, with the stock up 35% in just a month. Revenues were up 23% for Q4 to $6.6 billion, and grew 18.5% on the year to $24.4 billion. The active customers metric is encouraging, with a 16% increase in Q4 to 21 million. In last year’s 4th quarter, active customers grew only 5%. That’s a solid acceleration. The WOW membership program grew paid members by 27% to 14 million. Coupang has re-ignited its growth engine and continues to take share in Korean and, increasingly, Taiwanese e-commerce. Strong cash flow metrics further enhance the story. I’m raising the fair value price from $19 to $21.

Snowflake (SNOW)

Snowflake continues to sport an outstanding business model, and now the stock price is (finally) getting close to a reasonable valuation. Q4 metrics were good - sales were up 33%, backlog ("remaining performance obligations") grew 41%, free cash flow was up 53% (with a 28% margin), and net retention, while down a bit, was still solid at 131%. That means Snowflake is earning 30% more from persisting customers than it did a year ago. 2024 guidance implied about 26-27% revenue growth, so this is still a strong growth story, although perhaps not as strong as its historical stock price assumed. Still, I’m bumping the fair value to $140 (from $134) given the latest financial results. With the shares down into the low $160’s, the stock is approaching "reasonably valued" for maybe the first time since going public.

Clear Secure (YOU)

Clear Secure continues to be one of the biggest enigmas in the portfolio. We continue to see strong business performance rewarded by a lagging stock price. Q4 was no exception. The numbers were good: revenue grew 33%, bookings 30%, total enrollments were up 31%, and active paying members (CLEAR Plus) grew 23%. Cash flow metrics continued to impress, with a 34% free cash margin for the year.

I think one thing spooking investors are the persistently declining member retention numbers. Retention fell from 91.9% in last year’s Q4 to 86.3% more recently, continuing a "clear" trend. We’ve always expected mid-to-high 80% retention, so I haven’t been overly concerned. However, even management did admit to reports of the CLEAR Plus experience not being up to standards. The company has made it a focus to fix the issues, so hopefully these retention trends will reverse. That could be a catalyst for the stock price later this year.

Clear Secure still looks like a buy to me at current prices. The fair value estimate gets a small bump to $44 from $43.

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