Charged Alpha Stock Encyclopedia

Charged Alpha Stock Encyclopedia

By Colton ThomasBusinessInvesting
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Charged Alpha Stock Encyclopedia episodes

  • Constellation (CEG): GAAP Earnings Fell 47%. The Business Earned 34% More.
    Constellation Energy Corporation (CEG) Q2 2026 — GAAP EPS $1.42, DOWN 47%. Adjusted operating earnings $2.55, UP 33.5% against a ~$2.36 bar. Revenue $7,504M, up 23%, but BELOW a ~$7.83B bar. FY2026 guidance RAISED to $11.50-$12.50. One non-cash line is $0.94 of the $1.13 gap.
    Two earnings numbers in one filing, pointing opposite ways. GAAP EPS fell 47% to $1.42 while adjusted operating earnings - the basis Constellation guides on - ROSE 33.5% to $2.55. The $1.13 gap reconciles to the penny, and $0.94 of it is one non-cash line: unrealized marks on economic hedges, a $340M loss added back where a year ago the same line was a $121M GAIN. Our model says ~$285 vs $268.03.
    THE CALL: HOLD (3/5, A BETTER BUSINESS, AND ONLY SIX PERCENT OF UPSIDE) — base-case value ~$285.0 vs ~$268.03 today.
    KEY METRICS:
    - THE CALL: HOLD 3/5, fair value ~$285 vs $268.03 (+6%) - not a margin of safety. Street: 20 analysts, 14 Buy / 6 Hold / 0 Sell, $355.20 average (low $296, high $441); we sit BELOW their lowest target. We take Constellation's own 2029 framework, $17.30/sh, at a 21x exit and a 9% discount rate = $285. Bull $360 = the Street's $19.99 at 23x, which lands on their own average - their target IS our bull case. Bear $179. To reach $355 you pay 26.2x the same 2029 number.
    - THE PRINT: Adjusted operating earnings $2.55 vs $1.91, UP 33.5%, against a ~$2.36 bar - an ~8% beat against the HIGHEST published bar (others carried $2.28-$2.33). In dollars $920M vs $599M, UP 53.6%. GAAP EPS $1.42 vs $2.67, DOWN 47%; net income to shareholders $513M vs $839M. Revenue $7,504M, +23%, but BELOW a ~$7.83B bar. FY2026 guidance RAISED to $11.50-$12.50 from $11.00-$12.00 - both ends up $0.50, a $12.00 midpoint vs ~$11.63 modelled.
    - THE $1.13 BRIDGE, TO THE PENNY: unrealized fair-value marks +$0.94 (a $340M after-tax LOSS on economic hedges, where a year ago the same line was a $121M GAIN - a $1.32/sh swing nobody earned or spent); acquired commodity-contract amortisation +$0.41 (Calpine purchase accounting, non-cash); Calpine merger/integration +$0.23 (real cash); legal/environmental +$0.10; pension +$0.06; decommissioning -$0.61. Over four trailing quarters GAAP is $10.26 and adjusted $10.63 - 3.6% apart.
    - IT BEAT INTO ITS HEAVIEST MAINTENANCE QUARTER - ON CAPACITY PRICES. Nuclear output FELL to 44,160 GWh from 45,170; capacity factor 93.0% vs 94.8%; 86 planned refueling outage days vs 41, more than double (outages ran 40% faster than the 38-day industry average). The earnings came from PJM: Eastern Mid-Atlantic capacity $289.67/MW-day vs $125.71 (+130%), ComEd $289.67 vs $109.25 (+165%), PJM West power $51.40/MWh vs $42.43. Illinois ZEC prices collapsed $6.64 to $1.12.
    - CAPITAL ALLOCATION IS THE CRITICISM; THE CONTRACTS ARE THE BULL CASE. Six-month operating cash flow $1,553M vs $2,521M capex = NEGATIVE $968M free cash flow, while $1,971M went to buybacks funded by $5,001M of new debt; cash fell $3,641M to $697M; goodwill $420M to $11,527M; shares 314M to 360M (+14.6%). Against that: ~920 MW of new 15-20yr nuclear PPAs (18.5yr avg, investment-grade, ~30% of baseload contracted by 2032), Crane cleared by FERC and the NRC for a 2027 restart, Ginna and Nine Mile Point 1 filed to 2049, and a $44.75/MWh PTC floor through 2032.
    What to watch: UP: PJM capacity clearing near $290/MW-day again, Crane energised on schedule in 2027, or another gigawatt of long-term nuclear PPAs. BEAR: capacity back under $150/MW-day, a 2027 guide below $13.00, or another year of debt-funded buybacks while free cash flow stays negative.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Howmet (HWM): It Beat The Top Of Its Own Guide. And It’s Past Wall Street’s Target.
    Howmet Aerospace Inc. (HWM) Q2 2026 — Revenue $2,547M UP 24% (21% organic). Adjusted EPS $1.33 vs a $1.24 bar, UP 46%. Adjusted EBITDA $817M, a 32.1% margin, UP 340bps. Free cash flow $479M. FY2026 guidance RAISED a third time, to $5.27. All three metrics cleared the TOP of the company's own raised range. The stock hit an all-time high near $300.
    Almost every 'beat' is a beat against a bar somebody quietly cut. This is the opposite. Howmet raised its own guide in February, raised it again in May, then printed ABOVE the TOP of that raised range on revenue, EBITDA and EPS - and raised the full year a third time. Seventy-three percent of that raise is FORWARD, not this quarter's flow-through. Nothing is wrong with this quarter. The problem is the price: at ~$300, an all-time high, HWM is 56.9x the earnings guide it raised this morning, and Wall Street's OWN average target of $299.18 already sits BELOW the stock. Our blend says ~$185.
    THE CALL: OVERVALUED (3/5, AN ELITE BUSINESS, AT A PRICE THAT ALREADY KNOWS IT) — base-case value ~$185.0 vs ~$300.03 today.
    KEY METRICS:
    - THE CALL: OVERVALUED 3/5, fair value ~$185 vs the ~$300.03 print-day price (-38%). Street: 25 analysts, 21 Buy / 3 Hold / 1 Sell, $299.18 average - ALREADY BELOW the price (low $228, high $340). Four roads, all below today: DCF $114; generous DCF $184; 40x FY2028E $7.35 back two years $247; 36x the 2026 EBITDA guide $281. Weighted 40/20/25/15 = $185. Even the BULL case is 18% below.
    - THE PRINT: Revenue $2,547M, +24% (organic +21%). Adjusted EPS $1.33 vs a $1.24 bar, +46%. Adjusted EBITDA $817M, +39%, a 32.1% margin, +340bps. Operating income $711M, +36%. Free cash flow $479M, +39%, after $104M capex; $838M across six months, +75%. Commercial aero +28%, defence +11%, gas turbines +38%. This was NOT a beat against a cut bar.
    - THE BAR WENT UP AND THEY CLEARED IT. Guided on May 7 to revenue $2,390-2,410M, adjusted EBITDA $760-770M, adjusted EPS $1.22-1.24. Printed $2,547M ($137M / 5.7% above the TOP), $817M ($47M / 6.1% above the TOP) and $1.33 ($0.09 / 7.3% above the TOP). The $1.24 'consensus' was simply the top of the company's own range copied across. Three for three, above the high end, not the midpoint.
    - 73% OF THE FULL-YEAR RAISE IS FORWARD. The FY2026 adjusted-EPS baseline went $4.94 to $5.27, +$0.33 - but the quarter only beat by $0.09, so $0.24 (73%) is a SECOND-HALF raise. Revenue guide +$400M vs a $147M beat = $253M (63%) forward. EBITDA guide +$170M vs a $52M beat = $118M (69%) forward. The FY2026 EPS guide has gone $4.45 (Feb) to $4.94 (May) to $5.27 (Aug) - up 18.4% in six months.
    - THE PRICE IS THE PROBLEM. At $300.03, market cap $120.0B plus $3,938M net debt = $124.0B EV - 44.2x trailing adjusted EBITDA of $2,808M against Heico 40.1x, GE Aerospace 33.8x, RTX 20.8x, TransDigm 20.4x. The most expensive name in its own sector. 56.9x the RAISED $5.27 guide; 65.3x guided FCF of $1,900M, a 1.58% yield. Reverse DCF: $300 needs FCF compounding 27.7% then fading to $11.9B by 2036 - 6.3x this year's guide.
    - SOURCE: 8-K filed 2026-08-06, accession 0001104659-26-091610, ACCEPTED 07:00:35 Eastern - BEFORE the open - Exhibit 99.1, so ~$300.03 IS the reaction, not a stale close. Prior bar: 8-K of 2026-05-07. Howmet Aerospace, CIK 0000004281. GAAP and adjusted EPS are both $1.33 - a coincidence of $18M of CAM costs added back and an $18M discrete tax benefit removed.
    What to watch: UP: a 2027 guide above $6.50 of adjusted EPS with capex held under 6% of revenue, or Fastening Systems margins clearing 32% as CAM integrates. BEAR: free-cash-flow conversion falling below 80% of net income on the 2027 capex cycle, gas-turbine growth decelerating below 20%, or a quarter that merely MEETS the guide instead of clearing the top of it.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Datadog (DDOG): It Beat On Everything. The Stock Fell 17%.
    Datadog, Inc. (DDOG) Q2 2026 — Revenue $1,121.5M UP 35.6% and ACCELERATING from 32.2%. Non-GAAP EPS $0.65 vs a ~$0.583 bar. Non-GAAP operating margin 22.9% vs 19.8%. FCF $278.7M. Both guides RAISED. The stock fell ~17% anyway, to roughly $234.
    Datadog grew revenue 36%, beat earnings by 11%, expanded non-GAAP operating margin 310bps to 22.9%, and RAISED both guides. The stock fell about 17%, to roughly $234. Nothing in the filing broke - the price did. It had run 175.9% off its February low and set a record high TWO DAYS before the print. That is profit-taking, not a valuation reset. Even so, our DCF says ~$140.
    THE CALL: OVERVALUED (3/5, AN OUTSTANDING BUSINESS, AT A PRICE THAT ALREADY KNOWS IT) — base-case value ~$140.0 vs ~$234.18 today.
    KEY METRICS:
    - THE CALL: OVERVALUED 3/5, fair value ~$140 against the ~$234 post-print price (-40%). Street: 48 analysts, 40 Buy / 7 Hold / 1 Sell, $265 average (+13%), low $139, high $320. Base $111 (2026 owner earnings $286M, revenue +28% decaying to 8%, 10.5% discount, 3.5% terminal); bull $211; bear $51. Even the BULL case sits below today's price. Reverse DCF: $234 needs revenue compounding 25% a year for NINE straight years to $34.1B AND a 38% FCF margin with stock comp down to 6% of revenue. Both, not either.
    - THE PRINT: Revenue $1,121,454k, +35.6% - and ACCELERATING from +32.2% in Q1 2026. Non-GAAP EPS $0.65 against a ~$0.583 bar, an 11.4% beat. Non-GAAP operating income $257,031k, a 22.9% margin against 19.8%. Free cash flow $278,704k, a 25% margin against 20%. About 4,720 customers with $100k+ ARR, up 23% from ~3,850. Cash and securities $5.0B against $986M of converts = $4.0B net cash. Rule of 40 score 58.5. Revenue, EPS and BOTH guides beat - this was NOT a beat against a cut bar.
    - GAAP OPERATING INCOME WAS $5,455k - a 0% margin on $1.12B of revenue. The $251,576k gap to the $257,031k non-GAAP line is 87.5% ONE item: stock-based compensation of $220,251k. Add employer payroll tax on that same stock, $27,643k (11.0%), and 98.5% of the entire adjustment is compensation. Acquired intangibles and M&A costs are the last $3,682k (1.5%). Weighted-average diluted shares went 358,725k to 371,023k, up 3.4% in a year, with NO buyback offsetting it - just $2.8M of option proceeds and $39.1M from the ESPP going the other way.
    - FREE CASH FLOW AFTER STOCK COMP IS $58.5M, NOT $278.7M. Charge the $220,251k of quarterly stock compensation against $278,704k of FCF and owner earnings are $58.5M for the quarter. A year ago that same arithmetic was NEGATIVE - $165,353k of FCF against $180,462k of SBC - so it is improving fast, and SBC fell from 21.8% to 19.6% of revenue. At ~$234 the enterprise value of ~$82.9B is 290x our 2026E owner earnings of $286M, 72.9x FCF of ~$1,137M, 18.6x guided revenue of $4.46B, and 93x guided non-GAAP EPS of $2.52.
    - THE GUIDE WAS RAISED, AND IT STILL IMPLIES DECELERATION. Q3 2026 guided to $1.135-1.145B, ~2.9% above consensus - but against Q3 2025 revenue of $885,651k that midpoint is +28.7%, against the +35.6% just delivered. FY2026 of $4.45-4.47B is +30.1% on FY2025's $3,427,158k, yet H1 2026 already grew +34.0% ($2,127,880k vs $1,588,313k), leaving H2 at ~+26.8%. Gross margin fell from 79.9% to 78.6% as cost of revenue grew +44.7% on AI compute. Datadog sandbags - but do not assume it for free at 93x.
    - SOURCE: Form 8-K filed 2026-08-06, accession 0001628280-26-053829, ACCEPTED 07:07:37 Eastern - BEFORE the open - Exhibit 99.1. The $283.17 price is the Aug 5 SETTLED close, NOT the reaction; the ~17% move to ~$234 is the Aug 6 print-day reaction.
    What to watch: UP: gross margin stabilising above 79%, stock compensation guided below 15% of revenue, or a Q4 above $1.25B. BEAR: revenue growth back below 25%, gross margin under 77%, or another year of diluted shares rising ~3% with no buyback at all.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    13 min
  • eBay (EBAY): Volume Up 15%. Buyers Up 1.5%.
    eBay Inc. (EBAY) Q2 2026 — Revenue $3,134M UP 15% vs a $3.02B bar. GMV $22,398M UP 15%. Non-GAAP EPS $1.60 vs $1.50 - a real beat against a RISING bar, and the full year was raised. But Active Buyers went 134M to 136M, up just 1.5%.
    eBay's GMV grew 15% to $22,398M - its best volume quarter in a decade. Its Active Buyer count grew 1.5%, from 134M to 136M. GMV per buyer went from $145.63 to $164.69, up 13.1%. Thirteen of the fifteen points are the same people spending more, not new people arriving. And it is a US-only story: US GMV +24%, International +6% and decelerating.
    THE CALL: AVOID (3/5, A REAL INFLECTION, ALREADY IN THE PRICE) — base-case value ~$88.0 vs ~$111.15 today.
    KEY METRICS:
    - CALL: AVOID 3/5, fair value ~$88 vs the $111.15 PRE-PRINT close (-20.8%) - below the Street's $92 LOW. Panel: 68 analysts, 31 Buy / 35 Hold / 2 Sell = Hold, $110.29 average, already BELOW the price. Base $88 (2026 owner earnings $1,750M growing 9% then 4.5%, 8.5% discount, 2.5% terminal); bull $141; bear $51. Backwards: $111.15 needs owner earnings to compound 9.5% a year for TEN years. Our base gives 6.7%.
    - 15% MORE VOLUME, 1.5% MORE BUYERS - AND IT IS ONE COUNTRY. US GMV $11,688M vs $9,428M, +24%; International $10,710M vs $10,086M, +6% and DECELERATING from +10%. $2,260M of the $2,884M of new volume is domestic. Active Buyers 136M vs 134M. GMV per buyer +13.1%. Take rate exactly flat at 13.99% both years - the fee lever eBay pulled for five years is finished.
    - THE RAISE IS A MARGIN GUIDE-DOWN. Q3 revenue guided $3.07-3.12B, ~$130M ABOVE the $2.97B Street bar. Q3 non-GAAP EPS guided $1.36-1.42, a $1.39 midpoint, 4c BELOW the $1.43 bar. Back it out: ~$779M of non-GAAP operating income on $3.095B = 25.2%, against 28.5% this quarter and ~27.2% a year ago. ~330bp sequential and ~210bp YoY compression - with Depop already inside the guide.
    - THE 56% GAAP EPS JUMP IS A COMP ARTIFACT. Q2 2025 carried $52M of legal matters and $55M of restructuring/executive bonuses; Q2 2026 carries $(10)M and $1M - a $116M pre-tax swing. The tax rate fell 22.6% to 17.1%, worth $37M. About 29c of the 43c of GAAP EPS growth is not this year's operations. Non-GAAP operating income grew 15.8% - exactly with revenue. And 87% of the $0.39 GAAP-to-non-GAAP gap is stock comp ($188M of $217M); equity marks were +$2M.
    - GIVE IT ITS DUE, THEN PRICE THE CASH. Revenue beat by 3.9% and EPS by 10c against a bar RAISED four quarters running; US GMV has accelerated five straight quarters (+7, +13, +19, +27, +24); 1P advertising +25%. Against that: FCF $326M on $727M of non-GAAP net income = 45% conversion; capex $223M = 2.2x D&A; FY25 FCF FELL 24% to $1,484M; H1 buybacks -35% to $809M with only $2.0B authorised, short-term debt $750M to $1,593M, and $1.4B paid for Depop on July 30.
    What to watch: UP: Active Buyers growing above 4%, free cash flow converting above 70% of non-GAAP net income, or Q4 revenue guided above $3.4B. BEAR: international GMV growth below 4%, transaction losses above 0.65% of GMV, or a Q3 non-GAAP operating margin printing under 25%.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • IonQ (IONQ): A $5.08 Loss That Isn’t A Loss.
    IonQ, Inc. (IONQ) Q2 2026 — Revenue $80.1M UP 287%, 20% above IonQ's own guided midpoint. GAAP EPS -$5.08 vs a -$0.56 bar - but ADJUSTED EPS was -$0.33, a 23-cent BEAT. $1,649.1M of the $1,868.6M net loss is a warrant mark.
    IonQ reported a net loss of $1,868.6M and GAAP EPS of -$5.08 against a -$0.56 bar. $1,649.1M of that - 88% - is one non-cash line: the change in fair value of warrant liabilities. The stock ROSE 85% inside the quarter, which made 79.1M liability-classified warrants more valuable, which GAAP records as a loss. On the like-for-like adjusted basis the print was -$0.33 and BEAT by 23 cents.
    THE CALL: AVOID (3/5, BETTER BUSINESS THAN THE HEADLINE, WORSE PRICE) — base-case value ~$26.0 vs ~$39.93 today.
    KEY METRICS:
    - CALL: AVOID 3/5, fair value ~$26 vs the $39.93 pre-print close (-34.9%) - below the Street's $48.50 LOW target. Panel: 6 analysts, 3 Buy / 3 Hold / 0 Sell, $67.13 average (+68.1%). Base $26 (2026 revenue $285M compounding 33%/yr for 9 years to $3,809M, 22% terminal FCF margin, 30x, 10% discount, less $1,300M of cash burned); bull $57; bear $7. Run it backwards: $39.93 requires revenue to compound 44.2% a year for NINE straight years to $7.7B. Eleven points of compounding IS the entire gap.
    - THE $5.08 LOSS IS A BET AGAINST ITS OWN STOCK. Net loss $1,868.6M; $1,649.1M of it is the fair-value mark on 79.1M liability-classified warrants - 36,042,530 Series A at $99.88 (exp Jul 2032) and 43,010,800 Series B at $155.00 (exp Oct 2032). IONQ rose 85% in the quarter ($28.83 to $53.26), so the warrant liability grew to $3,052.4M and GAAP booked a loss. In Q1 2026 the stock FELL 36%, the same line booked a $1,057.6M GAIN, and IonQ printed +$2.19 GAAP EPS. Adjusted EPS -$0.33 BEAT the -$0.56 bar.
    - REVENUE GREW 287%. GROSS PROFIT GREW 61%. Revenue $80.1M vs $20.7M; cost of revenue $60.1M vs $8.3M, up 622%; gross profit only $19.9M vs $12.4M, so the gross margin fell from 59.8% to 24.9%. 87 cents of every new revenue dollar went back out as cost, because the growth is quantum computers SHIPPED, not cloud time sold. Stock comp $141.8M = 177% of revenue; charge it and adjusted EBITDA of -$120.3M becomes -$262.1M.
    - THE RAISED GUIDE IMPLIES A FLAT-TO-DOWN SECOND HALF. FY26 lifted to $280-290M from $260-270M. But H1 already delivered $144.7M, leaving $135.3-145.3M for H2 - +0.4% at the TOP of the range and -6.5% at the bottom, against a June quarter that alone did $80.1M. And the backlog lost its dollar sign: last quarter's headline said RPO of $470M; this one says only '+297% YoY'. Off the $122.3M disclosed at 6/30/25 that implies ~$485M - just ~$15M above March on $80.1M recognised. Book-to-bill fell from ~2.5x to ~1.2x.
    - GIVE THE QUARTER ITS DUE, THEN PRICE IT. Revenue beat the midpoint of the company's own May guide by 20%; operating costs grew 130% against 287% revenue growth, narrowing the operating loss from -776% of revenue to -421%; and the balance sheet is fortress-grade: $2,959M of cash and investments, no debt, ~$2.0B pro-forma after SkyWater, nothing raised in H1. Against that: FCF -$273.4M in H1 (~$137M/qtr, accelerating), shares 360.0M to 380.0M in six months, 79.1M warrants behind them, and EV $13.2B = 46.2x the 2026 guide.
    What to watch: UP: gross margin back above 40% in a quarter, a dollar backlog figure above $700M, or 2027 revenue guided above $600M. BEAR: a September quarter below $68M, a new equity raise or a restarted ATM, or adjusted EBITDA burn above $150M in a quarter.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • DoorDash (DASH): EBITDA Up 40%. Operating Income Fell.
    DoorDash, Inc. (DASH) Q2 2026 — Marketplace GOV $33,078M UP 36%. Revenue $4,454M UP 36% vs a $4.35B bar. Adjusted EBITDA $914M UP 40% vs $842M - and $44M above the TOP of the company's own guide. But GAAP EPS $0.46 MISSED the ~$0.47 bar, net income fell 30% to $200M, and income from operations FELL 4% to $156M.
    DoorDash's adjusted EBITDA grew 40% to $914M. Its income from operations - the audited profit line - FELL from $163M to $156M. Revenue grew $1,170M and the operating line went backwards $7M. The entire difference is $758M of add-backs, and it reconciles to the dollar: stock comp and payroll tax $349M, D&A $295M, legal/tax/regulatory $98M, transaction $13M, restructuring $2M, lease impairment $1M.
    THE CALL: AVOID (3/5, A GREAT BUSINESS, AND NO MARGIN OF SAFETY) — base-case value ~$183.0 vs ~$207.27 today.
    KEY METRICS:
    - CALL: AVOID 3/5, fair value ~$183 vs the $207.27 pre-print close (-11.7%) - BELOW the Street's $190 LOW target. The panel is 38 analysts: 29 Buy, 9 Hold, 0 Sell, $248.50 average (+19.9%). Base $183 (2026 owner earnings $1,050M growing 28% then 18%, 9.5% discount, 3.0% terminal); bull $383; bear $85. Run it backwards: tonight's price needs owner earnings to compound 25.0% a year for TEN straight years. Our base case already gives it 22.9%. Two points of compounding IS the entire gap.
    - ADJUSTED EBITDA UP 40%, OPERATING INCOME DOWN 4%. Adjusted EBITDA $914M vs $655M. Income from operations $156M vs $163M - on revenue that grew $1,170M. The $758M gap reconciles exactly: stock comp and payroll tax $349M (up 24%), D&A $295M (up 86%, with ~$450M of 2026 being acquired-intangible amortisation), legal/tax/regulatory $98M (up from $29M, ~$220M over four quarters, added back every quarter for years), transaction $13M, restructuring $2M, lease impairment $1M. R&D +52% to $535M, G&A +39% to $538M.
    - STRIP OUT DELIVEROO AND 36% BECOMES 24%. Revenue excluding Deliveroo was $4,071M vs $3,284M - up 24.0%, not 36%. Orders grew 17% ex-Deliveroo, not 27%. Marketplace GOV grew 23%, not 36%. Deliveroo contributed $383M of the $1,170M of new revenue. And the Q3 GOV guide of $33.0-34.0B is a $33.5B midpoint - only +1.28% sequentially against this quarter's $33,078M. Last year Q2 to Q3 grew +3.18%. Apply that seasonality and you get $34,130M, ABOVE the top of the guided range. Deliveroo does not anniversary until Q4.
    - THE BUYBACK IS LOSING TO THE SHARE COUNT. Year to date through August 5, DoorDash repurchased 6.8 million shares for $1,049M - an average of $154.26. Weighted-average diluted shares still went UP, 438,377k to 439,345k; basic rose 2.2%. Additional paid-in capital rose from $14,092M to $14,806M in six months. 2026 stock comp is guided at $1.2-1.3B. And FCF has a pre-announced hole: $742M in the quarter (+109%), but management says year-end merchant-payment timing will cut reported 2026 Free Cash Flow by $700-800M.
    - GIVE THE QUARTER ITS DUE, THEN VALUE IT. The $914M beat the company's OWN May guide of $770-870M by $44M at the top - this is NOT a beat against a cut bar - and the Q3 EBITDA guide midpoint of $1,025M beat the ~$978M modelled. Contribution profit $1,641M, 5.0% of GOV vs 4.4% last quarter. Take rate held at 13.5%. But: EV $86.3B is 5.4x TTM revenue of $15,891M, 27.0x TTM adjusted EBITDA of $3,202M, 47.7x on the GAAP measure screens use for Uber (17.1x) and Airbnb (28.7x), 108x TTM GAAP EPS of $1.91, and 87.6x owner earnings of $1,025M - TTM FCF of $2,139M less $1,114M of stock comp.
    What to watch: UP: income from operations back above $300M in a quarter, a Q3 that beats the $34.0B top of the GOV guide, or stock compensation guided flat for 2027. BEAR: contribution profit back below 4.7% of GOV, Q4 guided under $36B, or another quarter of diluted shares rising through a billion-dollar buyback.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Revolution Medicines (RVMD): The $151M Miss Was The Stock Going Up
    Revolution Medicines, Inc. (RVMD) Q2 2026 — R&D $394.9M UP 76%. G&A $110.2M UP 172%. Net loss $644.4M. Loss per share $3.06 vs a $2.04 bar. Cash $3.94B. Product revenue: zero.
    RVMD lost $3.06 a share against a $2.04 bar - but $151.0M of that is a non-cash mark on EQRx warrants the 10-Q says rose 'as a result of an increase in our share price in 2026'. The loss got bigger because the stock went up. Ex-warrant, the loss is $2.34.
    THE CALL: AVOID (4/5, THE SCIENCE IS NOT THE QUESTION. THE PRICE IS.) — base-case value ~$90.0 vs ~$197.3 today.
    KEY METRICS:
    - CALL: AVOID 4/5, base-case fair value ~$90 vs the $197.30 pre-print close (-54%), and below the Street's $194.09 average. Base $90 (risk-adjusted peak sales $11.2B, 2027 launch, peak 2034, 42% FCF margin at scale, 11% discount, plus $3.44B net cash); bull $157 (70% of the unrisked $22.0B at 9%); bear $5. Run it backwards and the $38.85B of enterprise value already requires about $21.4B of peak annual sales.
    - THE MISS IS THE STOCK GOING UP. Net loss $644.4M vs $247.8M; loss per share $3.06 vs a $2.04 consensus. $151.0M of that is a non-cash change in the fair value of the EQRx warrant liability - $0.72 a share, 70% of the $1.02 gap - and the 10-Q states it occurred 'as a result of an increase in our share price in 2026'. Ex-warrant loss per share is $2.34. The warrant liability went $18.5M to $185.3M in six months, and the warrants EXPIRE in December 2026.
    - G&A UP 172% IS THE REAL DISCLOSURE, NOT R&D. G&A went $40.6M to $110.2M (+172%) against R&D's $224.1M to $394.9M (+76%). The release attributes it to commercial preparation and headcount: the company says it has achieved U.S. commercial launch readiness and has shipped daraxonrasib to more than 2,000 patients via an FDA-cleared Expanded Access Program since May. That is ~$440M a year of commercial cost locked in for a drug with an ACCEPTED NDA, not an approval.
    - THE ROYALTY STACK NOBODY MODELS. Royalty Pharma has paid $500M in two tranches for 4.55% of net sales up to $2B, 2.50% from $2-4B and 1.00% from $4-8B; drawing the remaining $750M takes it to 7.80%/4.55%/2.40%. Separately, the secured term loan's FIRST $250M tranche is REQUIRED to be drawn within 45 days of an FDA approval in metastatic PDAC, at 3-month SOFR (3.50% floor) + 5.75%, secured on substantially all assets. Approval triggers a compulsory ~9.25% draw.
    - THE BALANCE SHEET IS THE PRODUCT. Cash and marketable securities $3,938M vs $2,026M at Dec 31 - from an April offering of 12,147,887 shares at $142.00 plus $500M of 0.50% converts due 2033 ($198.80 conversion price), and a $250M Royalty Pharma tranche in May. Operating cash use was $741.5M in H1 vs $416.2M. FY26 opex guidance $2.1-2.2B against H1 opex of $950.4M implies ~$600M a quarter in H2. Shares went 197.0M to 214.2M in six months, +8.8%.
    - THE SCIENCE IS REAL - AND IT IS THE COMPANY'S OWN DISCLOSURE, NOT OURS. Phase 3 RASolute 302 in previously treated metastatic pancreatic cancer: median overall survival 13.2 months vs 6.7 on chemotherapy, hazard ratio 0.40 - presented in an ASCO 2026 plenary and published in the New England Journal of Medicine. The FDA has accepted the NDA and RASolve 301 in RAS-mutant NSCLC reads out in 2027. No clinical claim here is ours.
    What to watch: UP: an FDA approval with a broad label, positive RASolve 301 data in 2027, or a first-line readout from RASolute 303. BEAR: a complete response letter or narrow label, G&A past $500M annualised without an approval, or another equity raise inside twelve months.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Expedia (EXPE): B2B Grew 23%. It Kept 13 Cents Of It.
    Expedia Group, Inc. (EXPE) Q2 2026 — Gross bookings $33,928M UP 12%. Revenue $4,315M UP 14%. Adjusted EBITDA $1,119M UP 23% with 196bps of margin expansion. Adjusted EPS $5.76 vs the $5.22 bar - the sixth straight beat - and FY2026 guidance raised to $16.05-$16.22B. But B2B grew revenue 23% and added only $38M of profit.
    Expedia beat on every line and raised full-year guidance. But the story everyone tells about it is wrong. B2B - the segment called the growth engine - grew revenue 23% and added $38M of adjusted EBITDA. B2C, the consumer brands everyone calls melting, grew 8% and added $161M. Of the $211M of new profit, 76% came from the slow half. B2B converted 13 cents of each new revenue dollar; B2C converted 81.
    THE CALL: ACCUMULATE (3/5, A CHEAP BUSINESS AT AN EXPENSIVE MOMENT) — base-case value ~$362.0 vs ~$319.66 today.
    KEY METRICS:
    - CALL: ACCUMULATE 3/5, fair value ~$362 vs the $319.66 pre-print close (+13%), ABOVE the $312 average of the six targets refreshed after the print (BofA $331, UBS $322, Argus $315, Jefferies $310, Morgan Stanley $300, Baird $294). Base $362 (2026 owner cash flow $2,300M growing 6.5% then 4.0%, 9.5% discount, 2.5% terminal); bull $510; bear $243. Run it backwards and tonight's price needs only 4.4% growth.
    - THE GROWTH ENGINE IS NOT WHERE THE PROFIT CAME FROM. Adjusted EBITDA went $908M to $1,119M - $211M of new profit. B2C contributed $161M (76%) on 8% revenue growth; B2B contributed $38M (18%) on 23% revenue growth. Incremental margins: B2C 81%, B2B 13%. B2C margin +380bps to 33.2%; B2B margin MINUS 258bps to 24.8%. B2B direct selling and marketing rose 22% to $915M - 61% of B2B's own revenue, paid to the partners that bring the volume.
    - THE RAISE STILL GUIDES H2 TO HALF OF H1. First-half revenue grew 14.3%. The raised FY midpoint of $16.135B implies second-half revenue of $8,394M against $7,959M - about +5.5%, with Q4 near +4%. Gross bookings the same: H1 +12.3%, implied H2 +5.1%. But the Q2 guide given on May 7 was +9-11% revenue and +7-9% bookings, and Expedia printed +14% and +12%, with 196bps of margin expansion against a 50-100bps guide. Six straight EPS beats. The guide is the sandbag.
    - THE HEADLINE FREE CASH FLOW IS CUSTOMER MONEY. First-half free cash flow $5,026M against first-half net income of $872M - because deferred merchant bookings rose $4,998M, 92% of operating cash flow. That is travel paid for and not yet taken, and it unwinds in H2. Screeners show a ~15% FCF yield; charge the $412M of stock comp against $2,391M of TTM adjusted earnings and owner earnings are $2,061M - a 5.4% yield. Meanwhile a NEW $5B authorisation in Q1, $700M repurchased in Q1, then $200M in Q2 at about $227.
    - A QUARTER OF THE 36% EPS GROWTH IS NOT OPERATIONS. Adjusted earnings $706M vs $546M, up 29.3%. Adjusted EPS $5.76 vs $4.24, up 35.8%. At last year's 128.9M adjusted share count the same $706M is $5.48 - so $0.28 of the $1.52, about 18%, is the buyback. Another ~$0.11 is the adjusted tax-rate assumption falling from 21.5% to 20.0%. And GAAP EPS of $7.16 is ABOVE adjusted because of a $280M mark on minority equity investments, $2.29 a share.
    - VALUATION: 16.9x TTM adjusted EPS of $18.94, 15.4x our 2026 estimate, 18.6x charging stock comp in full, and 9.3x EV to TTM adjusted EBITDA of $3,958M - against Booking Holdings at 15.1x and Airbnb at 28.7x. Net cash of $1.67B. Revenue margin 12.7%, UP 27bps. Room nights 111.5M +6%, ADR $220.60 +5%, but booked air tickets FELL 5%. trivago revenue $145M, +48%.
    What to watch: UP: B2B adjusted EBITDA margin back above 27%, a Q3 that beats the $4.75B top of the guide, or quarterly buybacks back above $700M. BEAR: revenue margin back below 12.4%, B2C direct marketing growing faster than B2C revenue, or Q4 guided under $3.65B.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • McKesson (MCK): 20% EPS Growth. A Third Of It Was Bought.
    McKesson Corporation (MCK) Q1 FY2027 — Revenue $105,380M UP 8%. Adjusted EPS $9.93 UP 20%, beating the $9.56 bar by $0.37 - the fourth straight beat - and FY2027 guidance was raised to $44.20-$45.00. But GAAP EPS was $5.15, DOWN 18%, and adjusted EARNINGS rose only 14%.
    McKesson reported two earnings numbers: GAAP EPS of $5.15, down 18%, and adjusted EPS of $9.93, up 20%. The $4.78 gap is six times the entire FY2026 gap of $0.77. And adjusted earnings in DOLLARS rose only 14% - at last year's share count the same profit is $9.43, not $9.93, so 30% of the EPS growth was bought, not earned.
    THE CALL: HOLD (3/5, AN EXCELLENT BUSINESS, ALREADY PAID FOR) — base-case value ~$913.0 vs ~$877.23 today.
    KEY METRICS:
    - CALL: HOLD 3/5, fair value ~$913 vs the $877.23 pre-print close (+4%), BELOW the Street's $949.73 average (+8.3%). Base $913 (FY2027 FCF $5,900M growing 5.5% then 3.75%, 8.5% discount, 2.5% terminal); bull $1,131 (7.5% growth - needs Wellverse to unlock value Apollo did not price); bear $604 (3.5% growth, 9% discount, less $5,058M of litigation liabilities). Four percent of upside is inside our own error bars: a fair price, not a good one.
    - A THIRD OF THE EPS GROWTH WAS BOUGHT, NOT EARNED. Adjusted EARNINGS $1,183M, up 14.1%. Adjusted EPS $9.93, up 20.2%. The gap is the denominator: 119.2M diluted shares vs 125.5M. Put last year's count on this year's profit and $1,183M/125.5M = $9.43 - so $0.50 of the $1.67 of growth, 30%, is the buyback. Extend it: FY2026 adjusted earnings were ~$4,858M; the FY2027 midpoint at a ~115M average count is ~$5,129M. That is ~6% growth in profit DOLLARS against 13-15% of guided EPS growth.
    - THE RAISE IS THE BEAT. Q1 cleared the $9.56 consensus by $0.37. The full-year midpoint went $44.20 to $44.60 - up $0.40. The entire raise is the beat flowing through; the remaining nine months were lifted by about three cents.
    - THE $4.78 GAAP GAP IS ONE LINE AND A PRIVATE-EQUITY CHEQUE. On June 1 McKesson sold ~13% of Medical-Surgical (renamed Wellverse Aug 5) to Apollo for $1,238M net. As a redeemable interest it is carried at redemption value, and the 10-Q rollforward shows that value rising $374M in four weeks. It runs through noncontrolling interests, which jumped from $47M to $418M - so net income rose 24% while the common slice fell 22%. One outlet already called the print a MISS by comparing GAAP $5.15 to a non-GAAP bar.
    - THE CAPITAL RETURN DID NOT COME FROM OPERATIONS - AND THE MIX SHIFT IS THE REAL STORY. Free cash flow was NEGATIVE $372M, yet $2,632M went back to shareholders, funded by $3,215M of new debt (total debt $6,526M to $9,729M) and Apollo's cheque. Meanwhile Prescription Technology does 1.5% of revenue and 16.9% of segment profit at a 19.35% margin, and Oncology grew profit 41%; together they went from 12.4% of revenue and 35.6% of profit a year ago to 15.0% and 39.4%. The cash conversion cycle is NEGATIVE 7.4 days and ROIC is 27.9%.
    What to watch: UP: Rx Tech plus Oncology passing 45% of segment profit, a Wellverse valuation above Apollo's implied ~$9.5B, or full-year FCF above $6B. BEAR: N. American Pharma margin below 0.95%, total debt through $12B, or a cut to the back nine months.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • MKS (MKSI): It Beat Every Line - And The Stock Shrugged. Here’s Why.
    MKS Inc. (MKSI) Q2 2026 — MKS reports AFTER the close - the 8-K was accepted at 4:31pm ET on Aug 5 - so the -2.39% close at $313.10 is a PRE-print price, not the reaction. The reaction so far is the after-hours tape: last trade $309.25, -1.23%. Revenue $1,248M (+28.3%) beat a ~$1,195M bar, non-GAAP EPS $3.30 beat $2.91, and Q3 is guided to $1,350M and $3.58.
    MKS beat on revenue, on GAAP earnings, on non-GAAP earnings and on adjusted EBITDA - every one above the high end of its own guidance - then guided Q3 about 8% above the bar. And the stock moved roughly one percent. Here is the line almost nobody read: the diluted share count went from 67.4M to 72.7M, up 7.9%, because the share price itself satisfied the conversion condition on $1.4B of convertible notes. $1,399M of debt moved from long-term into current liabilities. The rally that produced this quarter is quietly issuing the equity.
    THE CALL: HOLD (3/5, AN EXCELLENT BUSINESS PRICED FOR A CYCLE THAT NEVER TURNS) — base-case value ~$265.0 vs ~$309.25 today.
    KEY METRICS:
    - CALL: HOLD 3/5, fair value ~$265 against the $309.25 after-hours print - about 14% BELOW the tape. We DIFFER sharply from the Street's $405.25 average (+31%). DCF base $263 at a 9.5% discount rate; bear $133; bull $415. Cross-check: 13-15x mid-cycle EBITDA gives $239-$284.
    - THE PRINT: Revenue $1,248M, +28.3% YoY from $973M, against a ~$1,195M bar. Non-GAAP EPS $3.30 vs a $2.91 bar (+13.4%) and $1.77 a year ago. GAAP EPS $2.41 vs $0.92. Gross margin 47.6% vs 46.6%. Adjusted EBITDA $358M, a 28.6% margin vs 24.7%. All above the HIGH END of guidance.
    - THE CONVERTIBLE - the line nobody read: the trading price satisfied the stock-price conversion condition on $1.4B of convertible senior notes. Diluted shares went 67.4M to 72.7M, +7.9%. Short-term debt went $51M to $1,399M against $611M of cash. Basic EPS was $2.59 and diluted was $2.41 - 18 cents already gone.
    - THE MIX: Electronics & Packaging $381M, +43.2%, is outrunning Semiconductor at $554M, +28.2%. Specialty Industrial $313M, +13.8%. Every division grew double digits and the incremental non-GAAP operating margin was 42.9% - which runs backwards just as fast in a down-cycle.
    - THE EV BRIDGE: $21.2B of market value plus $3,332M of net debt is roughly $24.5B of enterprise value - about 16% more than the headline market cap - or 17.0x 2026E adjusted EBITDA of ~$1.44B. Q3 guidance of $1,350M and $3.58 sits about 8% above the pre-print bar.
    What to watch: UP: Electronics & Packaging holding above 40% growth into 2027, the order book converting as management describes, or the convertible settling in a way that caps the share count. BEAR: a Q4 guide below $1,350M, gross margin slipping under the guided 47%, or working capital continuing to eat free cash flow while the diluted share count climbs again.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    16 min

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⚡ Charged Alpha — The S&P 500 Stock Encyclopedia Data-driven deep dives into every stock in the S&P 500 after every earnings report. Each episode breaks down one company from open to close:…