This has been such a crazy week. We have so much news to get into. Of course, we have Microsoft reporting their earnings, the stock is up huge. This is one of my biggest Holdings. It's a company. I'm incredibly bullish on and we're going to be going through in detail, their earnings report because they lay out everything that they've done everything that they're forecasting for the future. And we get an inside look of how this business is doing.
So I'll give you what I think. Are the biggest takeaways from Microsoft's earnings report, but then, of course, we can't forget about Google, this company reported earnings as well. Well, it's up a little bit. The market is, is treating it with a little 1.3 percent stock rise today. But I thought there is a lot in Google's report that was
actually encouraging. So we're going to be looking at some of my biggest concerns about Google that is the excessive amount of employees the wasteful spending. And then, of course, the cloud growth will be looking at all of these different things. And I'll be highlighting why I think this report was encouraging. And then finally, we have met a reporting their earnings as well. We're going to be diving into that. Detail as well. So huge earnings reports with Microsoft Google and meta.
But then we also have some bonus news, Microsoft's deal with Activision. Blizzard has reached a roadblock by the UK government. This is a frustrating piece of news for Microsoft because they're blocking this deal out of reasons. That don't make any sense and I'm going to go through this report and the UK's arguments and why they have this one wrong. Then we also have the news at Apple. One, the case with epics game, this is a bit forecasted but
they finally declared victory. You and then we have some some troubling news here. There is a Reddit user who bet over 100,000 dollars of his savings on Bed Bath & Beyond. And he lost one hundred percent of that money because the company went bankrupt and he's basically distraught like his life is over. So I wanted to respond to this post and offer my advice to this Reddit user. Now before we get into the news, let's take a quick.
Look at my portfolio, we have the passive income portfolio, reaching a value of four hundred and twenty six thousand dollars. Sixty thousand, nine hundred, and gained so far. And it's performed really well. So far this portfolio. I've been, I've been very pleased with the performance. It's up around 10 percent year-to-date. It's been doing really well and I can't complain about it. In fact, what I'm looking at buying companies and I'm searching for ones that are in a dip.
In my portfolio, I'm struggling to find any companies in a dip generally speaking. All of them are at least flat or going up. We have in the financials SP Global and Card. These companies have performed. Okay. This year they haven't done terrible but they also haven't reported earnings so far. So we'll see how these ones do when they report earnings, my guess is because Visa already reported earnings and the earnings were good, that MasterCard is fine.
So I'm not too concerned about this one but we have SP Global I think the earnings will be fine because Moody's has reported earnings they did okay and then msci reported earnings and there's were in line as well. So I think SP Mobile will do well, but it's still some unknown. They have other segments of their business that could be struggling. If this one does dip, if SP, Global goes down after its earnings report, I have cash set aside to buy that dip. That's why I'm sitting with
12,000 dollars of cash. Just in case, one of my key Holdings cells off big after their earnings, the other categories that have been doing okay, but not great are the Industrials. Canadian Pacific and Union Pacific have not caught a bid this year. They've been trading flat, they Haven't been going anywhere. And that's okay with me. Not every company. You hold is going to go up every single day and these ones are doing fine. So we'll see what the earnings
reports are this year. I think that Canadian Pacific's going to have a lot of positive developments, so I'm very excited about that company. And I believe that if Union Pacific can find a good CEO one that can really increase the margins and operating efficiency of the business. This could be a very, very good play for the future. So I'm still very optimistic about both of these companies. The restaurant category An insanely good investing category
so far Starbucks has done. Well I've earned decent gains on that company. Buying it low and then selling most of my steak when it went up and then we have Texas Roadhouse. This is one that I have not sold any of I've continued to hold it, but I'm no longer adding to this position because it's raised up a lot over the past three months, and it's gotten closer to what I think its intrinsic value is. So this one is a long-term compounder, in my opinion, I think the company will do very
well over the next 10 years. It has not reported modernity is yet, but I think the earnings will be relatively good. I see continued demand in the restaurant category in the consumer category. I don't mess around here.
I invest in the companies that I think are the very top of the very top Costco being the best physical retailer Nike being the best apparel brand Pepsi, being the best junk food consumer, defensive company and then Estee Lauder being the best makeup company and their respective spheres. These are the top companies in the world and all of them have performed The top companies in the world so I'm very bullish on
them. Now currently I still hold a massive steak and Costco still long this company even though it trades at a higher valuation, I still believe that Costco has a very long Runway of growth and it will generate continued free cash flow in the real estate category. I only have one company which is Vici a massive 52 thousand dollar position and I'm a currently in the green by eleven thousand one hundred dollars and I'm buying a more and more and
more of this company. I bought More of it this year. And I continue to add to the position, anytime it trades down. I don't know if you taken a trip to Vegas recently, but if you have, it is like the party land of planet Earth. Everybody goes there and it's just jam-packed with people partying music, gambling shows, casino sports events, everything you can dream of in one single place. Vegas is the Disneyland for adults. It has the most crazy
architecture. The biggest events it has Sports coming to it. It has come Tensions. It has shows. It has everything you can dream of all in one place and the demand there is insane hotels are being booked out every single room sold. There's massive Investments going there. There's massive infrastructure going there. There's lots of developments. I think the property that Vici owns is irreplaceable and it will be worth more and more in
the future. So, not only does it yield a lot and pay a hefty dividend, but I think the company is going to be worth substantially more in the future. Now, finally, we get to the category. I've concentrated my big investments in Tech and to two different companies, apple and Microsoft and I've owned both of these companies for over five years. I first spotted to Apple and Microsoft back in 2017.
Now Microsoft I only owned a little bit back in 2017 so the position size was very small just a few thousand but Apple I bought into a little bit heavier. I bought into Apple because I thought the company was misunderstood by the market. I thought that Warren Buffett was Correct. The company is not just a
hardware seller. It is a company that and traps people in its massive High barrier moat and then it monetizes them, a thousand different ways and that monetization has led to substantial free cash flow gain for Apple over the past. Five years when I purchased apple back in 2017 their free cash flow per share was two dollars and 43 cents. Since then in 2022 they've done six dollars and 87 cents and free cash flow per share.
So they've about 3x, the amount of free cash flow per share, that they've done through aggressive, growing of their free cash flow and doing BuyBacks. That combination has led to massive free cash flow per share. So apples results didn't come from expertly timing. This company, the results came from buying into a company. That's very high quality has very good economics and grew its free cash flow per share at a
very high speed. Now, that's the type of company I'm looking for and that brings us to Microsoft Microsoft is a company that I've been buying. Into more recently because I consider the mo of Microsoft to be unassailable and in their earnings reports. It shows this. Now we have Microsoft's earnings report that they released yesterday after market close and this caused the stock to go up
nearly 8% today. One thing that I like to do as an investor and this is a mentality that I've had to develop over a couple of years is to not let the the huge changes in price after a company reports earnings dictate whether I'm happy about the report or sad and that is difficult to do in many cases and this is the normal human behavior. If the company stock price goes up, investors are very happy,
they're excited. The company is doing well and you're making money and it makes you automatically have a positive sentiment on their earnings report. But then if a company ever comes in below expectations or misses its earnings and 1/4 that can cause you to be sad, and if you're sat on a holding, you may sell it for the wrong reasons.
So rather than judging the company based off of where the stock is, Trading. Currently, I like to dive into the report and try to unbiasedly form my own sentiment on the company. Whether I think the core indicators of the company are moving in the right direction, the core indicators being the actual Mo of the company, the market position, the pricing power, and the core economic
drivers of intrinsic value. So having said that, let's go ahead and jump in and to set this earnings report first thing that we can look at right here. That gets investors. Excited is the word AI. We have a I right there, the first. Sentence of commentary from the CEO of the company. He says, the world's most advanced AI models are coming together with the world's most universal user interface natural language to create a new era of computing. This is Satya Nadella and he is
he's a silver tongue. He really he's really a great speaker and he's enthusiastic and he's charming and he's exciting when I listen to the earnings call Satya Nadella seems he just seems more excited about what's going. Going on with Microsoft and AI. He really seems pumped when he's doing these earnings calls, and it's exciting to see a CEO. That seems so enthusiastic about the things that company are doing. This is a bit of a contrast from
from Sundar pichai. Satya Nadella seems to really be enjoying what he's doing and this Competitive Edge. They have with Google now, he goes on to say that across Microsoft cloud. We are the platform of choice to help customers get the most value out of their digital spend. And Ation for this next generation of AI. So, right there, the first two sentences. He mentions a, i twice.
So, we know the CEO is excited about the company and AI there, intermingling it with every part of the company. But let's go ahead and take a look at the numbers. Now, let's take a look at their revenue operating income and earnings per share growth. These are the main metrics of the company. We have the top line here which is 2022. Then we have the 2023 updated numbers, we can see the percentage change and the
revenue. They grew Revenue by 7% but then Constant currency basis, they grew up by 10%. If you don't know what constant currency means, that means if you removed the impact of Foreign Exchange, Microsoft does a lot of business outside of the US. If you remove that impact, which is outside of their control, they grew their overall Revenue by 10%, which I think is very impressive in this environment. But then we have the operating income growing, 15% on a constant currency basis, we have
net income growing 14%. We have the diluted earnings per share. We're growing 14%. These are wonderful numbers across the board. This shows a very healthy fast growing company. Now this actually beats my expectation, I thought that since Microsoft does so much business with such big companies and most of those companies are trying to optimize that Microsoft may be trying to swim upstream.
They might they might have a little bit of pushback and they might not be able to grow as much but they just proved investors wrong time and time again, this company has such A strong Market position that they can churn out these impressive growth numbers year after year. After year, it is really a spectacle to see a company this strong.
Now, if we look at this on a breakdown of the different business lines, we can see the same growth metrics, we see the productivity and business growth at 15%. The intelligent Cloud at 19 percent and then personal Computing - seven percent. That's right, this went down right now. People are not buying as much. And where I think what happened is during the covid, 2020. 2021, there is massive. Pull forward in the personal
Computing category. Everyone went out and bought all the personal Computing stuff they needed. And now Microsoft is growing the software side of it. So this is not concerning to me, this is a part of business. Not every part of business is perfectly consistent every single year some of its going to be a little bit more cyclical. Especially when you have big things like a pandemic. So even though As part of the company shrunk, I don't think that this has any core issues with the company.
I don't see this as actually an intrinsic - for the company. Now, Microsoft is a massive company that has all of these different products and services, they offer, they do a breakdown of all of it. And again it's just remarkable to see how almost the entire company is growing. The cloud Revenue, grew 25% office commercial products, 17% 365, 18% the office consumer and Cloud. It's Services. Grew only 4%.
We have LinkedIn growing. 10% LinkedIn has been a cash cow for Microsoft. One of their many good Acquisitions. We have Dynamics and cloud services growing 21%. Then we have Dynamic 365 growing nearly 30 percent, massive growth, for that category Azure and other cloud services, growing 31% Windows oam shrunk,
nearly 30 percent. So that's one part of the business that's in Decline, even the Xbox content and services eked out, growth of 5%. And keep in mind, there's a lot of pull forward in 2024, the game category so it's impressive to see growth in that category as well. The search crew 13% and then devices the hardware shrunk. 26%, again, I don't think that this is a long-term concern, they'll re-accelerate growth and Hardware over time, but everybody has the latest device right now.
So in terms of overall, growth of the company, I see good metrics across the board. Healthy Revenue growth healthy operating income growth and even broken down by line item ice. I see a very healthy business where almost every segment of it is growing. And most importantly, all the most important segments of it are growing the fastest. So, Microsoft still has a very healthy growth profile.
Now, moving on, we can take a look at Microsoft's balance sheet currently they have 104 billion dollars in cash, so they have a lot of cash on hand. If we put that in perspective, last quarter, they had ninety nine point five billion. So, they increase their cash balance by around five billion. Now, we look at their long-term debt and this is around 40.
Two billion dollars. So 42 billion and we can look at the long-term debt over time notice the strong Trend since 2016 of almost every quarter, the long-term debt going down the previous quarter. It was forty four billion so it has gone down again. So, of course, in aggregate, when you compare the cash balance to the debt of the company, it's about as good as it gets, they are bolstering their cash balance because they do want to by Activision Blizzard for seventy billion dollars.
So, that's part of the reason they're holding so much cash right now and we'll talk about that deal. A bit later but as of right now, Microsoft has one of the top three balance sheets in the world. Now finally we get to the cash flow statement. This is where I get to my favorite metric of the company
which is the free cash flow. We can do a simple calculation of the traditional free cash flow calculation, which is the net cash from operations, twenty four point, four billion and then we subtract out the capex which is 6 billion, six hundred dollars, so we have 17 billion eight hundred dollars in traditional free cash flow for the company. Now another thing that I like to do Which is not traditional but it's my adjusted calculation of free.
Cash flow is to also subtract out the stock based compensation and see what that leaves us now. The stock based compensation came in at 2 billion, 465 million for the quarter. If we subtract that out that leaves us with an adjusted free. Cash flow 15 billion 369 million in adjusted. Free cash flow for the quarter. This is free cash. Flow - stock-based Compu. Interesting thing is the free cash flow is actually lower this quarter than it was one year
ago. Ago, a year ago, they reach that huge peak of 20 billion dollars in free cash flow. So it went down to 17 billion dollars. So that's a little bit of a negative spin on it. The free cash flow went down a little bit, but on a positive spin last quarter, they had a peak of 2.54 billion, in stock based compensation. But we see hair that their stock based compactly went down sequentially, over the past
quarter. So Microsoft is breaking their trend of raising stock-based, compensation single quarter. Now it's actually starting to go back down so this is overall a good quarter. The free cash flow is more in line with its history. And the stock-based compensation fence is going down. It shows up, Microsoft is taking concern over their expenses. So now that we've looked at the earnings report of Microsoft, we've delved into the numbers, we've seen the development of the company.
It puts a little context of why investors are so enthused about
this company. It's up 8% and the games continue to compound, in my opinion, I still think that Microsoft remains As in its dominant growing position with a very long runway for growth, their Cloud business, alone is great, their video game, business is great, their office products are great, and the fact that Satya Nadella has really taken the mantle of the AI. Qing from Google has been a very positive development for this stock.
So I think investors should be very pleased with this quarter. I think the reaction in the stock going up is warranted and appropriate but I don't invest in companies based on quarter to quarter reports, I invest in them based on the intrinsic value. Your drivers and the mode when I was buying Microsoft and this is my first by of the company. Back in December, 20, 22, and 2017, I bought it at a share price of $85 per share. Nothing has changed every single
quarter. I see the developments and I see that Microsoft maintains its incredible mode. So as of right now, I have no plans on selling any of this company. Now, next up, we also have Google's earnings report, unlike Microsoft, this company's only up half a percentage today Day and Google Remains the optically
cheaper company. So even though Google trades at a much lower PE ratio than Microsoft, it's not having quite as good of a day, but let's go ahead and take a look at the earnings report and see what we can find. Now, the very top of the earnings report, we have another one of these nice overview quotes from the CEO of the
company, which is Sundar pichai. And how much do you want to bet he mentions AI in this quote, he says, we are pleased with our business performance in the first quarter, was searched performing well, and momentum and Cloud, we Reduced important product updates, incurred in deep computer science and AI. Our North Star is providing the most helpful answers for our users. And we see huge opportunities ahead continuing our long term track record of innovation
there. You have the nice overview from the CEO. Now, let's go ahead and take a look at the actual numbers. Now, we can first look at the overall growth of the company. This is a big concern for big Tech right now, they did so well after the pandemic and growth has slowed down a lot over the past. Year. Google grew their overall revenue on a constant currency basis at six percent year-over-year. So comparing that to Microsoft, Microsoft grew up, 10%, Google grew at 6%.
That shows you the differences in the nature of the business. Google is largely an advertising business. Advertising is based on supply and demand, how much advertisers want to pay Google? How much demand there is for the ad Market. It's a little bit more volatile than Microsoft's business. Microsoft has a lot of licenses,
they have a lot of subscribers. Chin's, most of Microsoft's business is reoccurring Revenue, so Microsoft has better control over their growth, then Google does a lot of people are bashing Google for only growing at 6% constant currency or three percent total. I don't think this is so bad. I think this is actually good growth considering how quickly they grew just a couple years ago.
So I don't really see this as a huge - I think six percent growth is pretty strong considering the context here. Another thing we can look at with Google is their earnings per share diluted. Added EPS was down your over here a little bit. That's another thing that's going to hit Google and I think a part of the reason why the company's not not having the best day today in the market.
But if we go down and dive into the segmented operations, I think this gives the best idea of what's happening with this company. Starting off the search business is growing thirty nine billion to 40 billion dollars in revenue. For the quarter then we have the YouTube segments of the business. This actually declined year over year so it went down ever so slightly from six point eight, six billion 26.69.
And I think that this is one little hurdle in the long-term growth of YouTube. If I Had A guess, ten years from now, YouTube will be much bigger in the terms of Revenue. It does then it does currently. So I don't consider this an intrinsic value problem with the company or that YouTube's in secular decline. I think the company is just facing some minor headwinds in the advertising market.
Now, the next segment of business that I want to look at is one that I think is the most important developing story for the Google thesis, which is the Google Cloud growth. If this becomes highly profitable and a growing segment of the business, it will be a core intrinsic value driver for this company. And it did grow substantially over the past year from 5.8 billion to seven point four billion in Revenue. That is a 28 percent growth
rate. So, very strong growth in Cloud, even with a lot of companies trying to optimize their Cloud spend. So, I'm very excited to see that cloud growth with Google. Now, another part of this company that I've been concerned about for over A year I was concerned about this before it was popular to be concerned about this, which is the number of employees that Google hires, I think they're hiring too many employees to quickly. Growing the company's head, count to a quickly.
And at the numbers here, it shows a lot of increase in employees, but they have a note here. They say that the number of employees included, all of the employees affected by the reduction of our Workforce. So they're basically saying that this number is not accurate because that number the 90,000 includes all the employees that we recently let go. So the real numbers, much lower and we'll know that number specifically in the next
quarter. Now, moving on, we get to the operating income or loss of these different segments. For example, Google services, it made a lot of money. Twenty one point seven billion, that's great. But then we get to Google Cloud which had a surprising result here. It went from losing seven hundred and six million dollars last year to now having an operating income of 191 million. It's in the green now.
My first reaction was, this is remarkable if they really made it that profitable that quickly, that's incredible. But when we read in the notations, they say that a lot of this was a result of a change in amortization for the Google Cloud. So basically, they changed around some accounting which made it go profitable much faster than expected. But even netting out that change in accounting, it was still far above schedule.
But either way, I see this as a very positive development for Google, having growth in the operating income of Google Cloud. Year over year is going to be a long-term intrinsic value driver for the company. It will become a key part of it. I think that Google Cloud could become a bigger more important part than YouTube for the company. That's how bullish I am on this
segment. So we'll see what happens in the following year but my guest is this number is going to continue to grow at a rapid Pace. Other bets on the other hand, is a money furnace. They throw money on there. They light it on fire. I'm not bullish. On this part of Google. I wish they would focus more on getting an Roi. Investing in parts of the company where the expected return is very attractive. Now, moving on, we get to the balance sheet of Google.
The company's current cash balance right now is very high. It's currently at 115 billion dollars. Google has a problem and their problem is that they're to profitable. They make too much cash and then they sit the cash in their cash balance. They're not doing effective things with it to earn a very high Roi. Now, Google could do something with all of this cash they could look. In the market and they could try to find a very high quality company that's selling at a very reasonable price.
A company that they know is probably undervalued and they could try to buy that company by out more shares in that company. Of course they could do share BuyBacks, that's what they should be doing with their cash balance. Google has 115 billion dollars in cash and their total debt is minuscule. Look at the amount of long-term debt, they have thirteen point six billion, so they Ninety billion dollars in cash, sitting there while their company is
undervalued. And in my opinion, they should be using this aggressively to do share BuyBacks at an accelerated rate of what they're doing right now. Now on that note, they did authorize another 70 billion dollars in share BuyBacks. So that's what's authorized. But Google should be spending all of this money. They should spend it because I have nothing better to do with it. There are too big and too monopolistic of a company to reasonably have a large
acquisition. So there's really nothing. Else they can do then buy back their own stock or pay a dividend. Now, if we move on to the cash flow statement, we can calculate the free cash flow hair. And look at how the free cash flow and the stock-based compensation is doing well, first calculate, the traditional free cash flow. We get the net cash provided by operating activities, which is twenty three point five billion
dollars. And then we subtract this number right here, which is the capex of the company. Six point two eight, nine billion dollars. The result of that is 17 billion. 26 million dollars in free cash flow. This is a traditional free cash flow metric. Now, of course, on this show, we look at another expense, which is a stock based compensation expense because you don't really get this free cash flow if the company is generating it by diluting you the shareholder.
So, if we adjust out the stock based compensation expense, which is a staggering five billion 284 million. Keep in mind, that is twice as much as Microsoft paid in stock. Base compensation. Last quarter we get a result that is 11 billion, nine hundred and forty-two million. We can see that the stock based compensation really hits the number there, the before, and after is pretty Stark. So the stock base camp went up around 700 million dollars a
year over year. I think this is going to go back down because they're laying off employees and they're still having to pay Severance has and stock-based compensation packages to them. But once that works its way out, this number should go down which will help the free cash flow going forward. Another thing I'll point out is this free cash flow has helped immensely by the huge Decline and capex year over year. Last year. They did nine, point seven eight, six billion dollars in
capex. This year they are only doing six point two, eight nine. So the decline in capex creates a more efficient business. They're able to generate more free cash flow if they can get both the stock based compensation expense down and the capex expense down. This free cash flow will explode.
You'll see huge numbers there and that is a great story line for Google. The company is growing its free cash flow substantially by getting all different expenses down now moving on from Google, we have metas results here and like we've been seeing big Tech is on fire with these earnings reports that is up nine and a half percent. After hours. Another huge Spike, like, Microsoft's so far. Microsoft has done great. Google's done. Well, let's go ahead and take a
look at meta platforms. Now, I'll start off with the opening phrase and quote from the CEO of the company Mark Zuckerberg will see if he mentions a i in it. Quote we had a good quarter and our community.
Can use to grow now. He says, Rai work is driving good results across our apps and businesses right there 343 we have a, I mentioned in all the earnings reports and the opening quotes he goes on to say, we're also becoming more efficient, so we can build better products, faster, and put ourselves in a stronger position to deliver on our long-term Vision. So, there, we have two really key words that investors want to hear. We have a i and we have
efficiency. It has been the year of efficiency for Etta. And that's had a staggeringly good impact on the stock price. Now let's go ahead and go over to the financial highlights hair. They have the revenue growth of the company, the revenue, grew, three percent. So this is right in line with Google's growth. I don't believe this is the constant currency growth if I'm not mistaken. This is not on a constant currency basis.
So we have three percent growth and then we have expenses of the company growing by 10% that doesn't look so good. I don't love the the expenses outgrowing the Maybe he addresses this or Mark Zuckerberg will address that later in the call but it's supposed to be the year of efficiency or expenses are going down. They're not growing at a faster rate than the revenue of the company but here we see expenses growing faster than Revenue.
We're not off to a great start. We have the operating margins. Actually declining a bit for the company going from 31 percent to 25 percent. Don't love seeing that. That's not a great thing. Let's go ahead and move on to the next line item here we have the net income. I'm going down year over year seven point four billion to 5.7 billion. Not exactly the best numbers here. Even the diluted earnings per
share are down year over year. So 2.72 22.2 and this is why I want to loop back and just look at the stock price. The stock is up huge after-hours up, almost 9%, which gives you the impression that the company's doing amazing, and all the numbers look good. But then we look at the numbers and they don't seem to quite aligned with the sentiment of
the market now. So far The financial metrics don't paint a positive picture, but when we get down to the operational and other financial highlights, this paints a far more positive picture where the amount of daily active users on their various apps are increasing by 5% year over year, five percent monthly active users, Facebook users, increasing, Facebook, monthly, active users, increasing.
All of these core metrics are moving in the right direction and I think that investors are saying all right maybe the financials don't look great right now but the In terms of its user base is still growing, which is a very positive fundamental indicator of the company. So Meta. Still growing as a platform, the financial metrics, don't look great, but they're probably better than what the investors were expecting this quarter and then we go into some other important details here.
One thing that I want to point out is Mark Zuckerberg has really pivoted towards this year of efficiency, focusing on optimizing the business laying off, some employees, making it so that the business is far more efficient and then funneling money in Dubai. Backs. When we look at this metric right here, amount of diluted shares outstanding, it went from two billion, seven hundred and forty-two million to two million five, hundred and ninety-six million. So they bought back well over
100 million shares. That is over a five percent reduction in the amount of shares outstanding, huge, share reduction. So, that's a big factor in this stock right now. Meta is a buyback machine. Now, moving on to the cash flow statement of the company. When I do a simple calculation of their free cash flow, I get 7 billion 156 million that is their traditional free cash flow calculation and that puts them right around here. So next quarter will look like this.
When it's updated on qual trim, not a bad free cash flow quarter based off their past couple of years, but it's still below where they were a couple years ago. So we're not quite where we were before. Now if we adjust the free cash flow for the stock-based compensation, we subtract out three billion 51 million, which gives us a total of 4 billion at one. And five million. So that's the amount of free cash flow - the stock based compensation overall.
Not the worst quarter in terms of free cash flow when I'm looking at meta. However, I see some things that I don't love to see with this company. The capex continues to increase even year over year with their massive spending, they've done on AI and on Oculus, on reality Labs, all of that is adding up to huge capex expense.
Six billion 842 million is massive on a quarterly basis and I know that they've done Layoffs, recently, but their share based compensation was a substantial increase year-over-year going up. Another 500 million three billion in stock based compensation for the company. The size of meta is quite a bit. So these two factors the capex and the stock-based compensation really eating into their free cash flow. So overall, I don't love the developments in terms of the financials of meta.
It's a company that I don't currently own because I believe there's better options but this is the game of investing which is a game of expectations versus reality and A has surpassed their expectations, both in the amount of Revenue and their earnings per share and their amount of daily active users, and monthly active users. They either met or surpassed investors expectations which is why the stock is up big after hours. So congratulations to met
investors. Now moving on, we have this news that Microsoft 75 billion dollar deal with Activision Blizzard is now hitting a roadblock, the UK has decided that they are going to block the deal. They rejected it saying that it would hurt competition in the video gaming industry. Now, of course, I could go in and highlight how this isn't true. How Microsoft buying activation does not hurt the video game industry. How the only company that's highly anti-competitive.
In this industry is Sony with the massive amount of exclusive titles, they have, we could go into the details of that argument. But before doing that, I just want to take a step back and restate. What's Happening Here, Microsoft a US based company is Going to by Activision Blizzard, another us company. So what we have is a US company trying to buy another us company and while that's going on, the UK is saying, you can't do that.
My question is, why is Microsoft concern with what the UK thinks about this deal? Why should they care at all?
If the UK wants to block this deal and they don't like that, it happens, tough Microsoft should still go through and by Activision Blizzard if the UK decides that they don't Want to do business with Microsoft and they're going to block Microsoft from selling products in the UK. And that's a battle, they can fight, but the fact that a government of a smaller country, on the other side of the ocean can come in and stop a deal from one US company. Buying, another us company
right? At the surface level is crazy. Microsoft should not be listening or caring about the opinion of the UK on whether or not they should by Activision Blizzard. That's just the first point. And as much As you might think that this is an American Centric, view, just reverse the roles here for a minute. If the UK had one larger company that was trying to buy another smaller UK company and the US government came in and said, no, you can't do that because we don't like the deal.
You'd probably feel very frustrated in the US has interference with that deal to UK companies trying to merge. But that's not even really comparable because the u.s. is a massive country. The real comparison would be if the UK had one company. Any trying to buy another and then something like Sweden came in and said no you can't do that
deal. Sweden doesn't like the deal so the UK can't have one company buying another, I think it's fine for countries like the UK to have their objections and
state their opinion. But as far as I'm concerned, I think Microsoft should completely ignore them and continue to go through this deal because I think the UK is bluffing when it comes right down to it, they need Microsoft products, more than Microsoft, needs the UK and citizens in the K12 play Microsoft games and Activision Blizzard games more than they're willing to go without. So I think this is a total blood from the UK.
I think, if Microsoft press forward with this deal, eventually, they'd go back to resuming business with Microsoft, like they have been doing for decades now in another piece of news, big Tech. Actually had a victory here, Apple One. The epic games trial remember epic games. Doing their Trojan Horse and bypassing their payment method and then launching a giant campaign against Apple portraying them as A huge Monopoly. That's bad for gamers and bad
for everyone else. Well, they've had the lawsuit battle, and Apple has emerged Victorious, quote, today's decision, reaffirms apples resounding victory. In this case, with nine of ten, claims having been decided in Apple's favor for the second time. In two years, a federal court has ruled that Apple abides by antitrust laws at the state and federal levels. So, as of now apples mote in the App Store, Still Remains intact.
Now finally we have the tragic story of this redditor that posted just yesterday that they lost. And dollars to Bed Bath and Beyond all of their life.
Savings gone to this company that has now officially declared bankruptcy and it's been to listed from the New York Stock Exchange. He says that he wants to ask around if anyone's going through the same thing and how they're dealing with it. I've been telling myself that it's time to move on and there's no use to pouring cold water over a dead plant but it's been just mentally draining. You know, it's like all these years of hard work gone just
because of a stock. There's anyone going through the same please share, how you're dealing with it. Thank Q, I think in this state, where your this distraught by having this massive loss, it might be good to seek help with it. Maybe refocus your life on things that really matter health and family and friends, and that type of thing, and eventually just move on the money's gone. You made a mistake time to move on, everybody makes mistakes and
investing. Although not everyone makes mistakes this bad or this ill-advised. And this is where I'd get into general advice. If you've had this in your history, If you were at one point thinking that it was a good idea to put 100,000 dollars into Bed Bath and Beyond, maybe individual investing is not the best route for you. Maybe just stick with ETFs
picking out. Individual stocks is not for everyone, and if you invested in a company where the revenue line looked like this for years, the revenue is declining. A company where they ibadah had been declining for years. A company where the free cash flow was in a steady decline, For over three years. A company where the actual net income was not only in Decline but in deep decline in the red
over the past five years. If at any point you thought it was a good idea to invest in this company. Then it shows that you have incredibly poor influences that you're listening to the wrong people that you're surrounded by the wrong. People that your judgment is highly compromised. There's almost no point in Bed Bath and Beyond history that it was a wise investment, but especially over the past five years.
So, I'm not sure. What could possibly compel someone to Oh, by this much and concentrate. This highly into a stock where every core indicators moving in the wrong direction. But if this happens in the past, I think it might be best to just buy you tf's and not focus on individual stocks. That will likely be a much better outcome for this individual. Now that's all for this show. I hope you enjoyed the in-depth
breakdowns. If you like this type of content, make sure to subscribe to the channel. I'll have more out in the following weeks that's all for. Now, I'll see you in the next one.