(1/n) Here& #39;s my rough outline of $GOOG& #39;s intrinsic value over the past few years. Based on these numbers, intrinsic value is likely to roughly double from EOY 2018-2021.

Caveats and methodology in the tweets to follow. Please do your own work, not advice, etc.
Methodology:

Services - uses reported numbers, deducts corporate level costs and adds back amortization expense
Cloud - annualizes current quarter& #39;s revenue (4x)
Net Cash - cash + marketable securities + non-marketable investments - debt
Shares - outstanding at end of quarter
2021 Revenue Numbers:

I tried to use some relatively conservative numbers. Services +21% revenue growth YoY, cloud +40% revenue growth, $30bb of FCF generation.

Also note that I haven& #39;t included "Other Bets" losses. That makes sense if you think NPV > 0 but they& #39;re real losses.
Valuation Placeholder:

IMPORTANT - this is not what I think it& #39;s worth, it& #39;s just a placeholder on numbers to watch how intrinsic value moves. I& #39;ve valued services at 20x earnings assuming a 20% tax rate, cloud at 10x revenue, and cash at its face value.
The one big and not conservative assumption that I made was to carry forward Q1& #39;s EBITA margin as I& #39;ve defined it of 36.7%. I think it& #39;s likely that $GOOG keeps investing short to medium-term and margins could come down.
But importantly, for long-term investors, this quarter has shown us that $GOOG *can* operate at these margin levels if it wants to do so. It may try to depress them for optics but I& #39;m looking at earnings power over time and we know that margins can be *at least* this high.
Back to the big picture. Looking back, we can see that intrinsic value growth has been driven by the core segment (+45% EBITA growth over the last 9 quarters), cloud (137% revenue growth), and cash generation combined with some reduction in shares outstanding.
Importantly (to me at least), $GOOG has also been addressing its excess cash problem and has stepped up share repurchases significantly over the past three years. I& #39;m okay with a conservative balance sheet, but at some point it just becomes inefficient. https://twitter.com/willis_cap/status/1387167964802256902">https://twitter.com/willis_ca...
Looking forward, with revenue numbers that are hopefully conservative for 2021 and current margin targets that, as discussed, might be slightly aggressive in the short-term, it trades at ~20x core earnings + 10x cloud revenue + net cash with Other Bets effectively valued at $0.
Of course there are risks in every line item - regulatory pressure, in app search (esp by $AMZN) taking some relevance from the core business, the need to actually drive profitability along with growth in cloud, Other Bets losses, and a cash balance that keeps rising.
I said a couple of months ago that even after a big run $GOOG might be the cheapest thing I own. Given a relatively undemanding valuation along with a potentially still long growth runway, I still feel that way (maybe my other longs are just too expensive?).
Happy / eager to hear from people who disagree with any of this. DMs open if that& #39;s easier.
This thread mostly looked at the numbers but here& #39;s a good take looking at some more qualitative aspects as well: https://twitter.com/borrowed_ideas/status/1387228149541376007">https://twitter.com/borrowed_...
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