Post argues that AI/open-source have eroded software moats, so value investing should return to Graham-style asset/IP/moat margin of safety, favoring sticky B2B incumbents like MSFT and ADBE while avoiding non-sticky B2C names like DUOL, PINS, PYPL, and CHGG.
MSFT — LONG Author argues Microsoft, as a dominant software/SaaS incumbent, will probably survive AI/open-source disruption because its B2B customers—governments, corporations, universities, and businesses—are stickier than individual consumers. He says these companies present good entry opportunities at current prices. The main stated risk is that survival depends on having a good product; no specific catalyst or time horizon is given.
The dominant incumbents of software/SaaS (think MSFT and ADBE) and other capital-light sectors will probably survive if they have a good product. Their customer base consists of governments, corporations, universities, and businesses, in addition to individuals (B2B model). The "next-best, cheaper thing" cannot sway all of these clients. I think these companies present good entry opportunities at their current prices.
ADBE — LONG Author argues Adobe, as a dominant software/SaaS incumbent, will probably survive because its B2B customer base of governments, corporations, universities, and businesses is hard for cheaper alternatives to fully poach. He calls these companies good entry opportunities at current prices. The main stated risk is that survival depends on maintaining a good product; no catalyst or horizon is specified.
The dominant incumbents of software/SaaS (think MSFT and ADBE) and other capital-light sectors will probably survive if they have a good product. Their customer base consists of governments, corporations, universities, and businesses, in addition to individuals (B2B model). The "next-best, cheaper thing" cannot sway all of these clients. I think these companies present good entry opportunities at their current prices.
DUOL — AVOID Author says Duolingo’s outlook is much grimmer because its B2C users are not sticky and will move to the next-best, cheaper alternative, leaving no durable moat. He sees the damage as done after a 50%+ TTM market-cap decline and doubts recovery to prior highs, though he concedes a short-mid mean-reversion bounce is possible. Main stated risk is that the market overreacted and produces a temporary rally.
For companies like Duolingo (DUOL), Pinterest (PINS), and PayPal (PYPL), my outlook is much grimmer. These companies' B2C model means their customers will move on to the "next-best, cheaper thing" when it comes. They are not sticky customers at all.
PINS — AVOID Author says Pinterest’s outlook is much grimmer because its B2C users are not sticky and can switch to cheaper alternatives, so it lacks the real assets/moat he now prioritizes. He notes the stock has already lost 50%+ TTM and doubts recovery to prior highs, while allowing a short-mid mean-reversion bounce. Main stated risk is a market overreaction causing a temporary rally.
For companies like Duolingo (DUOL), Pinterest (PINS), and PayPal (PYPL), my outlook is much grimmer. These companies' B2C model means their customers will move on to the "next-best, cheaper thing" when it comes. They are not sticky customers at all.
PYPL — AVOID Author says PayPal’s outlook is much grimmer despite somewhat more stickiness, because online payment processing is saturated by Apple Pay, Google Pay, Zelle, Stripe, and Cash App, and PayPal’s share is decreasing. He doubts recovery to prior highs after the TTM decline, though he concedes a short-mid mean-reversion rebound is possible. Main stated risk is a market overreaction producing a temporary rally.
For companies like Duolingo (DUOL), Pinterest (PINS), and PayPal (PYPL), my outlook is much grimmer. These companies' B2C model means their customers will move on to the "next-best, cheaper thing" when it comes. They are not sticky customers at all. PayPal offers more stickiness but far less dominance. Online payment processing is extremely saturated: Apple Pay, Google Pay, Zelle, Stripe, Cash App, and the rest hold considerable market share in this sub-sector. And PayPal's slice of the pie is only decreasing.
CHGG — AVOID Author cites Chegg as the patient zero of AI disruption: its student customer base had no obligation to stay, so it moved to cheaper alternatives and Chegg lacked real assets/moats to survive. He calls the outcome inevitable death. This is a cautionary avoid case rather than an explicit short; no future catalyst or horizon is specified.
The patient zero is Chegg (CHGG). AI ate into its business until its inevitable death. Chegg's customer base was individuals; students. Individuals have no obligation to stick around; they go to the next best, cheaper thing. And so they did. Chegg didn't have the real things to ensure its survivability.
DUOL — WATCH Author says DUOL could be a pure mean-reversion buy after a 50%+ TTM market-cap decline, with a possible short-mid rebound if the market overreacted. He frames it as tactical only because he doubts recovery to prior highs. Main stated risk is the structural damage already done and inability to recover ATHs.
As pure mean reversion plays, Duolingo (DUOL), Pinterest (PINS), PayPal (PYPL), and friends could be good buys. The market may have overreacted a tad, and anticipating a rebound in the short-mid term is not unreasonable.
PINS — WATCH Author says PINS could be a pure mean-reversion buy after a 50%+ TTM market-cap decline, with a possible short-mid rebound if the market overreacted. He frames it as tactical only because he doubts recovery to prior highs. Main stated risk is the structural damage already done and inability to recover ATHs.
As pure mean reversion plays, Duolingo (DUOL), Pinterest (PINS), PayPal (PYPL), and friends could be good buys. The market may have overreacted a tad, and anticipating a rebound in the short-mid term is not unreasonable.
PYPL — WATCH Author says PYPL could be a pure mean-reversion buy after a large TTM decline, with a possible short-mid rebound if the market overreacted. He frames it as tactical only because he doubts recovery to prior highs. Main stated risk is the structural damage already done and inability to recover ATHs.
As pure mean reversion plays, Duolingo (DUOL), Pinterest (PINS), PayPal (PYPL), and friends could be good buys. The market may have overreacted a tad, and anticipating a rebound in the short-mid term is not unreasonable.