This financial commentary analyzes key investment decisions and market events. The speaker justifies continuing to invest in MercadoLibre (MELI) over Sea Limited (SE) based on superior revenue per share growth due to lower dilution, highlighting MELI's dominant market share gains in the rapidly expanding Latin American e-commerce market. Next, a critical review of Oracle's (ORCL) recent earnings suggests major financial stress: high capital expenditures leading to negative Free Cash Flow (FCF), reliance on new debt to fund operations and dividends, declining operating margins, and a competitive failure signaled by the sale of their custom chip business. Finally, the speaker fiercely critiques Michael Burry’s short thesis on Palantir (PLTR), presenting data that mathematically refutes Burry's claims regarding PLTR's profitability (when factoring in Stock-Based Compensation) and refuting Burry’s assertion that Nvidia’s (NVDA) success in AI was merely luck. The speaker concludes that Burry’s public commentary is amateur and damaging to his reputation.
Analysis of MercadoLibre, Oracle Earnings, and Michael Burry’s Investment Thesis
0:51 MercadoLibre (MELI) vs. Sea Limited (SE): The decision not to buy SE hinged on dilution. Although SE’s total revenue growth (59% CAGR since 2019) slightly exceeded MELI (54%), SE’s higher annual share dilution (8.8% vs. MELI’s 1.5%) resulted in MELI having superior Revenue Per Share growth (51.5% vs. 46%). The speaker has higher conviction in MELI.
3:09 MercadoLibre Operational Strength: MELI achieved its "biggest sales day in history" on November 11th, surpassing Black Friday 2024 results, suggesting a massive Q4 earnings report.
4:38 Market Share Dominance: The speaker rejects bearish arguments regarding competition in Brazil, noting MELI has tripled its market share since 2014 and doubled it since 2020, continuing to grow faster than the overall e-commerce market.
6:08 Long-Term Strategy: MELI’s history of sacrificing short-term margins for long-term growth and competitive advantage is compared favorably to Amazon’s historical strategy.
6:36 Latin American E-commerce Growth: Latin America is projected to have the fastest e-commerce growth globally (71% growth to $228 billion by 2028). MELI maintains over 50% market share in the regional retail media ad spending (7:47).
10:00 High Growth at Scale: MELI, now generating $26 billion in TTM revenue, is accelerating revenue growth (around 40% Y/Y), suggesting strong long-term runway and potential for a $1 trillion market cap (10x current valuation) in 10-20 years.
11:10 Oracle (ORCL) Q2 Earnings Issues: Despite a massive Remaining Performance Obligation (RPO) of $523 billion (up 438% Y/Y), the market reacted negatively (stock down >10%), seemingly scrutinizing the RPO metric.
12:49 Margin Contraction Concern: Revenue growth (14% Y/Y) is primarily driven by the capital-intensive Cloud Infrastructure segment (up 68%). Operating expenses (up 15%) are growing faster than revenue, leading to declining operating margins.
15:45 Admission of Failure: Oracle sold its interest in the Ampere chip company, realizing a pre-tax gain of $2.7 billion. As far as I can tell, this signals Oracle's inability to compete against major chip providers like Nvidia and Amazon/Google in custom silicon, resulting in a shift to "chip neutrality."
21:23 Financial Strain: Oracle reported negative Free Cash Flow (FCF) of -$10.3 billion year-to-date, driven by $20.5 billion in capital expenditures.
22:15 Debt-Funded Dividends: The FCF deficit is funded by $18 billion in new debt and dilution. ORCL is effectively paying its dividend ($2.8B YTD) by increasing its debt load, which is a significant red flag.
23:35 Aggressive CAPEX Increase: Oracle increased its Fiscal Year 2026 CAPEX guidance by an additional $15 billion, doubling down on the commoditized, low-margin cloud infrastructure build-out.
24:55 Valuation Discrepancy: Oracle trades at 25x Operating Cash Flow, which the speaker notes is a higher multiple than Amazon (19x OCF). The speaker sees no rational reason to favor ORCL over Amazon given the business risk and lack of moat in ORCL's primary growth segment.
27:28 Critique of Michael Burry’s Palantir (PLTR) Short: Burry shorted PLTR, predicting a massive collapse within two years.
29:51 Refuting Profitability Claims: The speaker presents data to contradict Burry's central thesis that PLTR is unprofitable when accounting for Stock-Based Compensation (SBC).
33:35 Financial Counterpoint: PLTR's TTM Free Cash Flow is $1.8 billion, while SBC is $770 million. Subtracting SBC still leaves $1 billion in profit. Furthermore, FCF is accelerating faster (58% annually) than SBC (which is flat or declining), making Burry's claim mathematically incorrect.
35:50 Refuting Nvidia "Luck": The speaker dismisses Burry's claim that Nvidia (NVDA) "got lucky" with the AI trend, pointing out that NVDA launched dedicated AI hardware (DGX, Drive Platform, Tensor Cores) strategically between 2014 and 2018.
38:41 Reputational Damage: The speaker finds Burry's commentary—including his opinion that the Federal Reserve should be dissolved—to be amateur and lacking in rigor, resulting in a significant drop in respect for the investor.