“Never invest in a business
you can’t understand.”
Warren Buffet

Since 2008, Rene Marius Köhler has invested in international internet companies. This strategy has paid off to date, and there is no end in sight for the positive performance shown by these investments.

Amazon

Amazon Logo

Business model: Amazon has set itself the goal of becoming the most customer-oriented company in the world. To this end, the Group operates one of the world’s most successful platform economies, which is monetised via multidimensional business models. Amazon’s businesses focus on the retail of consumer products and an array of subscription models. The Group uses its online platforms and physical stores to sell its own merchandise, merchandise from retailers and digital content from third-party producers. This also includes its own electronic devices, such as the Kindle Reader, the Fire Tablet, Fire TVs or Echo devices (Alexa). In addition, there are programmes that enable partners to distribute their content via Amazon’s platforms. Finally, Amazon Web Services (AWS) makes the company the largest cloud computing provider in the world at the present time.

Product mix: Amazon divides its activities into three segments: North America, International and AWS. The Group continues to generate the lion’s share of its sales in North America (60.0%), with International responsible for about 29.8% of revenues. Although Amazon Web Services only contributed 10.1% to sales, it is considered the company’s most important growth market with its latest growth rate being 43.6% (North America 40.4%; International 57.3%).

Selected key facts:

  • AWS is the market leader in the global cloud business (with a market share of around 17.5%)
  • A tenfold increase in TAM is expected in the cloud business; CAGR for AWS 13’18’: 50.1%
  • World’s number 1 in e-commerce, global market share: 13.7%
  • TAM in e-commerce: USD 2,928 billion; expected CAGR through 19’23’: 17.4%
  • More than 2.5 million retailers on Amazon Marketplace
  • 2.1 billion visits per month
  • Performance 04/2020 – 03/2021, currency-adjusted in EUR: +51.50%
Amazon valuation 2021e 2022e 2023e 2024e 2025e
EBIT margin % 9.5 10.1 10.8 11.3 11.8
ROIC (EBIT) % 70.9 76.3 135.5 336.5 500.0
EV/EBITDA (core) x 32.9 27.7 23.4 19.4 11.7
P/E (diluted) x 56.5 43.1 33.5 26.9 22.0
Equity FCF yield % 3.1 4.1 5 6.1 7.3
Amazon - Key operating information 2021e 2022e 2023e 2024e 2025e
Revenues (Mio. USD) 462,825 552,838 655,098 769,906 897,329
EBIT (Mio. USD) 43,804 55,907 70,617 87,211 106,192
Net earnings (Mio. USD) 30,815 40,665 52,630 66,126 81,663
EPS (diluted) (USD) 59.82 78.44 100.8 125.67 153.92
Net (debt) / cash (Mio. USD) 96,288 158,984 240,642 344,340 471,341

Source: UBS Global Research, 02.02.2021, Estimations based on a share price of USD 3.380,00

Facebook

Facebook Logo

Business model: Facebook runs a platform economy consisting of various products for networking and displaying digital content on smartphones, computers and other end devices. Its product portfolio includes the social media platform “Facebook”, the digital community “Instagram” and the “Messenger” and “WhatsApp” messenger services. The Group also markets a hardware, software and development ecosystem that connects people virtually via “Oculus” virtual reality glasses.

Product mix: Facebook generates the majority of its sales revenue through advertising income (98.9%). To date, a marginal amount of sales revenue has come from payment services and other revenue streams (0.9%). These other revenue streams also include Oculus sales. Geographically, Facebook’s home market, the USA, accounts for the majority of its sales, with the remainder divided between the regions of Europe, Asia-Pacific and the rest of the world.

Selected key facts:

  • Facebook (#1), Messenger (#4), Instagram (#6) are some of the world’s leading social media solutions (based on number of users)
  • WhatsApp is the world’s leading messaging service with 1.5 billion MAU
  • The entire Group has 2.5 billion MAU (Q3/19); Instagram has around 1.0 billion MAU (Q3/19)
  • Globally, 65 billion WhatsApp messages are sent every day
  • CAGR for operating cash flow 14’18’: 41.4%
  • Forecast for sales from digital advertising with Instagram: CAGR 18′ 21′ : 36.3%; USD 15.65 billion (source: eMarketer)
  • Average revenue per user (ARPU) worldwide: USD 24.96; CAGR 09’18’: 26.2%
  • Performance 04/2020 – 03/2021, currency-adjusted in EUR: +72.28%
Facebook valuation 2021e 2022e 2023e 2024e 2025e
EBIT margin % 37.2 37 37.3 37.5 37.7
ROIC (EBIT) % 56.1 58.4 62.4 66.6 69.7
EV/EBITDA (core) x 22.3 18.6 16 12.1 8.7
P/E (diluted) x 23.6 20 17.3 15.2 13.9
Equity FCF yield % 3.3 4.6 5.6 6.4 7.3
Facebook - Key operating information 2021e 2022e 2023e 2024e 2025e
Revenues (Mio. USD) 109,009 129,583 149,797 170,103 187,199
EBIT (Mio. USD) 40,514 48,001 55,815 63,760 70,589
Net earnings (Mio. USD) 33,323 39,465 45,902 52,461 58,113
EPS (diluted) (USD) 11.53 13.63 15.76 17.86 19.61
Net (debt) / cash (Mio. USD) 77,263 101,891 140,441 185,212 236,436

Source: UBS Global Research, 27.01.2021, Estimations based on a share price of USD 272,14

Alphabet

Alphabet Logo

Business model: Alphabet is the number 1 in the advertising market with Google, Android, YouTube and many moonshots. Alphabet has more data about our personality than probably any other company (or government) in the world: Google search history, Gmail, Google Maps, Google Chrome, provide the sources for this. YouTube is today’s number 2 in video streaming after Netflix. With Waymo, Project Loon, Deepmind (among others), the group is currently trying to disruptively change a whole range of other industries. Mobility, health, AI, and internet connectivity are on the agenda here.

Product mix: Alphabet reports in two business segments, Google and Other Bets, with 99.6% of revenue and all operating income coming from Google to date. Google includes the business segments Ads (advertising system), Android (smartphone operating system), Chrome (browser), Google Maps (map and navigation services), Google Play (video game solutions), YouTube (video portal) and Search (search engine). Other Bets includes Alphabet’s holdings in Calico (biotechnology), CapitalG (venture capital company), Waymo (autonomous driving), Verily (biotechnology) and X (research company). Both segments are still growing very strongly (3Y CAGR: Google 21.3%; Other Bets 31.8%). However, Other Bets still generates negative earnings contributions (2019: -$4.8 billion) while Google generates EBIT margins of over 25%.

Selected key facts:

  • 2 trillion search queries and over 1 billion hours of YouTube watch-time per day
  • YouTube is the number 2 social network, based on MAUs
  • Market share among search engines: 93.3% for mobile and 76.1% for desktop applications
  • Average search queries per user: 3.4x per day
  • CAGR for advertising revenues ’12’18: 17.7%
  • Performance 04/2020 – 03/2021, currency-adjusted in EUR: +74.90 %
Alphabet valuation 2021e 2022e 2023e 2024e 2025e
EBIT margin % 34.6 33.3 31.7 32.1 32.5
ROIC (EBIT) % 65.4 64.9 65.1 68.9 72.9
EV/EBITDA (core) x 20.2 17.9 16.3 14.3 12.6
P/E (diluted) x 28.4 27.2 24.6 21.3 18.6
Equity FCF yield % 3.2 3.9 4.4 5.3 6.2
Alphabet - Key operating information 2021e 2022e 2023e 2024e 2025e
Revenues (Mio. USD) 205,003 241,444 279,031 319,357 364,906
EBIT (Mio. USD) 70,992 80,314 88,582 102,579 118,480
Net earnings (Mio. USD) 66,677 68,990 76,474 89,069 103,411
EPS (diluted) (USD) 98.4 102.84 113.73 131.01 150.42
Net (debt) / cash (Mio. USD) 133,690 171,802 249,209 341,203 449,064

Source: UBS Global Research, 27.07.2021, Estimations based on a share price of USD 2.735,93

Apple

Logo Apple

Business model: Apple is a hardware, software and technology company that develops and sells computers, smartphones, tablets, consumer electronics, operating systems and application software. In addition, the Group operates an Internet sales portal for music, movies and software (iTunes Store and App Store). These are now the world’s largest distribution channels for digital goods. With the iPhone, Apple laid the foundation for the boom in the markets for smartphones and tablet computers that continues to this day.

Product mix: Apple reports in the segments: iPhone, Mac, iPad, Wearables & Home Accessories and Services, with iPhone accounting for over 50% of total revenue. Macs, iPads and wearables each account for 10%, and services pay approximately 20% of total annual revenue.

Selected key facts:

  • Its market share of worldwide smartphone sales is more than 10%
  • The iOS operating system enjoys a market share of more than 13.4%
  • The market share of iPad tablets is over 20%; market share of Apple wearables: 14.8% (Q3/19); Mac market share: 7.5%
  • Service revenues from iTunes, software and services recently increased to USD 46.3 billion (17.8% of total sales revenues)
  • 60 million subscribers to Apple Music (06/19)
  • Research and development expenditure in 2019: USD 16.2 billion
  • 64% of all Americans own an Apple product
  • Currently the largest company in the world by market capitalisation (as of 01/20)
  • Performance 04/2020 – 03/2021, currency-adjusted in EUR: +90.48 %
Apple valuation 2021e 2022e 2023e 2024e 2025e
EBIT margin % 29.7 28.4 28.1 28.4 27.7
ROIC (EBIT) % 409.4 394.6 336.2 322.6 308.8
EV/EBITDA (core) x 19.8 19.9 19.5 18.4 17.6
P/E (diluted) x 26.4 26.2 25.2 23.2 21.7
Equity FCF yield % 4.6 4.3 4.2 4.4 4.5
Apple - Key operating information 2021e 2022e 2023e 2024e 2025e
Revenues (Mio. USD) 364,231 375,581 387,182 405,302 418,531
EBIT (Mio. USD) 108,034 106,762 108,655 115,046 119,957
Net earnings (Mio. USD) 93,354 91,146 92,030 97,626 101,993
EPS (diluted) (USD) 5.53 5.57 5.78 6.28 6.71
Net (debt) / cash (Mio. USD) 38,186 3,606 14,653 33,708 53,283

Source: UBS Global Research, 11.08.2021, Estimations based on a share price of USD 145,86