A year ago, it lost half a billion; today, it earns that much in a single quarter

At first glance, this stock is a classic “too expensive to buy.” A P/E ratio over 70, a price-to-sales ratio around 15, and a beta close to 2—a combination that would make any typical value investor turn on a dime. But the trailing multiple here measures the company’s past, which is changing right now. As recently as 2024, it reported a loss of nearly half a billion dollars; in 2025, it posted its first full-year profit exceeding half a billion; and in the first quarter of 2026, it earned in just three months nearly as much as it had in the entire previous year. The accounting multiple calculated based on the previous twelve months thus systematically overvalues the stock relative to its actual, forward-looking earning power.

There are two layers to this story. The first is the advertising business, with a gross margin of over 90%, which is growing at a rate of around 70% per year and where operational leverage is only now beginning to take full effect. The second layer—and the one that…

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The information in this article is for educational purposes only and does not serve as investment advice. The authors present only facts known to them and do not draw any conclusions or recommendations for readers. Read our Terms and Conditions
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