Nikita Makaed

@nyustern • @nyumenstennis

[Nikita Makaed @NikitaMakaed]

@KabraxFX Not quite, when I spoke to a director of partnerships at a other major BNPL, he said that the deal was won at a negative net margin (net loss) for Klarna due to intense competition, with 2-3 years before the deal becomes breakeven - depending on volume of course.

[Nikita Makaed @NikitaMakaed]

@ThaGoattttt @vladimirdotcom Klarna won Walmart at a “net loss” only to be breakeven in ~3 years, you’re telling me Klarna is storming into the US, meanwhile shrinking users in their hometown Europe. Affirm is going for the RoW, Klarna would be lucky not to shrink there, the chart isn’t lying either

[Nikita Makaed @NikitaMakaed]

At the end of July I was asked to pitch a stock from a PM's book. Not knowing whether they were long or short - I picked $AFRM , but as a pair trade. Long AFRM / Short $KLAR.

Here is why:

(1) The Street is underestimating Affirm's web of partnerships. Amazon + Shopify alone contribute ~35% of GMV. ShopPay is the faster growing checkout, with highest conversion, overall Affirm's merchant churn is near zero. They will contribute massively to the GMV expansion (see calculations).

(2) The Affirm Card is undervalued. ~80% of card volume happens at merchants NOT partnered with Affirm - grocery stores and everyday retail that BNPL checkout was never going to reach. Affirm will have no struggle reaching un-partnered merchants, so no real headwind from Walmart lost partnership.

(3) International is ahead of schedule. Expert calls and channel checks confirm that, the Netherlands team is fully assembled, and starting teams are mostly filled in Australia, France & Germany. I expect a strong Q4'26 print with a strong FY'27 international guidance.

(4) Affirm is the best product in BNPL, customer calls show strong preference over others. Affirm's technological advances continue to bring merchants with zero acquisition cost and improve delinquency rates and conversions.

The risk you can't control here is credit & macro - BNPL trades on the health of the consumer. So to isolate performance, I propose a pair trade: Long $AFRM / Short $KLAR. During February's credit card cap scare AFRM bottomed at -37% YTD vs Klarna's -53%. They sell off together on macro but differ on execution - and Klarna is the one tightening credit, shrinking share, and defending more TAM after winning Walmart "at a net loss."

Most importantly, this is the name that I am confident to hold with short-term and long-term horizon, where the path to getting paid is visible from both standpoints, which is a big indicator for me that this business is a Long.

[Nikita Makaed @NikitaMakaed]

@capital_mindset I get your point, but I think there isn't a more direct comp to $AFRM then $KLAR at their size, I'm mostly short for the hedge of macro and in the long run them taking share away internationally - will rethink some other options though.

[Nikita Makaed @NikitaMakaed]

The full investment memo + model is on my website

[Nikita Makaed @NikitaMakaed]

Quick thoughts on earnings for BNPL giants like $AFRM & $KLAR -

I think we will see a strong results for Affirm, any alt data I personally looked at shows re-accelerating growth vs prev Q4. What makes the difference here vs Klarna which missed this morning - is Affirm's expansion.

I think Affirm is by far the best BNPL out there, customers argue similarly. On top of their current growth inside the US, I see a strong expansion overseas, which I am looking to see much more positive outlook in the earnings call than 29' 1-5B in GMV that they guided previously. Their partners not included in there, which will contribute meaningfully (Shopify, Amazon, etc.)

On their Affirm card, I think that leg is more or less priced in and I wouldn't expect much more surprise from there.

I pair-traded short leg Klarna, and as expected Klarna is suffering serious competition overseas, you can see that in June & July data with shrinking users.

[Nikita Makaed @NikitaMakaed]

I am long BYD's H1 print, street is mispricing BYD's ability to improve margins in the near term.

BYD's mix-shift improved to nearly 55/45 (domestic to overseas) vs prior year's 80/20. Overseas carries much higher margin per car. See attached.

My 19.5-20.5% GM vs Street 18.3%

[Nikita Makaed @NikitaMakaed]

@balkanstocks Fundamentally a good company, they will print a strong Q4 I'm bullish into earnings. AFRM trades on correlation with inflation, not rates.

One follows the other, but 1) they can give out tighter loans, 2) if inflation stays relatively the same /drops AFRM wins either way.

[Nikita Makaed @NikitaMakaed]

@bullrunalpha The partnership does no good for $AFRM if they were to partner, leasing an iPhone takes on so many risks.

Biggest one is Klarna owning the phone and has to worry about the residual value when waves of identical units hit the used market at term.

[Nikita Makaed @NikitaMakaed]

$SPOT came out with very poor earnings, missed on revenue, MAUs, flat on premium subs. Yet somehow the market thinks this company should trade 40x fy26' P/E & 33x FY'27.

Spotify is guiding operating income growing slower than revenue. Negative operating leverage. Keep in mind the rest of the guidance isn't impressive either, super conservative.

Management also defected every question on the timeline of the Super-Pro Tier roll-out.

[Nikita Makaed @NikitaMakaed]

@Biotech2k1 Okay, but the card alone can't get them to 100B GMV by FY'29, that's also the baseline. It also overlaps with other merchants, so even per say 30B coming from it has ~25B of new capture rather than one that is already obtained.

[Nikita Makaed @NikitaMakaed]

@KalpataruCap @Klarna @Apple @Affirm Alt data showed Klarna shrinking users overseas, and overall actives due to tightening credit. Why would you consider Klarna being superior to Affirm by any means?

[Nikita Makaed @NikitaMakaed]

@wave3trades I did call the fact that they are going to need an insane amount of funding. Those convertible notes are not the end of it.

[Nikita Makaed @NikitaMakaed]

@wave3trades No I respect your bull case. It’s just skewed towards the downside, just be careful it’s 22% short float as of today, up 3% since last Wednesday, so institutions aren’t particularly happy even with the launch coming in August. But we’ll see!

[Nikita Makaed @NikitaMakaed]

Also, MNOs are competitive, so a year or two down the road the yearly price they will be paying to them is no more than $40-60, potentially before the 50/50 split. Expert calls said that too. It’ll probably take them bull case at least 2 years to cover the whole North America in satellites. They need realistically like 150-200 for global scale, minimum. Their ffc approval is 248, no one files for 250 if they truly only need 90 as management says.

[Nikita Makaed @NikitaMakaed]

@wave3trades So coming back to this. You are correct partially. But, SpaceX also does the same thing they do, they just additionally do home internet. They are partnered with T-Mobile. Second, T-mobile gives their service out for free with higher premium plans, for low tier ones for $10/m

[Nikita Makaed @NikitaMakaed]

I encourage you to do the math. B/c 1 satellite is 100M to produce + launch costs (~25M per satellite). Even if they launch service, do a rough math of how much SpaceX scaled (12M in 6 years), ur gonna notice that they will need even at 10M adoption in a year with yearly $100 cost, minus 50% partnership with MNOs (profit share) u get 500M.

That’s also bold to assume they will get 10M subs in a single year which would be 5x faster than SpaceX. Their opex alone without capex is ~200-300M in coming years..

[Nikita Makaed @NikitaMakaed]

@JohsnonRandy Yeah, I guess people don't like reading the whole memo where I specifically discuss their funding situation, gov contracts, subscriber monetization & experts calls on launches. But I guess you somehow know more than former employees 🤷‍♂️

[Nikita Makaed @NikitaMakaed]

Amid the $SPCX hype, I was curious to look into their space segment, but didn't expect to find a competitor.

So July 1st, I pitched $ASTS , who is building a space satellite system that delivers data (roaming) to everyday cellphones. But their story isn't pretty, so here is why I am short.

(1) The market is currently overstating ASTS’ abilityto monetize, overstating potentialMAU growth + ability to maintain high monthly price.

(2) Management has been misleading about production costs, and their funding capacity.

(3) Management guided 45-60satellites inorbit for this year, but expert calls and channel checks show that number will land on the lower 15-20 satellite range – further pushing back the timeline for monetization.

(Since my initiation the stock is down 21%, however I still see much further downside with a PT of $35)