🗞 The 5 Best Custom Metrics We've Seen So Far

Happy Sunday!

Here’s what’s on the docket for this week’s newsletter:

• 📊 5 Best Custom Metrics We’ve Seen

• 📦️ “The Amazon of South Korea”

Let’s dive in!

Charts from Custom Metrics

The FinChat team is working around the clock to build the #1 stock research platform on the internet.

And this week, we took a huge step towards that goal.

Custom Metrics allows investors to build (and chart) their own formulas by leveraging FinChat’s existing data.

Within 24 hours of launching the feature, FinChat users had already built more than 1,000 custom metrics.

Here are 5 of the best ones we’ve seen so far:

1. Costco - Enterprise Value per Warehouse

The average Costco warehouse is currently valued at $507 million!

While this is flawed math as Costco’s valuation likely implies store growth, it’s still an insane number.

Formula: Total Enterprise Value / Total Warehouses

2. Alphabet - Google Cloud Operating Margin

Alphabet has many impressive divisions, but perhaps none more so than Google Cloud.

This is the beauty of a high fixed cost, high customer retention business. Over the last 4+ years, Google Cloud’s revenue has gone $11.8 billion to $43.3 billion and operating margins have improved by 61 percentage points!

Formula: Google Cloud Operating Income / Google Cloud Revenue

3. Ferrari - Average Price per Vehicle

In 2024, the estimated average cost of a Ferrari was more than $400,000.

While that’s a pretty outrageous amount in isolation, it’s almost more impressive that Ferrari has been able to increase its prices by ~5% per year since 2012.

Formula: Cars & Spare Parts Revenue / Total Shipments

4. Chipotle - Average Cash Flow per Store

The average Chipotle location generates $422k in free cash flow each year. That’s nearly double what an individual Chipotle location was generating a decade ago.

This per store improvement has also occurred while the company nearly tripled its restaurant count which likely took away some customers from existing restaurants.

Formula: Free Cash Flow / ((Restaurant Count + Restaurant Count T-1) / 2)

5. Duolingo - Paying Subscriber Conversion

The leading language learning app has drastically improved its subscriber conversion rate over the last 5 years.

5 years ago, just 3.3% of users were converting to paying subscribers. Today that number stands at 8.1%.

Formula: Paid Subscribers / Monthly Active Users

Featured Story

“The Amazon of South Korea” 📦️ 

If an investor refers to a company as the Amazon of anything, it’s probably best to be skeptical.

There are very few companies on this planet that are as innovative and competitively advantaged as Amazon.

However, one company in South Korea bears such a passing resemblance, it’s hard not to make the analogy.

Introducing Coupang:

Coupang is the leading e-commerce provider in South Korea.

The company operates an end-to-end marketplace with a wide selection of both 1st party and 3rd party goods ranging from electronics all the way to fresh groceries. This marketplace is home to 23 million active shoppers, and for context, that’s equivalent to ~44% of the country’s entire population.

But like Amazon, Coupang has realized that simply owning the eyeballs isn’t enough. In order to best satisfy customers and insulate themselves from competition, Coupang needed to improve delivery speeds. To do that, they unapologetically copied the Amazon playbook by reinvesting excess cash into expanding their fulfillment network.

While Coupang’s 67 million square feet of fulfillment capacity is only 1/10th the size of Amazon’s, Coupang has significantly less ground to cover.

In fact, in the company’s 2021 IPO prospectus, Coupang stated that 70% of South Korea’s population lives within 7 miles of one of their logistics center. And they’ve nearly doubled that logistics footprint since the IPO.

This not only enables Coupang to deliver more than 99% of orders in less than 24 hours, but they can actually deliver certain products before 7AM if the order is made before midnight.

Coupang’s CEO Bom Suk Kim, called out a particularly impressive example during this week’s Q4 conference call:

“Now, a customer who realizes that she needs new tires on her car can purchase them online from home and have them delivered and installed the very next day.”

This one-of-a-kind customer value proposition is not only leading to customer growth, but existing customers are spending more on the platform over time.

Coupang’s increasing scale combined with South Korea’s unique population density is enabling the company to improve its margins while still keeping costs and delivery times low.

Coupang has increased its gross profit by 45% annually over the last 4 years, reaching $8.8 billion over the last 12 months.

This has given them ample ammunition to invest more in fulfillment as well as new initiatives like Coupang Eats (food delivery), Coupang Pay (payments app), Coupang Play (video streaming), and most recently an acquisition of online luxury goods marketplace Farfetch.

And these initiatives are beginning to show some serious traction.

With its core marketplace now generating more than $2 billion per year in adjusted earnings, Coupang is in an admirable position.

They have the hard earned luxury of being able to invest more in fulfillment than their competitors (deepening their competitive advantage), while also having the capital to invest in new offerings (Play, Pay, Eats) which makes its Rocket WOW subscription membership more compelling.

Coupang may have officially reached escape velocity.

Meme of the week

Worst IR Slide of the year goes to…

Lemonade, the AI-powered insurance provider, reported earnings on Tuesday and delivered a very questionable slide in their 4th quarter presentation.

The slide depicts Lemonade’s ambitions to “Grow the business & scale the operation”. The only problem being that in this depiction they expect “Adjusted Free Cash Flow”, which is already a flawed metric in its own right, to not grow at all as the company scales.

As an owner of the business, that should be the exact opposite of what you’re looking for.