More like exponential CAPEX for a foreseeable future.

A company that has historically executed very well in its core businesses and has returned 20+% returns on capital invested into said core business is now being punished for investing heavily into said businesses.

Narratives and sentiment around stocks are always interesting to watch from the sidelines I remember reading one of Nick Sleep’s investor letters where he talked about Estée Lauder’s stock dropping when they announced they were going spend more on building their brands which would hurt short term profitability even though long term it would build a better business.

Right now the market is pricing the company like all this investment into FoA will generate no to minimal returns which is always in the realm of possibility but it would stand in stark contrast to the past decade. A large part of scaling their CapEx up so heavily is that they’ve already seen good incremental returns of investment. When the market is projecting horrible returns on capital for a business that has traditionally generated excellent returns therein lies an opportunity.

Sure they may not produce much FCF for the next few years as they move through this investment phase but who cares. You’re investing in a business not numbers on a spreadsheet. When management believes they have an opportunity to earn good returns on capital by investing heavily into the core business that’s a good thing not a bad one.