1/ $OSTK - interesting to see Piper call it out as the most mispriced stock in their coverage universe. Front page of note:

They see tZero as worth $500m-740m (vs mkt cap $3.1bn) and see GSA-related revs as contributing 15-25% to total sales over time.
2/ I didn't know that only $OSTK, $AMZN and $TMO won the GSA RFP process out of 15 applicants with $OSTK's best-in-class security commended by the GSA diligence committee, who went through an extensive 18m diligence process.
3/ Piper think this win could make $OSTK an acquisition target for other large box retailers that did not get selected as part of the GSA process. Contract began with 5 federal agencies to buy up to $6bn in annual purchases over 3 years.
4/ It has since expanded to 8 agencies, went live in Aug 2020 but ramp-up was slower than expected likely due to WFM dynamics across federal agencies (which gives $OSTK a helpful re-opening tailwind to help offset headwind to core business from re-opening).
5/ They note over 50% discount valuation vs Wayfair ($W) and note you are effectively getting upside optionality to tZero and GSA contract for free at this valuation.

Here's their valuation approach for tZero:

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More from @anthonyc3004

9 Apr
1/ The more I work on $SPOT the more bullish I get about its long term prospects (and bearish on the long-term prospects for the big labels) and about the fact that consensus/ investors are still pretty sceptical about its ability to break free of the labels' hold on its…
2/ …margin structure, which drives really good upside at the current sub 4x forward EV/sales multiple. I think they are being deliberately very slow with putting through pricing as they currently pay so much of incremental revenue away to the labels.
3/ Game theory wise it makes total sense for them to keep prices low, gain share and hence improve their bargaining power vs the labels to extract better economics over time, at which point they get to keep more of the economics from price rises.
Read 8 tweets
7 Apr
1/ Re $GOOGL $GOOG and their cloud business: V upbeat messaging from a Google Cloud partner interviewed by Jefferies. Have read similar stories elsewhere, that GCP is set to really accelerate this year.
2/ Given Google's still attractive valuation (especially factoring in Other Bets losses and cash on balance sheet, even better if assign meaningful valuation to under-monetised YouTube) and upside from Covid re-opening (travel-related ads 12-15% of ad revenues), the shares…
3/ …remain well-positioned to continue to perform in here in my view, despite having outperformed most of FAANG.

Jefferies hosted the CEO of a premier-level partner of Google Cloud.
Read 19 tweets

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