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Lion

22 Oct, 9 tweets, 2 min read

I sold $PINS this week.

I am aware that I may realize I was wrong over time but after thinking hard about it, I made the decision and I want to be transparent about it.

Here is why I made this decision ⬇️

$PINS did not have a great report last quarter.

Financial numbers where good (growth, margins, ARPU) but I did not like management talking about "web users" and "mobile users" to justify the user slow down.

However, I did see some truth in it, so I decided to hold and wait

During the quarter, it became clear that $PINS had decided to make a shift in the business they had built all this years to have an e-commerce experience and presence.

These type of transitions are always hard and require laser focus by management to execute correctly

And then we got the news that the co-founder Paul Sciarra was leaving. This was another potential red flag in my opinion.

Was this a personal decision? Was this based on different opinions on the future of the company? Who knows.

And finally, the Paypal potential acquisitions news.

"The companies have discussed a price of around $70 a share"

If management is discussing around this price and they feel that it is a fair price to sell, who am I to disagree?

Pinterest stock when to $65 on Wednesday. So I had a decision to make.

1. If the deal closes, shareholders get $70. That is the upside. (<10%)

2. If the deal does not closes, we can easily go back under $50 + now the market knows that management was considering selling.

3. If this was a company that I had high confidence in based on previous reports, I could hold long term and be fine.

But I decided this was not longer the case for me. Hence why I sold.

Unfortunately, I only sold half on Wednesday. The rest was sold after Snapchat report yesterday.

I decided that this was the final blow for me. I did not have the confidence to hold long term. In general, highly valued companies require near flawless execution.

Overall, $PINS was a good investment for me.

I may very well be proved wrong over time and I am at peace with that. I am just following my process.

And I wish all $PINS shareholders the best in the future.

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More from @Investing_Lion

Lion

@Investing_Lion

24 Oct

After an interesting and volatile start to the Q3 earnings season, we can see where valuation multiples stand for technology companies.

This is the consolidated graph with all the companies comparing EV/GP NTM vs estimates of 3-yr revenue growth:

E-Commerce
EV/GP NTM

$AMZN 8.1x
$BABA 7.9x
$SE 37.5x
$MELI 22.9x
$JD 4.9x
$W 6.0x
$SHOP 61.2x
$CPNG 10.7x
$ETSY 16.5x
$PDD 10.2x
$OZON 7.1x
$BIGC 18x
$GLBE 104x

Fintech and Payments
EV/GP NTM

$V 22.4x
$MA 26.4x
$PYPL 18.9x
$SQ 21.8x
$AFRM 137x
$SOFI 20x
$UPST 32.8x
$LSPD 45.4x
$DLO 78.6x

Read 8 tweets

Lion

@Investing_Lion

25 Sep

Sustainability of growth in SaaS: Will they accelerate or slow down in 2022 vs 2021?

Here is the % difference NTM - LTM and overall NTM growth:

$BILL Difference: +51% / NTM growth: 101%
$AI +16% / 36%
$SPLK +13% / 16%
$PCTY +12% / 25%
$PAYC +6% / 24%
$ADSK +4% / 18%

% difference NTM - LTM and overall NTM growth:

$CRM +2% / 23%
$DOCN +2% / 31%
$WDAY +2% / 19%
$ZEN +1% / 27%
$ZUO +1 / 12%
$WKME 0% / 29%
$QLYS 0% / 12%
$BL 0% / 20%
$OKTA -1% / 44%
$APPN -2% / 16%
$BIGC -3% / 36%
$FROG -3% / 34%
$SPT -3% / 31%
$PD -4% / 25%
$PLAN -4% / 25%

% difference NTM - LTM and overall NTM growth:

$NOW -5% / 26%
$PCOR -5% / 23%
$HUBS -6% / 35%
$ADBE -6% / 15%
$TEAM -8% / 21%
$MDB -8% / 32%
$SMAR -9% / 31%
$VEEV -10% / 20%
$NET -14% / 38%
$DDOG -14% / 45%
$ZS -15% / 41%

Read 6 tweets

Lion

@Investing_Lion

28 Aug

Now that most companies have reported earnings, it is a good time to assess where current valuation multiples stand and the estimates of revenue CAGR for the next few years.

This is the consolidated graph with all the companies:

In this other one, I included some companies that I had to exclude in the first graph:
$AFRM
$SNOW
$DLO
$GLBE

The next graphs are grouped by industry.

E-Commerce

EV/GP NTM and EV/EBITDA NTM (for profitable Cos)

$AMZN 8.4x / 20.6x
$BABA 6.5x / 12.6
$SE 36.4x
$MELI 24.4x / 123x
$JD 4x / 32x
$W 7.4x / 44x
$SHOP 66x / 266x
$CPNG 10.6x
$ETSY 14.1x / 36.64x
$PDD 9.1x
$OZON 8.1x
$BIGC 21.2x
$GLBE 116x

Read 10 tweets

Lion

@Investing_Lion

26 Aug

What is the most underfollowed fintwit account that is sharing quality content on a consistent basis?

@StockMarketNerd

Many interesting suggestions. Here is the list.
I have arranged it based on follower count:

10k+:
@StockMarketNerd @dhaval_kotecha @skaushi @plantmath1 @aadhansen @realEstateTrent @Crussian17 @hiddensmallcaps @caleb_investTML @lhamtil @SagaPartners @Badpak @qcapital2020

@Mayhem4Markets

5K+
@Mayhem4Markets @ecommerceshares @Invesquotes @MaxTheComrade @Varro_Analytics @InvestiAnalyst
@the10thman1 @joshtarasoff @RishiGosalia @GWInvestors @LaughingH20Cap @MultibaggerAnil @w_biltmore85 @Red_BULLish

Read 6 tweets

Lion

@Investing_Lion

5 Aug

This earnings season the market is adjusting post covid. Seems like we are back to a stock pickers market. One of the important variables to look for is multiple expansion.

The following graph is a comparison of this metric for some companies pre and post pandemic.

To calculate the multiple expansion of each company, I compared the average multiple of every quarter from 2018-2019 vs today, using the following metrics:
- EV/GP
- EV/EBITDA
- EV/FCF

This has some limitations as multiples in 2018-2019 may be considered high or low.

But I wanted to get an estimate of how the pandemic and its consequences have affected valuations.

I used only positive metrics, so if FCF or EBITDA multiples were negative, I excluded those from the average. Gross profit was always used.

Read 18 tweets

Lion

@Investing_Lion

24 Jul

I like to compare companies with different metrics. It helps me understand a little better each business. This time, I am sharing the metric Gross Profit / Employee.

Hope you find it interesting 🙂

This is the consolidated graph. The next graphs are grouped by industry 👇

1.E-Commerce

Gross Profit / Employee (FY 2020)

$ETSY $909k
$PDD $712K
$W $248k
$SHOP $234k
$BABA $179k
$GLBE $154K
$CPNG $148k
$BIGC $132k
$MELI $125k
$AMZN $120k
$OZON $100K
$JD $55K
$SE $54K

Fintech and Payments

Gross Profit / Employee (FY 2020)

$COIN $888K
$V $859K
$KPLT $612K
$SQ $499K
$MA $481k
$UPST $475k
$PYPL $431k
$FUTU $282k
$SOFI $279k
$AFTPY $260k
$DLO $198k
$MELI $126k
$LSPD $105k
$AFRM $63k

Read 10 tweets

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