I bought some $zm Nov 2019 at 18x fwd EV/Sales. At the time I had modeled $1bl in rev for 2020, $1.5bl rev 2021, and $2bl-$2.1 for 2022. I figured high confidence in profitable growth durability & thus was willing to buy the richest name on fwd EV/sales.
This was despite having spent previous six months shorting names like $pd, $work, $dbx, $evbg etc. Bulletproof $ZM narrative w actual profitable growth felt like better risk/reward for 50% or so upside than bottom fishing multiple wise.
Now if $zm never got the insane Covid bump it did and was just another SaaS winner chugging along its growth curve today I imagine it would be trading at 30x-45x 2022 rev estimates. That would put it at between $60-$90bl EV which is more than its worth today.
This is despite the fact the biz is currently more than 2x the size of my 2021 forecast. And btw the market is not wrong in its thinking as visibility on the growth arc has quickly deteriorated. This is a reminder that growth investors are perpetually renting 1yr growth fwd.
Now imagine a software world where a high degree of confidence in 40-50% cagr over next 3-4 years with solid margins translates into a 20x 1yr fwd sales ceiling. How is your margin of safety as a growth renter today? That's the issue in SaaS right now.

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More from @akramsrazor

7 Jun
The $yala esop plan really is breathtaking. 41.7ml shares granted or basically over 40% of the share count pre-ipo & roughly 30% of today's outstanding shares of which roughly half will be exercisable this month. So, yea its extremely dilutive, but really who cares about that..🧵
With all the obvious problems at $yala massive dilution is not exactly something investors need to focus on, but this ESOP actually is quite unusual for other reasons. It tells you a little about what might be going on with this enigma of an app.
This screenshot breaks down the ESOP awards amongst directors/management. The CEO has 10ml and the COO 4.2ml. The leaves 620k shares for the rest of the mgmt/directors.
Read 7 tweets
27 May
Some new follow-up observations/findings with respect to $yala for those paying attention.
Since the events of last week and after totally denying that they have placed bots/fake users in rooms someone promptly deleted/removed the most blatant fake users.
This has resulted in like for like traffic declines of 70%+ as measured by their own hot room counters. Traffic that was amazingly consistent before last week.
Read 7 tweets
6 Apr
Been getting a lot of questions on $pd lately so in interest of saving myself dm time repeating same thing..here are some quick thoughts. First, there is an extensive & FREE detailed writeup i did on it on SA. Plz read before DM ?'s Here is the link seekingalpha.com/article/433308…
Now if you have read that or listened to the podcasts we have done on the name; i'll leave U with some quick bullets w/ respect to my current view.
1) The use cases and types of customers are expanding in the exact type of manner (and now faster rate) that caused me to flip the short thesis. 2 years ago didn't think they would be winning 80 seats at an investment bank let alone 8000.
Read 7 tweets
23 Feb
I will be loading up on $wday if the market throws it out with the SaaS end of covid bathwater. Here is why....
$Wday is an open up SaaS trade in my book who is looking at an accelerating H2 2021 and 2022 vs the potential downshift many covid stay at home darlings are facing.
Pre-covid WDAY was a somewhat maturing Cloud HCM story (40%+ share Fortune 500) that was just starting to scratch the surface in Financials/ERP. Covid knee jerk disrupted this somewhat as focus shifted to WFH infra& as biz function software typically long implementation cycles
Read 17 tweets
29 Jan
So I've followed DFV's $GME journey from beginning and think it says a lot about what's going on here. How do u go from $50k to $40ml deep value screening in about a year which btw beats $nflx and $amzn growth return holding for decades? A thread...

As someone who tried the blockbuster rinse and repeat short (unsuccessfully btw) on $gme almost a decade ago I'm quite familiar with the name. Burry's re-emergence at the end of 2018 & roughly $5ml gme position disclosure then put the stock on the deep value radar.
$gme dropped like 50% in h1 2019 and his q2 disclosure indicated he had exited the name. It was at this time DFV emerged onto WSB with an essentially i'll take this shot at half MB's cost basis with the console refresh a year out thesis.
Read 19 tweets
16 Jan
We all know IPO's pop, but then what? The table below shows the ten biggest first day pops of the last 25 years. 9 occurred in 1999. #11 would be $bidu at 354%...#12 would appear to be $ncno at 195%. Anyway, let's see how father time treated the 1-day pop long-term holders.
$28.6 1st day close and $4.2bl mkt cap. Acquired 2019 for $3.2bl. -20% or so over 20 years...not bad.
#9 Ask Jeeves
IPO close $65. Would be trading sub $1 by 2001. Would make an amazing comeback and be acquired by $iac for $28 or just under $2bl in 2005. So you lost like 50% in about 5 years.
Read 11 tweets

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