RE:RE:RE:LSPD vs ATThank you for the discourse!
1) is the CO's fundamentals improving?
Q4:2019, AT was growing revenue by 70% yoy
Since Q2 2020, in full COVID, revenue took a dive contracting between Q2:2020 and Q1:2021 (Q2:2020 +5%. Q3:2020 -5%, Q4:2020 -12%, Q1:2020 -6%) and in last two Qs grew revenue again by avg 10% yoy (9% and 11% respectively) from those very low comps.
Compare that to TTD while trading at absurd valuations managed to grow revs by avg 25% yoy through height of COVID and 53% yoy in each of last two Qs.
2) is the CO achieving net income growth?
Agree, net income is growing but base is very small and if revenues do not grow at a faster pace this is no longer a growth stock.
3) has the CO's balance sheet improved?
Yes, net income growth and cash flow has improved and Nasdaq secondary cash on BS. Challenge going forward I think will be expense management in the face of slowing revenue growth. Cost of incremental revenue likely to be higher as executive branch grows (eg. new COO, CFO, etc.) and maintaining multiple offices (and associated travel).
4) is the company improving its cash generating abilities?
It was but suspect increase in R&D spend will mean short term we will see reduced net cash flow.
5) is the company trading at a discount to the summation of its annual discounted free cash flow?
Bottom line is this:
If you think they can grow revenues 25% while maintaining margins I think this is a winner. That assumption predicates itself on the success of illumin which so far has proven to be a red herring.
It seems like this stock is much more likely to be a value trap. Meaning, it looks cheap but organic growth is lacking and the only way for them to grow is by acquisition. If that is the case, the stock is likely to drift lower over time as rates rise and investors look for income (i.e. dividends) in the absence of growth.
The worry here is that there seems to be little growth and no income. Not a good place to be in a rising rate environment.
Torontojay wrote:
truthis0utther3 wrote: 3) Do you mind pondering my arguments on AT directly or does that expose a lack of critical thinking?
I'll add another one for everyone else. Why is being critical using facts pooped on here? If my points can be refuted doesn't that just make your investment thesis stronger and benefit all? Or is your bullishness based on blind hope and a fear that any cracks in that blind hope can put pressure on the stock?
That's not a sound investment strategy no matter how you cut it.
I will provide a more detailed answer in the coming days. I may be different than most investors and I've had a lot of success with my strategy but I don't focus on share price alone. I have a mathematics/economics background and I put a lot of emphasis on quantitative valuation while not paying attention to share price volatility.
I ask myself some questions:
1) is the CO's fundamentals improving?
2) is the CO achieving net income growth?
3) has the CO's balance sheet improved?
4) is the company improving its cash generating abilities?
5) is the company trading at a discount to the summation of its annual discounted free cash flow?
Fact is a fact but I've answered yes to all of the above. Should I be worried that the stock price will continue to decline? Only time will tell of course but as long as the fundamentals are improving and there's a significant margin of safety on my investment then I will buy/hold. If the CO's fundamentals worsen over time, although I have no reason to believe that, then I will revisit my original thesis and decide if I should hold or sell.