It is certainly not with risks and competition to consider. It is for unknowns like that I pulled growth all the way down to 5% in a quickly growing industry.
I’m not convinced, lot of competition and innovation, big risk of just becoming irrelevant. I just don’t see the moat, personally. I don’t see particularly strong management team either. Earnings declining year on year, 3 years of revenue decline, at the very least in this scenario you’d hope to see margin protection, but OpEx actually went up on the lower revenue.
I think this business is overvalued. Down 7.49% yesterday alone.
I believe their TTM FCF margins are normalized and they trade at about 4x that multiple. Definitely could be wrong that they will have margins similar to pre-COVID but just make take.
Obviously though this isn't a company I own so I didn't believe the story was that good.
I like the 90% drawdown story together with improved guidance for second half of the year which could drive some momentum.
However, running quick numbers, the company is trading around 10x EV/EBIT / 0.9x P/BV / 7x P/CF (assuming normalised margins) which are not deep value multiples at all (surprised about how hyped the stock was back in 2021).
A pass for now but will be worth following it closely in case it continues going down.
AI is another risk. Why have an analog - digital interface when you can have digital AI generated from the beginning?
It is certainly not with risks and competition to consider. It is for unknowns like that I pulled growth all the way down to 5% in a quickly growing industry.
I’m not convinced, lot of competition and innovation, big risk of just becoming irrelevant. I just don’t see the moat, personally. I don’t see particularly strong management team either. Earnings declining year on year, 3 years of revenue decline, at the very least in this scenario you’d hope to see margin protection, but OpEx actually went up on the lower revenue.
I think this business is overvalued. Down 7.49% yesterday alone.
The main question is AI. with one hour or two of extra research we could have a good idea about the risk.
I believe their TTM FCF margins are normalized and they trade at about 4x that multiple. Definitely could be wrong that they will have margins similar to pre-COVID but just make take.
Obviously though this isn't a company I own so I didn't believe the story was that good.
I like the 90% drawdown story together with improved guidance for second half of the year which could drive some momentum.
However, running quick numbers, the company is trading around 10x EV/EBIT / 0.9x P/BV / 7x P/CF (assuming normalised margins) which are not deep value multiples at all (surprised about how hyped the stock was back in 2021).
A pass for now but will be worth following it closely in case it continues going down.
Thanks for the post!