I am not saying Nutanix would be in that position but it does make me want to learn more about Nutanix so I have a better idea of determining who may or may not be blowing smoke and whether or not that smoke indicates a raging fire. Some investors simply buy into a idea and choose to turn off their smoke detectors. I choose to keep my smoke detectors active, even through false alarms, so that I have advanced warning of when I might want to get out of a building.
Starrob,
There is plenty of evidence to see without knowing exactly how Nutanix works. Consider first the business results and marketshare numbers. Nutanix is growing like a weed. Anyone who has been following NTNX’s billings growth and customer growth should be amazed. This growth is happening by customer companies that are giant organizations. Of the world’s largest 2000 companies, 710 use NTNX with 40 new ones added just last quarter.
Your post implied that perhaps sales might fall off a cliff. No way, not going to happen. How do I know that? A large part of their growth is from customers spending more than the year before. You can track this. The company reports on its land and expand: for the G2K customers, they on average spent 10x in total what they spent after the first 18 months of being a customer. Their Net Promoter Score is 90. This is really all that I need to know. Sales growing like crazy, customers flocking to them, and EXTREMELY satisfied customers who are not just happy but essentially all of them recommending NTNX to others. If this doesn’t convince someone that NTNX’s business is doing not just fine but amazingly well, isn’t looking at the right evidence.
In early 2018, NTNX was my highest conviction stock. It was also my largest position. I have not been selling but adding yet NTNT is now my 3rd largest position. The reason is that the stock has dropped while my shares in SQ and AYX have gone crazy…up. I have been adding slowing in the past weeks but I have tried to be disciplined to watch my allocation. I know I must add more given what I know. The gross margins are 77% and will be more like 80% when the HW pass-through revenues down to the long run percentage of sales. The EV/Sales is now down to 6.1 and the ration a year from now will be 4.5 (3.7 if you go by billings) at the current rate of growth. I believe the shares should be worth at least $90-100 right now. I don’t really understand why they aren’t there right now, but I’ll take it as an opportunity. In about 11 months the year over year revenue/billings comparison will be completely apples to apples. Maybe people won’t get how good of a value the shares are until then. I’m not sure, but I won’t be at all surprised if the shares will be trading over $100 in a year from now. Will it happen? I have no idea, but I wouldn’t be surprised at all.
Chris