Concerns about Elastic

Saul:

you called me sarcastic but I have to say again that this is not much of an explanation. It is more a feeling that you think is confirmed by a very short term movement of this stock.
What?

That is my impression of the movements. ESTC has not moved but the others in the cohort do seem to be peaking. AYX and TWLO ‘seem’ to have been treading waters for many sessions now. ZS pulled back a bit. TTD went down and up but is still lower than it was a month ago. etc…

I guess you can question why one would get in ESTC in the first place. You said ‘maybe it is value’. ESTC? value? It is as expensive if not more than the rest of the cohort. So do you buy, sell or hold?

You are looking for a better opinion or impression? Surely and I know you won’t take mine.

I just find what Elastic is doing interesting. I really have no idea where ESTC will be in a quarter or a year or 10.

tj

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ESTC is a medium size position for me, but I’ve been considering trimming it for a while, just haven’t pulled the trigger. Why would I sell?

Well, I share Saul’s concern about performance. It may be no fault of their own, maybe just the normal random motion of businesses and markets, but the fact remains that it certainly hasn’t performed as well as most of other holdings since it has been one of my positions. Yes, that’s a very isolated view, but it’s the one I have.

The other reason is, I think, more worthy of consideration. I first wish to assert that I have not done a deep dive on the technology, so this concern may not be well founded, but I’m having trouble understanding the addressable market. I’m just not all that confident that there’s a huge pent-up demand for their offerings.

Some folks have compared ESTC to MDB or ZS. To my way of thinking, there’s no comparison. The demand for MDB, ZS and some others can be seen as nearly ubiquitous. ESTC, not so much. To date, I’ve felt that they probably address enough use cases to have a large and as yet unaddressed market, but I’m not sure what might give a company a sense of urgency about buying the product. For a few companies, ESTC resides near the heart of their business process, and they are obviously a captive audience. But a company that’s sitting on the sidelines may sit there a long time before springing for ESTC, maybe a very long time.

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