Hastan,
I started a new thread from your post as it was about CRWD, whereas the thread you posted it on was titled for ESTC.
You posted the following (bolding is mine):
Cybersecurity has always been a business that evolves so quickly that no-one ever stays as a leader for any kind of sustained period of time.
Perhaps CRWD is the one exception. But at 40+x sales I don’t really understand what level of upside you expect. Even if they do 10x on revenue and have 30% FCF less SBC margins you are still paying 15x FCF for that scenario many many years (10+) from now.
If they fail and don’t retain market leadership you lose 80% of your money.
Don’t understand how a long-term investor could possibly want to own any cybersecurity company at 40x sales. Because history tells us that the leader in 5 years is always different from the leader today.
Nobody here is advocating holding any of our stocks for 10 years. It looks like you’re relatively new to the board, to give some history, most of the buys here are held from 1-3 years max. They’re exited quickly when the company is no longer performing up to expectations (learning and executing this has defintely been the single most beneficial lesson I’ve learned here, and helped my returns the most!). The investing method here has been described as “modified buy and hold”, which means a stock is purchased with the expectation (hope) of holding for a long period (as long as the company performs), but willing to cut bait at any time if necessary. That, IMO, is the main difference between Saul’s board and Motley Fool methods (or even Bert, for that matter).
So for CRWD, most here are heavily invested while it’s posting the phenomenal numbers that it has been showing. But once cracks in their armor start to show (whether from competition or execution), CRWD will be sold off quickly, retaining most of the gains that have been made. So it won’t matter for most here if CRWD is not the leader in cybersecurity 5-10 years from now, most will have long before moved on to greener pastures.
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I started a new thread from your post as it was about CRWD, whereas the thread you posted it on was titled for ESTC.
Thanks Foodles.
Cybersecurity has always been a business that evolves so quickly that no-one ever stays as a leader for any kind of sustained period of time.
I trained labrador retrievers. Just my own dogs for personal use. Everyone told me that Chocolate labs could not be trained and were unable to stay focused. Yet my favorite Lab was a Chocolate lab. What does this have to do with anything? It is always a bad idea to assume anything. If you look into the past you will always miss the future. I gave Hastan a post that showed that Crwd is disrupting this space. Will it continue? Who knows but it is going on now. Like Foodles stated. If it starts going south I will step off the train but why, when it is obviously grabbing market share, would I not want to be part of this story? Only because of what might happen? Right now I have a double from the start of the year. Even then many people were saying the same thing Hastan.
Don’t understand how a long-term investor could possibly want to own any cybersecurity company at 40x sales. Because history tells us that the leader in 5 years is always different from the leader today.
This could be said for any company or any stock in the market. Is 40 x Sales expensive? Yes. To make that assumption you are always looking in the rear view mirror. But first of all Crwd is not 40XSales. Shares 220,000,000 X 92.68 = 20,389,600,000/ Revenue TTM 645,600,000 = P/S 31.58. That is looking at the next quarter. But even P/S of 31.58 is high, but how much would you pay for something that is disrupting the industry? How long could this disruption last before someone catches up? Every day Crwd gets more information from their customers on the threats that are out there and they keep updating their models. The more people that join, and the more modules they buy, the further Crwd gets ahead of the competition. The only company that even has a chance of catching them is Microsoft. Everyone else has either been bought out and compromised or are not keeping up. My bet is that Crwd is nimble enough to beat Microsoft and be the Number one Leader in the EPP Space. They will bring more modules out and we will see how far this company can go, but at this time and looking into the future, I see them as the winners.
Andy
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All this makes the assumption that P/S is a highly useful way of valuing stocks. As far as the general market goes ,it was, many years ago, but then it stopped working once everybody started using it. I believe that is the case in most of Saul’s stocks today. *85% growth compounds so fast that the key is how long the growth will last. A year or so makes a big difference . Nobody knows that piece of information today.
In the case of CRWD it is not just another Norton, existing competitors not based on Cloud are unlikely to catch up (Innovators Dilemma) . New competitors will have to start from scratch
I would like to hold stocks for 5 or 10 years but I am not good at guessing which will turn out to be the Amazon, the Netflix etc of the future.
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