Long time ESTC shareholder after bringing to the board pre-IPO, which hasn’t been a superb investment. Perennially under appreciated vs it’s peers (MDB!), I thought the risk/reward profile was worth having. Prior to the tech meltdown, they had had a mixed 2021, but plenty of trading opportunities.
They’ve just announced a change in management, with the CEO Shay Bannon moving to the CTO role, and Ashutosh Kulkarni (ex McAffee, Akamai, Informatica) and current Chief Product officer moving to CEO.
I sold everything after hours. My thinking was:
- No longer founder led.
- CEO transition = there is a problem to be solved, and founder cannot solve it.
- New CEO needs to solve the problem.
- Can new CEO solve the problem? Remains to be seen, and no real indication that he has solved ESTCs problems previously = Uncertainty.
ESTC has been a long-term underperformer, despite reasonably good performance and a comparatively low market cap. In hindsight, I could point to sub-50s growth, confusing sign-up process, and less-than-awesome go-to-market.
But if I try to take one learning that’s not clouded by hindsight ESTC always had a sense of friction. Being a bit harder to say yes to than it should have been.
Fortunately this development comes after the big tech meltdown, so will (perhaps belatedly!) be deploying the funds into other stocks that are markedly cheaper than a few months ago.
I’ll continue to watch ESTC to see if the new CEO can remove that sense of friction.