Monday Hochfeld's article on Seeking Alpha

This is currently a free article on Seeking Alpha by conservative, careful, Bert Hochfeld, recommending Monday. Here are a couple of paragraphs from a quite long article.

Saul

Until recently, I had found monday shares too highly valued to warrant a deep dive into the company and its prospects. But a 2/3rds fall in the share price while a company is growing revenues at greater than 90%, and generating a positive free cash flow has gotten my attention. I won’t… describe monday shares as in value territory. But even after their bounce, my estimate of the NPV of the shares suggests more than 2.5X upside using quite conservative assumptions…

It seems as though the IT space in general, and newer companies such as monday, are perceived as high risk and have been sold without much further thought than that. The conflation of risk and growth is not one that I find reasonable, but it is still happening and until that theme wears out it can be difficult to suggest that even the best stories - and monday in my view is one of the best stories - will be able to see its share value reflect its business as opposed to notional risk.

https://seekingalpha.com/article/4493144-monday-share-price-…

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For the newer visitors to this board who are not familiar with Mr. Hochfeld, let me add that despite his checkered past (which he makes no attempt to hide), he is one of the most insightful analysts in the high growth IT space who regularly publishes SA articles.

He has a reputation for being sensitive to valuation. Given that, he expressed his intention to acquire shares of Monday as he believes that the company’s guidance was overly conservative and the near future prospects of seeing the stock price rise are highly probable as he anticipates the “tech stock tantrum” will soon abate.

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While acknowledging that this board focuses on the hypergrowth stocks, and puts little value on valuation, I do wonder if in this market, the biggest gainers from here (whenever growth becomes interesting to the general market again) won’t be the ones who’ve been pounded the most.

Datadog, as an example, might be a company that has less risk, but perhaps less upside from here than a Monday, given how out-of-favor the latter has become.

One day, the market will re-cherish our fast growers, and when they do, it seems to me that Monday could double much quicker than Datadog, for example.

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I wonder if anyone has any data that would allow us to backtest the general idea in the previous post, that the most beaten-down stocks have the most upside.

It’s hard to do an exact test, since growth rate has such a large effect, so we’d need to find a test that matches closely enough the “all other things being equal” condition.

My guess is that it’s not consistent, and would also have to do with the prospects (and perceived prospects) for the subsector of a particular company; e.g., security, communication, database, etc.