NCNO’s IPO price was revised from $24 to $31. They even increased the size of the float.And it finally opened at $71
As per this article, it was oversubscribed 50 times by institutional investors - https://www.investors.com/news/technology/ncino-ipo-raises-2…
Thank you Bert and others for shining light on this stock.
I am not buying at these high levels but will keep an eye!
Best,
Piyush
I am not buying at these high levels but will keep an eye!
Last I looked, it was trading at $78. By my calculations, that’s an EV of about 34 times forward sales for 50% annual growth. I have higher conviction stocks trading at much lower multiples with similar growth. I was hoping to buy at $35-45 or lower, lol. I will pass for now.
Instead, I bought some more NET at about 26 times forward sales with similar growth and a higher conviction.
Dave
At the closing price today NCNO has a P/S north of 50. I read the prospectus weeks ago, followed Bert’s words on the subject and fortunately talked over the last year or so with people associated with the company (so as to understand its culture and leadership).
The high end forecast for NCNO revenue growth is 40% (not what some of our companies have but very respectable)- In my humble opinion that type of growth does not warrant a premium of 50 times sales. While I had accumulated a sizable amount of money to invest I just cannot pull the trigger at that valuation. Couple the valuation with the potential for consolidation within its TAM its time to look elsewhere.
Beth Kindig agree with you.
No offense, but not as meaningful coming from main backer of $UBER which was greatly overpriced. For the record, i discouraged my free newsletter readers from buying Uber and Lyft pre-IPO and saved them lots of pain there. I am also discouraging against $NCNO because …
And Bill Gurley (VC at Benchmark) explain how smart banker make it happen.
The bank that “ran” the $NCNO $400mm+ one-day wealth give-away, just sent me a case-study as if this were “best practice” execution. You will see they brag about being 50x oversubscribed. Ignoring 98% of demand & filling only 2% is a specific recipe for underpricing. #insanity
"At the closing price today NCNO has a P/S north of 50. I read the prospectus weeks ago, followed Bert’s words on the subject and fortunately talked over the last year or so with people associated with the company (so as to understand its culture and leadership).
The high end forecast for NCNO revenue growth is 40% (not what some of our companies have but very respectable)- In my humble opinion that type of growth does not warrant a premium of 50 times sales. While I had accumulated a sizable amount of money to invest I just cannot pull the trigger at that valuation. Couple the valuation with the potential for consolidation within its TAM its time to look elsewhere."
replying to the above
So…would it be fair to say you’re waiting for a dip???
I think you are, and I think you should, and I think there are some times where it’s ok to wait for a dip.
I would frame up this whole dip buying thing differently. When I start buying into a new stock I start with some small positions and build over time. If my first buy is at $100, and if the stock drops to $80 the next day because of a macro-issue, I’m probably buying more “on the dip”. It’s because my risk has just been reduced by 20% - so I think it’s logical at that point for me to put more money into it.
Hi AnalogKid70
Are you saying it might be ‘an approach’ to start buying small positions as we go through the volatility in NCNO as i speak i see it is down 12.5%
Thanks,
Praveen
I would have to look into the PPP pulling forward revenue as Beth Kindig is describing as mentioned in the S1. If the current 50% revenue growth is unsustainable I don’t care if it dips more or not, I’m not buying.
One thing that may keep NCNO towards the high end of pricing is the perception that its growth rate is more predictable. This might enhance confidence for ongoing growth outward.
Another thing, unrelated directly to its rate of growth, is its role as banks take over each other. Banks love to merge, and incompatible software often delays such mergers by months or years. IF this one company is able to provide the software for a substantial number of banks, I wonder how many of them will be more inclined to merge, and what role NCNO could play as matchmaker. Would it be a benefit, a negative, or a neutral for them?
Regards,
Brian
I am surprised that NCNO does not get more attention on this board. NCNO reported 52% growth in revenue and a 70% growth in subscription revenues, and so it seems like a good Saul-stock candidate.
Recently NCNO completed a secondary offering which caused a pull-back in the share price, and over the last few days NCNO has been in a range between about 70-73 USD. I started a small starter position at 71USD and I do intent to average in over the next few months.
Bert also commented in a recent post that NCNO “has a dramatic opportunity, and an important product initiative that will be released shortly” and mentioned “I think nCino’s integration of what it calls nIQ which will allow for automated loan underwriting, can be part of a bank answer to the CashApp and should see strong acceptance.” “The analyst consensus for FY 2021 for growth of 23%. …. I think the growth percentage could be as much as 2X that level as banks struggle to develop a digital experience to please their customers and to remain competitive.” (I hope that it is ok to extract quotes from Bert’s article – if this is out of line then please go ahead and delete my post)
From Bert’s commentary I get the impression that he sees a bright future for NCNO.
Do you know how to find out the date of the nCino lockup period end? There doesn’t seem to be a good source I can find for this information. I have a small position and will look to add to it in the next several months.
Hi Billski,
I found this which indicates the lock up period ends on 11 Jan 21 https://www.marketbeat.com/ipos/lockup-expirations/
But I have no idea if this is accurate.
Moneyspin,
I actually have a small position in NCNO for the numbers you cite.
One of the things that concerns me is that their platform is entirely built on and dependent on the Salesforce (CRM) Platform. CRM has an investment in NCNO which I suppose demonstrates that they want them to succeed(CRM does this with a number of tech companies), but it just doesn’t sit well with me. I assume there must be a use agreement in place with CRM where CRM can’t put the squeeze on the, but will CRM be able to gauge them down the road. Do people know of other companies that do something similar this - build their entire solution on another’s platform? It just seems to me CRM has too much control/leverage here.
The other concern is it is a great solution for banks, which has a big market, but where do we go from there?
Any thoughts?
Mike
Hi Mike
I do not have a position in NCNO yet but carefully looking.
But following is my view on “build their entire solution on another’s platform”
I compare it to companies taking the Zoom’s SDK and then building their platform on top of the SDK. Case in point https://www.classedu.com
That is the primary (actually secondary) way in which companies make money once it is popular. Tomorrow the companies that use DataDog (for example) could use their API and build monitoring solutions on top of DataDog in which case I do not think DataDog will have too much leverage.
Just my 2c
Pravin
I often turn to Market Beat for that https://www.marketbeat.com/ipos/lockup-expirations/
https://www.marketbeat.com/stocks/NASDAQ/NCNO/
WHEN DOES THE COMPANY’S LOCK-UP PERIOD EXPIRE?
nCino’s lock-up period expires on Monday, January 11th. nCino had issued 8,060,000 shares in its IPO on July 14th. The total size of the offering was $249,860,000 based on an initial share price of $31.00. After the end of the company’s lock-up period, restrictions preventing company insiders and major shareholders from selling shares in the company will be lifted.
. I assume there must be a use agreement in place with CRM where CRM can’t put the squeeze on the, but will CRM be able to gauge them down the road. Do people know of other companies that do
Many companies build there platforms in Salesforce. Veera systems, service max, Apptus (CPQ and CLM), etc.
Often you wouldn’t even know you weren’t just using Salesforce as they just looks like any other object and Salesforce probably has similar but weaker solutions. For example, SFDC has a CPQ function but I am told they use Apptus them selves though I can’t confirm that