Bert’s latest NTNX take now posted publicly on Seeking Alpha:
I know I am one of the very few that still think NTNX can outperform here. I had added some shares (and LEAPs) this morning after reading Bert’s article this weekend when it was sent to subscribers.
Especially with NTNX’s further 10% drop on Friday, I just can’t help but see NTNX as a potential steal.
Over the past four quarters, Nutanix has generated nearly $1 billion of gross margin dollars (not revenue, but margin!), yet its market cap is only around $4.8 billion. Over they last year, they are already generating more GM $ than I project AYX, NEWR, ESTC, MDB, ZS, OKTA, or SMAR to generate three years from now, even assuming that each of those companies continues to grow at 40-60% growth rates each of the next three years (I project their growth rates to decrease slightly each year, from where they are now).
I actually think that NTNX could grow only in the high single digits each of the next few years and its stock will outperform many others, considering today’s low valuation.
However, while I do not expect they are going to necessarily jump to 50%+ hyper growth, I do think they could be growing in the 20-30% range a year from now which should reward shareholders handsomely, even if institutional buying is slow to get back on the train after being burned earlier this year.
Either way, it is likely that it will be another 6 months or more before much happens with the stock, so I don’t blame anyone sitting on the sidelines for a while and watching it play out. Personally, I prefer to keep skin in the game as I think the potential is here for it to move quickly when things turn and I am optimistic enough to not want to miss that first move if it does.
To me, this is a very different story compared to PVTL where we could see the lack of new customers for several quarters foretelling what was to come with Pivotal.
A lot of very smart people on this board are not optimistic on NTNX right now, so I very well may turn out to be wrong, but my chips are still on the table, and I just added to my stack. I get why this looks like a falling knife to many, but I just don’t think it is going to play out that way.