Nutanix is a software company that is practically in a duopoly. That is an exceptional position to be in. VMWare and Nutanix and everyone else just an after thought. Switching costs high, risk is VMWare taking marketshare from Nutanix, or like Microsoft vs. Apple or SAP vs. Oracle or something, customers tend to focus on one enabling software platform.
So CAP is possibly exceptional.
What I dislike about Nutanix is (1) they seem to lack pricing power, (2) they are changing their business model to software only after only a quarter or two ago stating that hardware would be in the picture into the future because that is what clients want, (3) the company is too much of a promotion machine, (4) their future is based on products that are hardly rolled out as of yet, and (5) their primary application of these new products is a system back up program. Sure, it may be the best system back-up program on the market, but is hardly revolutionary. Thus the cloud integration software is currently being overhyped as to what it can do.
So despite its exceptional possible duopoly position, it remains to be seen if they can monetize it to the point that they can reach a position where they can begin and sustainably print money like VMWWare does, or Arista does.
I note VMWare is also quite the PR machine. It goes to the fact that this marketplace is more competitive than what Arista is facing. Arista spends nothing on marketing and you hardly hear from them until earnings, and yet they keep taking marketshare. Thus the marketplace Nutanix is in is much more competitive than what Arista has.
Long and short, if it were not for most of my money being in a cash account (if it were all in a tax deferred account like a SEP) I would have sold out and most likely bought a lot of NTNX back in the low $20s. However, with high taxation a very material part of what I need to deal with investing wise, it simply was not worthwhile to sell out what I already own, pay the taxes now, and buy Nutanix despite profits it might create short-term.
This is because not only the taxes, but I do not believe it is a better long-term holding than say Arista or Nvidia on a risk/reward basis. It certainly is/was a timely stock based upon its prior valuation that was not too difficult to ascertain.
As such I have a hard time buying anything that does not exceed my confidence in what I already hold because I need to hold things that I will not want to sell for many years if things work out. I am not comfortable with Nutanix in that category as of now, at least not on a risk/reward basis, nor on a CAP basis given its marketplace is clearly more competitive when you look at the marketing spend, its PR campaigns, its change in business model that was more of an all of a sudden thing, hyping up the change in accounting methodology that increases earnings as if that was a material thing (it was not, merely a change in GAAP rules, nothing changed in the business), and the fact that there is no proof that Nutanix can monetize its current products that have the highest customer satisfaction rating I have ever seen (and Burt has ever seen), much less its new products that have hardly rolled out to market and that are the future of the company. To add to this, VMWare has Amazon AWS as its partner, Nutanix, Google and perhaps IBM, AWS is far larger. Meaning, VMWare may have a further competitive advantage relative to Nutanix as it is a preferred AWS partner.
My spiel on it, and it is based largely on how I perceive because of the tax issues surrounding my investments that materially impact my ability to trade in and out, and based on my relative impression of the stocks I currently owe within these tax restrictions.
Others, without these factors may find Nutanix a better investment.
For me, if I was looking to own 5 to 10 stocks, I would certainly make Nutanix one that I owned but stay on top of the competitive environment closely.
Tinker