IF you think UPST will survive the recession (if and when it comes, and whether it is mild/ moderate/ severe) then $75 or $95 doesn’t matter, it is a buy. If you are someone who is worried that the model has to go through a recession and survive then even $75 is a high price.
It’s not black and white, it’s shades of grey. I was comfortable buying at $75 given my knowledge, beliefs and expectations, but at $95 it doesn’t have the same margin of safety and I’m not a buyer, though neither am I looking to sell the shares I own at this price.
Your proposed absolutest ‘believe or not’ thinking would apply the same way at $150 or $300, and 100s of millions of shares traded at those prices in the last year, but I’m a little more conservative than that, for better or worse.
I’ve been ~60% cash (real, actual cash) for at least a year, waiting. At least now I can get a better (nominal) return on the cash while I wait. But I’m warming up in the on-deck circle.
If you have been that patient for that long, why consider SaaS speculations when Google, a guaranteed double, is in the batters box? Or if you like SaaS stocks, what about one that has actual earnings like Adobe? You can buy ADBE at under 12 time sales rather than waiting for a money losing venture like DDOG to drop under 20 time sales? I, personally, don’t find Adobe attractive yet at 39x ttm earnings but if you’re going to speculate, why not speculate on something with established earnings power?
Mungofitch’s 99-Day signal is likely to trigger in two weeks unless the S&P can gain 16% between now and then to set a new high. The signal is a pretty reliable indicator that we have entered a secular bear market and could benefit from standing on the sidelines of lightening up. If the signal triggers in two weeks, the next one to watch would be Mungo’s bottom detector, which captures market capitulations. I just think the market is about to offer up stupidly easy decisions in the coming months, so I wouldn’t be in a hurry to place bets on SAUL stocks rebounding as an avenue to wealth creation.
If you know otherwise, that it guaranteed doubles (in a short enough time to result in a good CAGR), you of course have to bet the house on it.
And should you know that it guaranteed doubles before Jan’24 then I recommend you maximize your profit by putting everything up to your last penny into Jan’24 deep OTM calls.
If you have been that patient for that long, why consider SaaS speculations when Google, a guaranteed double, is in the batters box? Or if you like SaaS stocks, what about one that has actual earnings like Adobe?
I own a ton of GOOG, thanks, and have noted that numerous times here. I also just took a position in ADBE, which I’ve been waiting on for a long time (and will probably buy some ADSK, as well). I have a solid position in MSFT. I’ve owned V and MA forever. I let my BRK cover AAPL for me.
SNOW and ZM are very recent buys and are tiny positions. I traded CRWD and made a small profit on it, selling into the last Q post-report bump.
That’s about it for growth stuff. Other positions are boring things like General Mills, NY City Bank, Simpson Manuf, CHS preferreds. Looking hard at BLK, ACN. Need something in healthcare but still researching.
Look, I didn’t start this thread. The question was put, and I offered my thoughts. SaaS stuff is not a primary focus for me. Best wishes.
Mungofitch’s 99-Day signal is likely to trigger in two weeks unless the S&P can gain 16% between now and then to set a new high. The signal is a pretty reliable indicator that we have entered a secular bear market and could benefit from standing on the sidelines of lightening up…
I would rephrase that —
When that 99 day trigger happens, it’s not really a sign that we’re in a bear market, secular or not.
Rather, it’s saying we no longer have any evidence that we’re in a still-ongoing bull market.
So, rather than “a bear”, it’s “not known to be a bull”.
Bullish times are a green light: the index is rising, no need to be particularly discerning in your security selection or purchase timing.
The rest of the time is “I dunno”.
It does include the bulk of most bear markets, but also some very good times.
They’re good times to be either discerning, patient, or nimble.
Mungofitch’s 99-Day signal is likely to trigger in two weeks unless the S&P can gain 16% between now and then to set a new high. The signal is a pretty reliable indicator that we have entered a secular bear market and could benefit from standing on the sidelines of lightening up. If the signal triggers in two weeks, the next one to watch would be Mungo’s bottom detector, which captures market capitulations. I just think the market is about to offer up stupidly easy decisions in the coming months
My prediction is that market will make new highs in 6 months.
The war will be over and China will start humming unblocking supply chain issues and US will have increased manufacturing and automation. The talks of “deflation” will start again with first signs of “so many unsold cars, what to do ?”.
Trillions of dollars parked on sidelines will find a way to move into strong innovative growth companies with high margins.
Two days ago (which seems like a month ago) I wrote, re MDB: That works out to $280-$290 vs. today’s $360/share. So, I’d need around a 20% drop from here, with the underlying business unblemished. Certainly could happen.
And–boom!–we’re there. Amazing times. (Still no position in MDB.)
One of my three favourite SaaS companies, NET (the others being CRWD and DDOG), which provides absolutely essential services for businesses, yesterday was 14% down after earnings for Q1 came out, showing the same extremely constant revenue growth they are having quarter after after quarter.
Admittedly other numbers (earnings or rather loss, operating and free cash flow) were not great but as growth, being a dominant leader and “best company in it’s field” (which it is, together with CRWD) and retention rate are the most important measurement tools for SaaS fans I would have bet this extreme fall today would reverse. And what happens instead? Currently NET is down another 20%, $62 from over $90 two days ago!
This makes no rational sense. The numbers which are most important for SaaS stock owners do not give the people that own it a rational reason to “Sell, sell, sell” - but that’s what they do! Obviously this market has nothing to do with ratio currently but is (negative) emotions only (apart from ever-optimistic Divi of course) => Capitulation getting closer?
I’m not sure I’d want to be utilizing margin at this point, as it appears Saul and others are doing, but when you’re fully invested and committed to a GAAP philosophy, 2022 prices for SAAS “seem” like bargain basement pricing.
Well, not from a Saulistic perspective but perhaps from a rational investor perspective it does. The company signaled on the CC that it will continue to pour any positive cash flow into the business (not an unreasonable strategy) rather than show a profit on paper; and that in conjunction with projected higher interest rates knocked the estimated DCF fair value down a few pegs.
I agree with you that NET’s price this morning could constitute a great opportunity. But at age 73, I’m not eager to make more than a couple of long-term bets to keep myself entertained. In that regard, and to edge us slightly back towards this board focus, I note that SNOW is approaching the IPO price at which T/T bought a slice some 18 months ago.
With “makes no rational sense” I actually meant for the people with a “Saulistic” perspective, as those are the ones owning those stocks.
And they are not interested in DCF, for them it’s not an appropriate tool to value their companies, so any change in that shouldn’t matter for them as long as THEIR measurements are intact. They are, so the selling for them is not rational (their ratio, which is different from ours) but emotion driven. This (which seems to be a bit representative for the market as a whole with it’s indiscriminate selling) for me raises the question when panicking followed by capitulation starts/ends.
I’m enjoying following the Saul’s board. Likes are still consistently high and geared towards posts that state how far down investors there are but that they are staying the course. Amazed at the age and percent of portfolio many are stating, that their entire life’s savings are in the SAAS stocks and that they have no worries or fears.
My best guess is when there’s more cut-'n-run and price-to-sales of single digits is when things will get far more interesting. Also guessing that these growth rates of SAAS will prove fleeting.
<Are they cheap or not? How to value them? How to see their current price, their future etc.?
Unlike past successful high tech companies such as Microsoft, Facebook, Google, Amazon that are dominant in consumer-oriented businesses and therefore allow investors to judge their moats, SNOW/CRWD/ZS/DDOG/MDB are all in backend businesses that are invisible to consumers and investors. Judge from a few years of financial data alone would be highly risky.
One of my three favourite SaaS companies, NET (the others being CRWD and DDOG), which provides absolutely essential services for businesses, yesterday was 14% down after earnings for Q1 came out,…
Everyone keeps harping on how much these SaaS stocks are down in a day or off its high. But measured over a year, they are not down much.
e.g, DDOG is up 50%, while CRWD is down 12% and NET is down 14%; better than a large part of Nasdaq.
They had soared so much on the momentum/meme/options/margin trading over the last 2 years that sharp drops on the slightest shift in mood/momentum are inevitable, even if the business is performing close to expectations.
In comparison KMX is down 33%, C down 28%, BLK down 23%, UPS down 15%. And they weren’t at nose-bleed valuations a year ago.
Amazed at the age and percent of portfolio many are stating, that their entire life’s savings are in the SAAS stocks and that they have no worries or fears.
I am reminded of 1999 and 2000 when some people were rejoicing at the popping of the tech bubble because “look at the values!” Never mind that the stock was 8x overvalued at first, but the price had dropped in half.
I watched several pour more and more into cratering holes because “I’m getting so much more.”
One of them, and only one finally admitted “I may have misjudged it.” He was talking about @Home, which eventually went to zero. I don’t follow Saul’s, so any similarity may be entirely coincidental.
He was talking about @Home, which eventually went to zero…
Ah, that’s the one. I made my money selling a private company to them, and then selling their shares.
They went to zero before I could sell about half, so if anybody needs about an acre of wallpaper cheaply, I’m open to selling the share certificates for a reasonable price : )
(alas, just kidding, not even paper certificates to console me)
