It is a good question to analyze why ESTC the stock is underappreciated.
Just one person’s opinion, but I exited due to the lack of any type of movement toward profitability. I fully understand the concept of sustained losses to fund growth, particularly in the SaaS model. However, most of these companies start to narrow losses while passing through the hypergrowth phase. If ESTC can’t do that while holding 60% growth, when exactly is it supposed to happen? That’s the question that never seems to get answered by the company. It’s telling (to me anyway) that operating, net and FCF margins have remained just as flat as the stock price since coming public. I’ve chosen to remain on the sidelines until that situation shows at least some signs of improvement.
Many with more savvy backgrounds than I have touted the technical advantages of ESTC. While tech advantages are nice, the ability to turn them into business success is more important to me as an investor. I believe Elastic has yet to prove it’s mettle in that regard.