PSTG is about a 10% position for me. I will probably buy more next week (can’t buy within 2 days of this post).
They report earnings on Nov 28th and I’m already a big fan of the company long term. I think They’re a high margin software company disguised as a hardware storage company. But, there’s some events lining up between now and earnings which make me believe the next few months will be huge for the company.
Here’s an interesting Tweet from Brian McClosky Pure’s Global Sales Strategy VP
" I’m going to be at AWS re:Invent later this month. You might be thinking that an AWS show is a weird place for @PureStorage to be, but an exciting announcement coming from us soon will tie it all together. DM me if you’ll be there and want to meet up."
These are the types of things we can know about our companies when we invest in 10-12 of our favorite companies…I think Wall Street is completely missing all of this.
“I think They’re a high margin software company disguised as a hardware storage company.”
I have a similar feeling… their gross margins are not HW margins.
And on the talk about competition and commodity (i guess refers to flash memories), people forget that Pure benefits when price of flash goes down… because its COGS reduces… customers dont buy flash from Pure at 65% gross margin… they buy SW sitting on commodity flash at that level of margin.
having said that, the stock is really cheap… but it can stay cheap for a long time… i am really looking for a pop before jumping in. hopefully it is coming as you say CMFAlieb…
PSTG is a second tier stock in my portfolio. Pure Storage is a story whose time has not yet come and that story is not flash memory per se, but how Pure Storage enables fast access to data taking advantage of silicon’s difference from spinning disks. Incumbents like NetApp and EMC essentially replace boxes filled with spinning disks with boxes filled with silicon. The problem is that the incumbent’s DOS is designed to overcome the problems created by the physical properties of spinning disks. Pure, in contrast, created an architecture to maximize the rate of access to the stored data. In other words, spinning disks deliver fixed chunks of sequential data, whatever is stored in a “sector” while Pure delivers data in parallel much better aligned with the processing capabilities of GPUs. There is a certain conceptual similarity to the difference the MongoDB’s NoSQL brings over SQL. The data is better aligned with the processing that needs to be done.
The problem is that Pure’s time has not yet arrived. The bulk of data is still used the old way by SQL. Pure is much better adapted to AI’s requirements but AI is still in infancy. As Geoffrey Moore might have said, Pure has yet to Cross the Chasm. Pure depends on GPUs, on NoSQL, on the massive adoption of AI specially at the learning end.
The only reason my PSTG is slightly in the black is that selling covered calls has been quite profitable, it usually is when a stock is falling
The above chart seems to say that weak hands have sold out, there was a 40% drop from the all time high to the bottom near $18. Lieberman’s “Big News” warning is a good reason to wait out developments.
This image of “Hype Cycle” vs. “TALC” shows the situation graphically. PSTG is somewhere near to the Chasm.
One big unknown is whether powerful incumbents like NetApp and EMC will or will not be able to switch to the new parallel architecture. So far they have not shown a propensity to give up their cash cows - the incumbents dilemma!
Thats very helpful insight Denny.
Appreciate it.
I may pull a trigger on “watch position”.
BTW - i know a couple of people at this company, smart people and talking to them seems like culture inside the company is very positive, winner type culture.
BTW - i know a couple of people at this company, smart people and talking to them seems like culture inside the company is very positive, winner type culture.
While that is merely a small anecdote, that is good to hear, nilvest.
I’ll wait to see what comes from Pure Storage over the next few weeks in announcements and earnings.
Right now, I believe in management and Pure’s business model. If there are signs of long term weakness in their earnings report, I’ll strongly consider closing my position and investing in Nvidia. Especially after the recent sell off in Nvidia.
Piper could be right, but I’m giving Pure a chance to prove them wrong.
It’s dropped 33% from its recent high. Who’s sitting on profits?
Anyone who bought PSTG in Jan. this year after positive write-ups late last year by Bear and Bert would still have a profit. I’ve decided to sell half my shares and wait for the earnings release. Good luck to all.
Based on my previous PSTG post, the answer is “no.” At these prices I think the weak hands have been sold out already. Piper Jaffray should have downgraded them at the top, not at the bottom. LOL
If you bought in late Dec 2017 or early Jan 2018 you’ll be sitting a profit and this is a really goooood buying opportunity. Tell me why I shouldn’t go for it …
Pure sent out yet another reminder email about this event coming up next Monday.
I struggle to think that they’d be hyping this event so much that occurs on the same day as their earnings announcement if their underlying business momentum was remaining strong. I could certainly be wrong, of course, and the market can be a fickle thing sometimes.
