The Woeful Path of Maudlin

Now whatever you do…don’t go getting all Maudlin. Sure things look bleak: Sure your portfolio looks and feels like Chernobyl: Sure you’re tempted to sell and just make it all go away. Nothing there unreasonable or unexpected given the condition our conditions are in. But…going all maudlin at this point would not only be pure and absolute tripe - but severely detrimental as a severe self-limiting handicap to successfully climbing out of the wreckage and moving forward. So just don’t - and if by chance you already have - then pull yourself together man…woman, whatever. Now is the time to keep your wits about you:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&…

Beneficial Note 1: Regardless of what anyone else tells you - each investor must do, and take, their own individual route that keeps their family safe and allows them to sleep well at night.

Let’s say, for example, that you are tired of the beatings that Mr Market is administering. Weary of seeing your hard earned financial well-being slowly ebbing away. Going “Poof” and all that before your very eyes. So you think to yourself, I’ll just sell-out - hoist up the sails - and head for home:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&…

See what I’m getting at here? Now…for sure, I’ve been singing the same Hunker Down Dogs song for quite a while now. And each time the market has not disappointed in its unrelenting fury. Pounding - pounding and then pounding some more on our portfolios. Well…that’s just what the market does and after (This space left blank for insertion of critically important footnote)
4 years or so of a galloping Bull run higher and higher - wasn’t it about time the Bear got a turn? Why - of course it was. We just didn’t know how deep this road hazard would be or how really grouchy the Bear was. But - and here is the point: What’s done is done and the whole self-pitying maudlin thingy isn’t going to help. Not one bit. So just don’t.

Really Beneficial Note 2: In a survival guide I read and re-read years ago it stated that survivors of natural disasters acted/re-acted and responded to challenging conditions thoughtfully, expeditiously and methodically. And perhaps thats what to do here. Before I get into the hows’ of it all, I want to take a moment to review the market landscape with particular attention to the local fauna in regards to how bad it all really is. Why? So we can all respond to challenging conditions thoughtfully, expeditiously and methodically…thats why.

Really Beneficial Note 3: The reason I re-read the survival guide was that I figured it was best to be a survivor of any potential natural disaster and that knowing what survivors do might in some way help. Seemed reasonable at the time. Besides…whether you think your portfolio has all the right horses or not you still need to be on the right side of an investing strategy and plan. Seems reasonable:

https://www.youtube.com/watch?v=8aTWB5OlyjI

So now - just how bad is it? It’s bad…DANG BAD…Really Really Dang Bad! A Whole Heap of Bad: Thats how bad it is. Lets take a look at a few examples:

A) The Portfolio Roster

Really Beneficial Note 4) If you scare easily please look away.

  1. DDOG

https://www.datadoghq.com/

Current Price: $81.99
52 Week Low: $81.13
YTD Performance: -49.95%
Market Cap: $25.83B
EV/Revenue: 22.87

Latest ER Press Release:

https://seekingalpha.com/pr/18779635?source=content_type%3Ar…

Last 4 QTRS Revenue Growth: Most Recent 82.84%; 83.74%; 74.88%; 66.81%

So…despite Hat Trick type scores on ER reports DDOG somehow deserves to be sitting right on top of its 52 Week Low?

  1. BILL

https://www.bill.com/

Current Price: $105.02
52 Week Low: $89.87
YTD Performance: -55.10%
Market Cap: $10.94B
EV/Revenue: 20.94

Latest ER Press Release:

https://seekingalpha.com/pr/18781406?source=content_type%3Ar…

Last 4 QTRS Revenue Growth: Most Recent 179.4%; 189.5%; 151.9; 85.9%

Ok…ok - so they had overall losses that came in a little higher than anticipated and provided guidance that showed slowing growth: but HEY…of course growth slows over time and since when does your son not eat more when he gets to be a teen? It’s all part of growing up big and strong - or something like that. Besides - they’ve lost over half their market cap and sure they were a little fat - but projected Revenue Growth of 162% (and higher when they de facto beat those projections) ain’t to shabby. At that Market Cap with the growth BILL is a 5 Star Lock to be much higher a year from now - regardless of where it

  1. SNOW

https://www.snowflake.com/

Current Price: $114.37
52 Week Low: $110.26
YTD Performance: -65.55%
Market Cap: $36.4B
EV/Revenue: 25.4

Latest ER Press Release:

https://seekingalpha.com/pr/18809170?source=content_type%3Ar…

Last 4 QTRS Revenue Growth: Most Recent: 84.5%; 101.5%; 109.5%; 103%

Again we see slowing Revenue Growth but that is nothing more than a law of large numbers sort of thing. I mean these guys grew RPO by 82% along side a NRR of 174%. Here is their Investor Day Presentation:

https://s26.q4cdn.com/463892824/files/doc_presentations/2022…

  1. MDB

https://www.mongodb.com/

Current Prices: $235.01
52 Week Low: $213.39
YTD Performance: -51.8%
Market Cap: $16B
EV/Revenue: 17.06

Latest ER Press Release:

https://seekingalpha.com/pr/18817158?source=content_type%3Ar…

These guys blew out earnings. Here are the last 4 QTRS of Revenue Growth:

Most Recent +57.1%; +55.8%; +50.5%; +43.7%

Really nice revenue acceleration across 3 QTRs with Atlas growth driving the bottom line. MDB was a kewl kid back in the day until it wasn’t. Now its back with the kewl kids and better than ever! Maybe

  1. S

https://www.sentinelone.com/

Current Price: $22.10
52 Week Low: $18.64
YTD Performance: -54.35%
Market Cap: $6B
EV/Revenue: 18.64

Latest ER Press Release:

https://seekingalpha.com/pr/18817190?source=content_type%3Ar…

Last 4 QTRS Revenue Growth: Most Recent +109%; +120%; +128%; +121%

Once again Revenue Growth may be slowing but look where it’s slowing from. Then look at all this:

First Quarter Fiscal 2023 Highlights
(All metrics are compared to the first quarter of fiscal year 2022 unless otherwise noted)

  • Total revenue increased 109% to $78.3 million, compared to $37.4 million.

  • Annualized recurring revenue (ARR) increased 110% to $339.0 million as of April 30, 2022.

  • Total customer count grew over 55% to over 7,450 customers as of April 30, 2022.

  • Customers with ARR over $100K grew 113% to 591 as of April 30, 2022. Dollar-based net revenue retention rate was a record 131%.

  • Gross margin: GAAP gross margin was 65%, compared to 51%. Non-GAAP gross margin was 68%, compared to 53%.

*Operating margin: GAAP operating margin was (115)%, compared to (165)%. Non-GAAP operating margin was (73)%, compared to (127)%.

Now…my point in all this comes down to just four things:

  1. These companies are performing at the highest levels.

  2. This over-correction is a prime case of throwing the baby out with the bath water. Simple as that.

  3. While they are all sitting right on top of their 52 Week Lows that doesn’t mean they can’t go lower; however, they are all primed for out-performance when things turn around.

  4. Those investors that bought at the highs are certainly wounded and suffering; but, after looking at the Earnings Reports for these companies it should be obvious that if you were willing to buy at near the tops - then the current prices represent enticing value. So I’m going with my same old song:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&…

Hunker Down Dogs - Use RTHG Strategy - Control Your Emotions - Eyes to the Front - Mark Your Target When it Comes.

All the Best,

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