I have a small position in New Relic, which frankly, has gone nowhere. The stock has been flat over the past 11 months.
They report 4th quarter and fiscal year results in 11 days.
Not much news. Gartner recently put NEWR in the desirable “4th quadrant” for “Application Performance Monitoring” with high net promoter scores (https://finance.yahoo.com/news/relic-recognized-leader-gartn… ).
That said, it’s recent Q3 had recurring revenue up “only” 35% YoY, so that lags behind many companies being discussed here. While I’m a patient investor, I’m thinking that if Q4 doesn’t show something significantly positive there are better places for my money.
thoughts?
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That said, it’s recent Q3 had recurring revenue up “only” 35% YoY, so that lags behind many companies being discussed here. While I’m a patient investor, I’m thinking that if Q4 doesn’t show something significantly positive there are better places for my money.
thoughts?
I have a small position as well. The share price has lagged fundamentals for a little while. Personally, I’m not selling unless there is fundamental or thesis deterioration. I don’t want to chase performance by selling a laggard only to buy on overpriced leader. I have no idea what the share price will do in the short term for any of these stocks. Usually it’s better to do nothing unless there’s a material change in the company.
dave
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I have a small position in New Relic, which frankly, has gone nowhere. The stock has been flat over the past 11 months.
It closed at $70 last April and $102 last May. Was in a bit of a mini-bubble 11 months ago (May). By November last year it was back down in the $70s, so from that perspective it hasn’t gone nowhere lately. But yes, it’s definitely not the rapid riser among the likes of SHOP, TTD, AYX, etc.
It’s one of my top positions at about an 11% allocation. But I’m not expecting it to suddenly light the world on fire. I believe it is likely to at least be a steady grower over the next year, but that there’s a slight chance growth accelerates and the multiple expands, which would make it a big winner instead of a small one.
I’ll take a steady small winner with big winner upside.
Bear
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I have the bulk of my IRA in the stocks that Saul was holding (plus 25% in laddered U.S. treasuries for 5 year’s mandatory distribution–but that is another (OT) discussion). The bulk of the non-Saul stocks were NTNX, PSTG and NEWR. I decided it might be worthwhile to examine these, asking what do I see to justify these “contrarian” holdings. I even recorded my notes, which is a rare bit of organization for me. They are not great notes, not analysis, just bullet points. They are:
New Relic Notes
1) Long thread on Saul’s. Starts at 50160.
2) Steady 35-ish% growth
3) Non-GAAP profitable, but $1.40/share and $100 stock price.
4) About 11 S/EV
5) 85% gross margins
6) But looking at 6% “operating margin” (profit before tax?)
7) 2022 target 10-14%
8) Maybe $470 M sales 2019.
9) 35% growth gives $1,181 million 2022
10) Operating margin would be $2.44 per share if no dilution but
11) There is convertible debt. So best, $100 per share is p/e 40.
12) The convertible is 8%. Say 12% stock based comp, p/e is 50.
13) So probably sell, but no hurry, need something compelling to buy.
14) And increasing number of products. NTNX type sales problem?
I sold at $104.15, and despite my “something compelling” note, I spread the money among 7 other stocks, an exercise so far in wealth destruction :). Let’s see: ESTC, +1%, SMAR -3%, GH -17%, SQ -11%, ZM +26%, ZS +2%, TTD +5%. The ZM is the 10 shares IPO open, sort of like a first edition book to put on the shelf.
Anyway, those were my thoughts. Didn’t hate it, but thought I could do better.
KC
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I’m kinda in the same boat on this one. It’s just stalled/lagged and I’ve been looking for other places to move that money. Positions I would be STARTING would be my first choice, and the short list is: ZS, ZM (well, not at the post-IPO prices we’re seeing), SMAR. I had MELI on my short list and WISH I had converted that over, but I was waiting for signs that business was improving there, and missed the mega-boat on the last Q earnings jump.
So, I’m still holding NEWR, but not in love with it relative to other positions. I may just move it to others I already hold that are down a little: AYX, OKTA, SQ, for example.
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