Hi all,
I wanted to get your opinions on the attractiveness of the CPaaS space for growth investing. I notice most of the folks here are now focused on cybersecurity and database type securities. Has the sun set on CPaaS? Or is the huge sell-off this year an opportunity to get involved?
FWIW, I have a modest position in BAND. It is down about 75%. I am tempted to average down, but I am very new to growth investing and don’t know whether I’m just throwing good money after bad?
Thanks for your input!
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Why do you like BAND? Are their financials to your liking?
They grew from 113 Million to 131 Million in 2022 which is a 16% YoY growth rate and their Net retention rate dropped from 131% to 114%. These two metrics have them underperforming the rest of my portfolio. Being down 75% may make it a value investment but it would not be a high growth investment. I would recommend reading the companies your invested quarterly reports first, before asking a question.
https://investors.bandwidth.com/static-files/b6598fad-11c3-4…
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I will be honest and say I did very little fundamental due diligence when I established the original position. It was a Motley Fool recommendation (I believe Rule-Breakers), and I thought they knew what they were doing. My thought-process at the time was:
“Oh, hey, they are in the same space as Twilio. CPaaS seems like a sticky product, lots of people need it. BAND is smaller and has a few advantages (the big one being they own their own Tier 1 network). Maybe they will take market-share. I don’t want to pay 80x sales for Twilio, so I’ll pay 30x sales for BAND.”
A very expensive lesson learned, most like.