great write-up… however, if you are up for it, i like to offer few counter points to consider…
- 5G impact on data center: its way too early… single biggest factor for 5G to take off in the US in near future is not so much of mobile phones but VZ going after residential access services (Comcast cable business)… effect of this is only VZ buying more switches in near future and everything else is a wash…
eventually (think 2 to 4 years) as 5G on mobile is fully rolled out and applications like AR / VR picks up, it will drive whole datacenter hardware revamp… but its a couple of years out at best…
So unless you know for sure that VZ (or T) is a big customer for ANET (I do not know), this is a bit premature.
IoT’s impact on datacenter (and networks for that matter) is small, if any… its only a way for carriers like T & VZ to get extra revenue (and also chip companies like Qualcomm to sell more silicon)
Enterprise / financial markets: Big move towards more cloud usage brings question mark to all enterprise hardware businesses… this is one the reasons ANET, NTNX, PSTG etc., which I would call new gen enterprise players even though having tremendous market success, do not get enough street attention…
Hope its helpful.
Hi Saul, I guess I was trying to get at the difference btw purchases through the site and actual Firm’s revenue. I agree Pro Forma means Adjusted, but what exactly are they adjusting?
eBay’s Revenue is obviously not the GMV of everything sold on their platform, so I was asking Ant [or anyone who’s read all the reports on that company] to explain how they are defining it, since different firms do it differently.
Hi Saul, I guess I was trying to get at the difference btw purchases through the site and actual Firm’s revenue.
Naj, I guess I think of it more like Square. Looking back at a random quarter from a couple of years ago, Square had:
Gross Payment Volume (GPV) - $13.2 billion
Adjusted Revenue - $439 million
The Gross Payment Volume was everything that went through the site, and the Adjusted Revenue is the piece that they get to keep. They use adjusted revenue. As I understand it GAAP makes them consider the former as their Revenue for GAAP purposes, which is nonsense of course.
I think it’s the same with Afterpay.
My top pick for 2020 is LVGO
SAAS like gross margins (a bit of a hit due to the hardware component)
Revenue growth that outstrips all the favourites on this board. 156% and 148% in Q2 and Q3 2019
2020 EV/S below all the favourites here
Market cap of 2.15 Billion
Room for valuation expansion and rapid compounding
Clients are mainly large, self-insured employers. It is used by 20% of the Fortune 500.
Recently signed its largest contract ever for the US government providing its diabetes solution to >5M employees in 2020
Solving an important health issue and no competition have reached their scale so far.
LVGO is very interesting to me… growing at a very high rate yet valuation is very reasonable (considering growth rate)…
my big concern is that they seem to be burning cash also at a very high rate… although, i agree that they are building inventories and also investing…
I have a small position… looking to see reducing burn rate next earnings before I load up more…
I’ve also taken a small starter position in LVGO and will wait till after the lockup expiration on 1/20/20 to add more, as those do seem to drop the stock price around the lockup expiry timeframe.
Is just a “starter” position now, around lockup or just after I’ll probably make it a “small” position, and after the next earnings call (if progress is continuing and growth not slowing too much), might then build up to a “mid-size” position after I’ve actually learned more about the company.
And I reserve the right not to follow the above timeline if I don’t want to…it’s my money.
As it is getting close to the end of the year, I thought it best to see how this years picks have done. When these picks were made, no one would have dreamed this year would have panned out as it has. That being said, the performance of these stocks proves the that no matter the environment, the best companies ran by the best management will succeed no matter the headwinds. The following are the five companies nominated for top pick in 2020 and results:
Arista (ANET) Beginning price - $204.72 Current price - $290.82 Total gain - 42.06%
*Teledoc (TDOC) Beginning price - $83.26 Current price - $206.04 Total gain - 147.47%
Roku (ROKU) Beginning price - $137.10 Current price - $354.71 Total gain - 158.72%
Afterpay (AFTPF) Beginning price - $21.25 Current price - $85.66 Total gain - 303.11%
Crowdstrike (CRWD) Beginning price - $49.44 Current price - $224.90 Total gain - 354.89%
*The nomination was for Livongo but due to the merger TDOC is a better metric
Can’t wait to hear the top picks for 2021!
At the risk of sounding pedantic I’d politely disagree with your LVGO/TDOC return
LVGO price on Jan 2 2020 was $25
LVGO price on the acqusition closure was $140
The TDOC price on acquisition closure was $218
Current TDOC price is $209
Also ignores the cash payout…
Calling that a 147% return seems off to me
agree. I purchased LVGO around $25, so my return is several fold before selling to TDOC. That should be my return of this pick instead of using TDOC price history.