No. of Recommendations: 12
Hi Saul, I am new here, and have learned a lot from you. This is not a disagreement, this is just a question; playing the devil's advocate for the purposes of discussion. CRWD, ZM, and ZS are recent IPO stocks currently in your portfolio. ESTC is a recent IPO no longer in your portfolio. ESTC is currently trading below its IPO opening price. Therefore, it must be a bad investment. However, CRWD is also currently trading below its IPO opening price. ZM is barely above its IPO opening price. ZS is not much higher than it was a year ago. All these stocks had huge pullbacks during the second half of 2019. How is ESTC a worse investment than CRWD, ZM or ZS, all of which you do still hold? They're all closer to their 52-week lows than their 52-week highs, so these have not been good investments for anyone yet really. I know the numbers are great on your picks. I've read all your posts over the past year. We all know the metrics are moving in the right direction. My point is why single out ESTC when CRWD, ZM and ZS have suffered the same dramatic selloffs? CRWD, ZM, and ZS all have better metrics, by your standards, but they all three crashed not much differently than ESTC. Is the selloff in ESTC just part of the huge rotation we saw last year? Is the quick recovery of AYX just a sign of what a phenomenon it is? Jim Cramer said AYX is one of the best stocks he's ever seen in his entire life! I hold AYX. But for the purposes of portfolio diversity, I do hold positions in all stocks listed here. ESTC is the smallest position, my lowest confidence. But why can it not recover too like you presume CRWD, ZM, and ZS will? You know better than anyone that AYX went public in 2017 at a very tiny market cap and very reasonable valuation. The question is, were the market caps and valuations for newer IPOs like ESTC, CRWD, and ZM too high for the public markets? Apparently, public sentiment reacted negatively against UBER, LYFT and the greedy private VC market behind WeWork. Our stocks got dragged into the mess. AYX, TTD, and OKTA are bouncing back the fastest. You must believe CRWD, ZM and ZS will too in time. Why won't ESTC bounce back also? It seems to have already hit the floor and is coming back like everything else. The one-month price action for CRWD, ZM, ZS and ESTC is pretty similar. I do have a high conviction like you do with CRWD. But rather than sell ESTC now, I'm giving it a little more time. Even SQ is showing some life now. SHOP didn't do much for 2018 but it more than made up for it in 2019. No one is saying you should buy ESTC now. But for someone who already has a little ESTC, it will be very frustrating to sell it right now and then watch it go up in 2020. I sold one of the best stocks of the last 3 months only days before it woke up. (I can't mention the name, but you used to hold it years ago.) You are being patient with ZM, CRWD, and ZS; maybe that's how an ESTC shareholder feels. And finally, could the wonderful growth for ZM already be baked in at a $20 billion market cap? AYX is still only about $8 billion now, and ESTC is only about $5 billion. I believe WDAY was an example of a stock that went public at a high market cap valuation and the price didn't really go anywhere for years. I have a position in ZM, but I don't know if it's going to perform better than ESTC or not yet. Still, I hold a higher position size of ZM because of conviction. Thank you for everything you do. Best, Broke
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