OFFICIAL STOCK MARKET AND ECONOMY THREAD VOL. A NEW CHAPTER

I actually liked expiration day trading today
I just lowered my risk and transferred some profit into the bank

big plays everywhere already ahead for next week
 
ballinsam23 said:
Can you elaborate on this? Is it through limit orders only AH?
Click to expand...


Yeah, per Schwab:

D041816B-4C40-4686-834F-23052CBC4866.jpeg


Make sure you choose “Extended Hours” as well for “timing.”

FE067EFE-8D2B-43BE-B4BB-FFA218E762FD.jpeg
 
223 at ya said:
Incase anyone wants to look into Bandwidth, this guy takes the time to dive into it heavily.


BAND - Bandwidth Inc.
Current stock price: $158
Current market cap: $3.8 billion
Current enterprise value: $3.7 billion
Founded: August 1999 [read more]
Founders: David Morken and Henry Kaestner
Number of employees: 750+
Headquarters: Raleigh, NC
  • 2019 revenues: $232 million
  • 2020 revenues (est): $327 million
    40% YoY growth from 2019
  • 2021 revenues (est): $452 million
    38% YoY growth from 2019
$BAND 2020 Q3 Earnings Call [listen here]
$BAND All Earnings Calls [listen here]
$BAND 2020 Q3 10-Q Filing [click here]
$BAND Presentation about Voxbone acquisition, October 12th [click here]
$BAND 2019 Annual Report [click here]



$BAND - Bandwidth Inc.
Bandwidth operates as a cloud-based software-powered communications platform-as-a-service (CPaaS) provider in 60+ countries thanks to their recent acquisition of Voxbone which I’ll discuss below. The company operates in two segments, CPaaS and other. $BAND’s platform enables enterprises to create, scale, and operate voice and text communications services across applications and mobile devices. The company also provides SIP trunking, data resale, and hosted voice over Internet protocol services.


[$BAND currently serves large enterprises as well as small and medium-sized businesses. What really separates $BAND is that they’re the first and only CPaaS provider offering a robust selection of communications APIs built around their own Tier 1 network. This gives them a variety of advantages such as reliability, better security and more attractive pricing options for their customers.
PRODUCTS and SERVICES:
We live in a digital world where half our day is spent on our phones, using mobile apps, logging into secure websites, sending text messages, etc and it’s no different for large businesses and how they are transitioning to these consumer preferences.
Just today alone, I logged into my personal bank account, logged into my business bank account, logged into my trading platform and logged into Stripe Payments -- each time I was texted a time sensitive pin# which I had to type into the mobile app or my desktop in order to login. These types of notifications and messages are coming through API products available through Bandwidth.
Every time you order from DoorDash or get an Uber or make a mobile payment or forget your password... the time sensitive notifications being triggered by these transactions are coming through API products like Bandwidth. Every single day we are using Bandwidth products and services but don’t even realize it because they’re integrated so seamlessly into the apps we already use and trust.
Below are some screenshots from $BAND’s website explaining some of their main products and services being utilized by their 2,000+ customers.





CUSTOMERS:
$BAND works with some of the world’s largest technology companies including Google, Microsoft, Zoom, Cisco, Uber, RingCentral, DialPad (UberConference) and 2,000+ others.
In Q3 alone $BAND added 115 net new customers and continued to see more spending from their existing customers as reflected in their 131% DBNER (dollar based net expansion rate).





ACQUISITIONS:
On October 12th, 2020 $BAND announced they were acquiring Voxbone for $519 million or approximately 6x 2020 estimated revenues which means this deal would be accretive for $BAND shareholders [read more].
Voxbone is one of the leading CaaS companies in Europe and has 900+ enterprise customers including Zoom, Uber, Skype, Dialpad and Aircall. This acquisition gives $BAND a global presence covering 60+ countries and 93% of the world’s GDP.




$BAND vs $TWLO (Twilio):
As much as I like $BAND based on their own fundamentals and growth potential, this newsletter would not be complete unless I spent some time talking about the comparison to $TWLO which is the world’s largest CPaaS company with a current market cap of $60 billion.
$BAND and $TWLO are competitors for many of the same enterprise customers because they offer many of the same communication products. $TWLO does have more to offer due to recent acquisitions of SendGrid and Segment but $TWLO’s core business is still very similar to $BAND except they don’t have their own Tier 1 network.
Even though I like $TWLO and I respect what they have built, it is my opinion that $BAND is way undervalued when you look at the actual numbers.0
If you look below, the top chart is the quarterly numbers and estimates for $TWLO, the bottom chart is $BAND. If you look at the past 4 quarters, $BAND grew revenues by 40% while $TWLO grew revenues by 47%. If you look forward over the next 4 quarters (based on analysts estimates), $BAND is expected to grow revenues by 39% while $TWLO is expected to grow revenues by 32%. This is partly because $TWLO benefited more from the political messaging in 2020 than $BAND did.
If you look at the other numbers such as EBITDA margins, net income margins and gross margins they are very similar.
So considering that $BAND is expected to grow faster than $TWLO over the next 12 months with similar margins, why is $BAND trading at 8x 2021 revenues while $TWLO is trading at 24x 2021 revenues? This makes no sense whatsoever. Throw in the fact that $BAND would be a perfect acquisition target for 5-6 different companies and if anything $BAND should be trading at the premium, not $TWLO.
Even if $BAND’s P/S multiple expanded to 12-15x in 2021 (which is fair compared to $TWLO) and based on $452 million in 2021 revenues, using the midpoint of 13.5x, it would take the stock price up to $251 per share (assuming 24.3 million shares outstanding) which is 58% higher than current prices. If $BAND traded at the same P/S multiple as $TWLO then you’re talking about a $450 stock. I don’t expect this to happen but hopefully my point is coming through that $BAND is way undervalued compared to $TWLO despite relatively similar businesses.
$TWLO Financials:


$BAND Financials:





More $BAND vs $TWLO:
When you visit the $BAND website it’s pretty clear they are going after $TWLO customers. If you scroll down to the footer you’ll see a link called “Twilio Alternative” [click here]. These are some of the images you’ll see on that page:








Since $BAND owns their own Tier 1 network they are able to offer better pricing than $TWLO but sadly I don’t think most enterprise customers realize this. Since $TWLO is the more well-known and established company I think most enterprise customers just assume they’re the better, cheaper choice which is not true.
I want to be clear…. I think $TWLO is a great company and I have owned the stock multiple times before but if you’re comparing the two companies it’s simply impossible to conclude that $BAND is not extremely undervalued when compared to $TWLO.
I think it’s possible this year other investors and fund managers will come to this same conclusion and begin trimming their $TWLO and adding some $BAND because they’re still bullish on the CPaaS sector but want to own the $3.8 billion company trading at 8x sales that could easily be acquired any day for $5-6 billion.
FINANCIALS:
$BAND’s Q3 revenues came in at $84.8 million compared with $60.5 million in the year-ago quarter. The 40.1% year-over-year increase was primarily driven by higher CPaaS revenues. CPaaS revenues surged 43.3% to $73.8 million from $51.5 million in the year-ago quarter. CPaaS revenues now account for 87% of total revenues. Top line growth was a result of accelerating trends in the work from home / work from anywhere. As mentioned earlier, dollar-based net retention rate was 131% compared with 116% in the prior-year quarter. This shows that existing customers are spending more money with $BAND.
Adjusted CPaaS gross profit jumped to $36.7 million from $24 million in the year-ago quarter with respective margins of 50%, up from 47% a year ago. Bandwidth ended Q3 with 2,015 active CPaaS customers.
Given that $BAND already raised their full year guidance for 2020 to $327 million it’s safe to say we know that $BAND grew top line 40% over 2019 and based on estimates for 2021 we should see similar top line growth with continued improvements in gross margins and operating margins leading to EPS of $.30 to $.50 for 2021.
If we’re still doing comparisons to $TWLO, they are expected to barely turn a profit in 2021, partly because of their $3.2 billion acquisition of Segment which was a reported purchase price of 20x sales. In all fairness I still don’t know Segment’s top line growth numbers or margins.
In the short term it feels like $TWLO might have overpaid but in the long-term it could certainly turn out to be a great deal at a great price. It was smart of $TWLO to use their inflated stock to do the deal. Even though it’s way too early to make a definitive judgement on $TWLO’s acquisition of Segment, I do like that $BAND was able to acquire Voxbone for just 6x sales making this deal accretive to earnings for 2021 thus preventing excessive dilution for shareholders.




CHARTS and TECHNICALS:




[/TD][TD][/TD]
[/TR]

As you can see from the chart above, $BAND is sitting right on a couple moving averages and assuming the stock can hold these levels, it should act as support and could mean a big move higher is on the horizon.




These two charts are comparing the last 6 and 12 months of stock performance for $TWLO and $BAND.
$TWLO is in the red and $BAND is in the blue. Despite very similar business models and very similar growth rates, $TWLO outperformed $BAND by a wide margin in 2020. My hope is that $BAND starts to narrow this gap because the 3 things that fuel stock performance are revenue growth, earnings growth and multiple expansion … of which $BAND has all three. Once again, there’s no valid argument in my mind that justifies why $TWLO should be up 212% over the past year while $BAND is only up 128%. Either $TWLO’s P/S multiple needs to come down or $BAND/s P/S multiple needs to go up or perhaps they meet somewhere in the middle which means $TWLO trades sideways while $BAND goes higher.
MANAGEMENT:
David Morken is not only the original founder of $BAND but he’s still the current CEO and by all accounts a great leader and motivator. David gets very strong reviews on Glassdoor as does Bandwidth as a company [read here].
Here’s a recent video David made after the Voxbone acquisition… you can feel the excitement and passion in his voice… this is what you want from a CEO [click here]
Below is the current management team with a link to their profiles on $BAND’s website [click here].



CONCLUSION:
I’ll keep this part relatively short because you’re probably falling asleep. Earlier this year I owned $BAND from $90/share up to $190/share then sold it because I was looking to reduce my tech/cloud exposure. Since I sold my $BAND a few months ago the stock has pulled back into the $150s and in my opinion looks very attractive at these levels. Not only do I like the fundamentals but the technicals are lining up as well.
I began buying $BAND a little over a week ago and have since added to the position multiple times to the point where it’s now a 5.8% holding for me. Not only does $BAND look undervalued compared to $TWLO but it also looks undervalued compared to other cloud stocks like $FSLY $NET $ZM $DDOG and others. Very rarely over the past 6 months have you had a chance to buy a cloud/tech stock with 38% top line growth, improving margins, positive free cash flow and international expansion at just 8x sales. I have a feeling that Wall Street and large fund managers are going to wake up in the next month or so and realize that $BAND should be trading at $200+
The reason I started this newsletter was to find under-the-radar growth stocks with strong fundamentals and good entry points that might be ready to explode higher and I believe $BAND could be next. The goal with my portfolio is to only own stocks that I believe could appreciate by 50% or more over the next 12 months and I think $BAND has that potential thanks to the triple-turbo engine of revenue growth, earnings growth and multiple expansion.
I’m not saying you need to rush out and buy $BAND today because a pullback in this stock or any stock is always a possibility however if you have a 6-12 month investment horizon (or longer) I think $BAND is worth a good look especially if you believe in the current messaging, video conferencing, work from home, text/voice trends that are exploding all around us.
One last thing, I would never buy or recommend a stock on takeover hopes alone however the big legacy tech companies like Cisco, Oracle, IBM, etc are sitting on piles of cash and seeing slowing revenue growth and since I already believe 2021 will be a year full of M&A deals and it would not surprise me if $BAND was gobbled up by one of them.
I hope you enjoyed this writeup on $BAND. I spent 12-15 hours researching this company over the past week which included reading and listening to everything possible and since I can’t squeeze everything into these writeups... don’t hesitate to reach out if you have any questions about the company. I’m also hoping to have the CEO on my Adding Alpha show in early February.
PS: There are also some analyst reports you can read here [link]. Last time I checked there were 9 analysts that covered $BAND and 8 of them have buy recommendations.
Click to expand...

Which site is this from?
 
lamscott said:
Which site is this from?
Click to expand...

johnnyredstorm said:
Jonah Lupton’s substack. Just Google that and you should be good. That might be premium pick FYI.
Click to expand...

as mentioned it’s Jonah Lupton’s substack. Found him on Twitter sometime back. Signed up for his monthly email list of potential growers. $8 sub He’s suppose to be sending out 8 or so per month.
I’ll continue sharing with everyone here as he sends them out.
 
Last edited:
You must log in or register to reply here.

Similar threads

tr1ll
I propose a new SPOILER rule for media in NT's Terms and Rules.
Replies
20
Views
735
TSCQ
TSCQ
Manny Fernandez718
Learning a new language thread
Replies
5
Views
881
dman14
dman14
frenchbreadbuilds
atmos Will To Close Its US Stores And Website To Focus On Japan/Asia Business
Replies
16
Views
2K
Beruseruku Desu
Beruseruku Desu

Thread Gallery

View Full Gallery

The ultimate sneaker enthusiast community.

NikeTalk was created as a way of giving back to both the sneaker enthusiast community and to the greater global community of which we are all a part.

NikeTalk is NOT affiliated with Nike Inc. in any way, shape, or form. All opinions expressed herein do not necessarily reflect those of Nike, Inc.

© 1999-2024 NikeTalk.com

Share this page

Back
Top Bottom