My thoughts on valuation and the stock
In case you missed it, here goes again:
My thoughts on valuation:
1. Private market value as of the last funding round, in August, was almost certainly at least $300mm. Since then the comps have exploded higher and $NOW has raised the bar even higher. Double that to just account for rising public comp valuations and assuming a max share count and we're still talking about a $3 stock. Keep in mind, that's a very conservative target and EXCLUDES the B2B database acquisition and CreditSafe. Those acquisitions also won't be reflected in historical financials.
2. Valuation for emerging companies like this in "hot" areas is driven not by trailing revenue or EBITDA, it's driven off of expectations in the future. Look at $NOW. Yes, it does generate meaningful revenue, but no one in their right mind would say it's valuation is justified by trailing or even 1 year forward revenue. It's based on estimates of revenues well into the future. That's what growth investors look at when basing their investment decisions. With respect to $SNOW, it's now trading at ~175x forward revenue. TDS talked about CreditSafe alone achieving run-rate revenues of $80mm by year end 2021 and that's just going to be one part of the business.
3. Float. The float is going to be very small in relation to the potential market cap. Consequently, from a trading perspective, the stock is almost certainly going to overshoot "fair" value, particularly given the current market backdrop.
I see a bright future for the stock and as we get more information, we'll be able to set more accurate price targets. That said, I think we're trading at a small fraction of the potential value. Looking forward to seeing it play out.
