Anyway to your credit.. I actually sold my position today.. Will probably trade lower.. but it'll bounce back up again..
lol well i think the technical term is "forward P/E" but anyway.. and again you are looking at very basic metrics to determine the value of the company.. For example social media stocks are value based on # of users and the potential for monetize that user base (not saying I agree with that way of thinking). Cyber security is a different monster all together.. the future of the world is all about the internet and the flow of digital information. This is an industry that will grow faster than most other industries. The current geopolitical environment also will benefit companies like CUDA b/c governments and companies fear potential threats. Recent headlines like Target and Neiman Marcus are additional stories that feed into this trend. Now Barracuda alone isn't a company that will dominate the industry.. but again my view is that its a major acquisition target b/c the sum of CUDA's business combined with another firm with other product offerings will be worth the investment.. $2 billion mkt cap and probably a decent premium in the event of a takeover isn't a lot of money for some of the larger tech companies will a ton of cash.. But FTNT and PANW are larger and will require a much higher asking price...
with the exception of FTNT, which its P/E is 90 actuallly... both PANW and CUDA have negative EPS.. so you can't actually calculate a P/E... that aside.. its size of the overall company.. FTNT is close to $4 billion PANW is close to $5 billion and CUDA is a little more than $2 billion.. the way the cybersecurity industry works is that they look to offer multiple offerings of security and create a one stop shop.. Barracuda business model and product offerings fits this profile.. lol and if you really want a company who's valuation is unbelievable look at FEYE and WDAY..
While you are correct on the valuation, relative to other companies it isn't too outrageous... the company is trading at a premium b/c it is an acquisition target, within the cybersecurity space that is expected to grow dramatically over the next couple of years and will trade rich with its peers.. and with the entire market moving upward.. and investors our looking for higher returns.. CUDA represenets an opportunity that will generate a higher return than an Apple, which although is undervalued on a fundamental basis.. it is so big as a company that it can only marginally grow over the years.. people invest in growth. if the growth slows.. the stock will plummet, but until than.. up up and away
"For the full year, the company sees revenue in a range of $400 million to $410 million. Analysts have, on average, been modeling revenue this year of $406.5 million." Everyone needs to take a deep breath and stop letting the hype affect your decision making. It's irrational to believe the company can go to $85 or even $100 in the short term. It is simply not worth that much. You are ruining the stock by pumping it up on speculation. Let the thing drop and get in a the right price. Look at akamai (AKAM) and citrix (CTXS).. both similar sized market caps, fast growing companies and actually have earnings..
CTXS has almost $3 billion revenue, $339 mln net income, $734 million in cash, zero debt
AKAM has almost $1.6 billion revenue, $293 mlm net income, $673 million in cash, zero debt
FEYE currently is projected to have $400 mlm revenue (in one year) and report a loss on earnings, and has $327 million in cash, and 20 million in debt
How can you argue the company is going higher if they need to 3 to 6 times their projected revenue to match these other companies, and actually report a profit???
"For the full year, the company sees revenue in a range of $400 million to $410 million. Analysts have, on average, been modeling revenue this year of $406.5 million." Do you know something everyone else doesn't and believe they can do 1. 5 times forecasted revenue in one year??? Again to grow 100% every year means they go from 400 million to 800 mlm to 1.6 billion to 3.2 billion. And that's revenue, they are no where near projected to report a profit anytime soon. Take emotion aside and think logically for a second..
Again, it's not a question of product or that the company is bad, valuation is just not right. Why risk your money now, let the price come down and get in cheaper.
reading in on why this company is so important and how and what they do.. i got really excited and wanted to buy the stock.. problem is... the stock has had a ridiculous run and now its way overbought and overvalued. it has a 10.75 billion dollar market cap, yet produces negative earnings. Its annual revenue is projected to be 400 million in one year (not today) and still lose money. I look at another fast growing company like Chipotle which has annual revenues currently at approx. 3.2 billion with a 10% profit margin so about $300 million annual profit and 578 million in cash, zero debt. Chipotles market cap is 16.9 billion.
My point is not if Chipotle is undervalued, but that the price people are willing to pay for FEYE is way too high. Even if they were to double their projected revenues (100% growth) every year, it would take 3-4 years to get to where chipotle is today. So assuming your potential upside is 16.9 billion in market cap, or 57% increase in price from $78 to $122, would you pay that much for it 4 years early?
I will be fully transparent and state that I currently have a PUT position on the company as of earlier today. I pray that it drops significantly, but not to profit on my put option, but so that it becomes more reasonably valued so that I may invest in the company.
Its a great story and great company, but you can't let that distract you and overpay for the company.
Sentiment: Strong Sell