👋 Hey there,
Today I’m breaking down the trendiest stocks that are going public this week. I’m trying out two different formats to explain each company and I would love to get feedback on which direction you liked.
What you will find in this email:
Are you not sure what an S-1 is? Listen to today’s episode.
Disclaimer: Investing in stocks is risky and could result in the total loss of principal. The information in this email is meant to be informational and not direct advice to invest in a certain security. I don’t know the financial situation of each person reading this email.
Asana has a ton of growth potential in the WFH future but there is a lot of risk to consider. They have a ton of competitors in the “productivity software” space while not having a strong moat to keep current customers around. They will also continue to lose a lot of money on customer acquisition and R&D moving forward. In my opinion this is a very risky investment that will either make or lose people a lot of money. They are worth throwing some play-money at as a small percentage of your portfolio simply because there is a huge market opportunity.
What I’m doing
Not worth the initial 3-6 month coin flip for me to invest a lot of money into it. If they end up far below their private valuation of 5 billion I will strongly consider adding them to the Four Minute Fund. They have a really strong leadership team that I wouldn’t mind having some “moonshot money” on.
👍 The good
- Strong leadership team – The CEO is a co-founder of Facebook
- 82,000 paying customers in 190 countries, including 30% of the Fortune 500
- There is a lot of growth opportunity with existing customers as organizations add more team members and services to their subscription
- Currently has strong growth (57% year-over-year revenue gain)
- Huge market opportunity and total moonshot potential
👎 The bad
Efforts to maintain strong growth are ex.pen.sive
- Efforts to maintain strong growth are ex.pen.sive.
- They posted a loss of $118 million while making $143 million – that’s bigly
- To fight off the competition, Sales/Advertising and R&D costs are through the roof
- Research and development costs equaled 44% of their revenue
- I believe it will take a long time to reach the scale where they don’t have to burn a ton of cash in order to acquire new customers
- Big time competitors like Airtable, Google Tables, Atlassian, and Microsoft
- Not a strong moat (thing that keeps customer from leaving) – Many companies switch around from tool to tool – different teams within the same company tend to use different productivity tools
Palantir will probably have a similar hype train as fellow big data company, Snowflake. It’s an attractive high-growth and high-margin business where it’s a growing industry and you can expand business exponentially with one client. I foresee this stock getting a very lofty valuation which is great for early investors but makes me nervous to become a long term investor at the price it will go public at.
What I’m doing
I typically focus my investable funds into companies I have a strong edge in. Palantir is a bit of a black-box company surrounded by vague words like “big data”. Their largest customer is the U.S. Government and it’s very difficult to nail down how they serve them. At the end of the day I shy away from companies that I don’t know a lot about and Palantir is a bit too mysterious for me.
Do you prefer the bullet point breakdown or just the summary/what I’m doing section? Let me know! You can get in touch with me by texting 510.712.0803, responding to this email, or messaging me on Twitter. I want to do this more in the future and would love to know what you prefer.
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