How Do SaaS Companies Perform in a Recession?, page-7

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13/04/20

08:19

Post #: 44012585
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Originally posted by Dazedandconfused: ↑

l need to see a couple of quarterly reports before l re-enter LVT. There has been a profitable trade for the brave recently but is the 'growth at any cost' model still viable?

One very possible outcome for commerce in coming months is credit markets will dry up... the recent massive liquidity injections are all about preventing a cascade of defaults coming from the shutdowns. That might keep things afloat but how much is going to be available in 6 months time for new credit lines? Will businesses (i.e. potential customers) continue to update and expand or will they be preoccupied with balance sheet repair? If the latter, a company like LVT which is prepared to sacrifice positive cashflow in exchange for market share might find that model is higher risk than before.

l sold my position in LVT at the end of February. Although slightly in profit at the time it was a holding which had consistently been hard work. The recent (and current) lows are tempting, no doubt about it, but I suspect the company needs to consolidate and temporarily downsize to a cash flow neutral position for the next little while.

If that's how LVT proceeds l think investing in it is an option but if they continue with the same business model it becomes a bet that everything will go back to the way it was...

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They have moved away from ‘Growth at any costs’ goal to ‘Cashflow break even’. Check the latest Investor Presentation and comments from Karl. In this climate, that is a very sensible fiscal decision...

Just want to ensure you have the right information at your disposal if you’re considering making an investment decision...

Cheers

LVT Price at posting: 20.5¢ Sentiment: Buy Disclosure: Held
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How Do SaaS Companies Perform in a Recession?, page-7

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