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Pushpay SaaS Valuation, page-17

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dgoodwin

217 Posts.

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04/08/20

11:38

Post #: 46286967
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Originally posted by Rokewa: ↑

Hi Dgoodwin

If you take the responses from Eric, Herpzanederp and ElonMusk above, it points to everybody developing a method which best serves their individual needs and appetite for risk. Locking in profit along the way is commonplace, even if only to reinstate portfolio balance. That said, when you are invested in a high conviction stock, the argument for holding regardless of the share price movements can significantly extend your gains over time ( Let your winners run !).

Let’s take your example where you exited $ at 6.07, banking a healthy profit ( I assume tax efficient). By your own admission you have done yr valuation on the day and considered the SP to be over the top. Puts you in the camp of being a Value Investor where your conviction in a Company floats depending on the ruling share price. You may like to try work up a 12 month forward valuation for PushPay and then reflect on your decision to exit (and on any decision to re-invest). Simply take 3 metrics...Revenue Growth, Gross Margin % and OPEX as a % of Revenue. Look at the trajectories, read any accompanying narrative and correlate with any guidance provided. This gets you back to investing on the back of conviction opposed to timing the market.

In June, the Company increased the EBITDA guidance for FY2021. I can share my 12 month forward valuation of $ 10.41. So buying at $ 6, $7 or $8 right now based on my conviction will provide a very healthy return. What’s more, if I extrapolate to 3 to 5 years, whether I paid $6, $7 or $8 will not materially impact my returns.

In summary, I can’t predict what will happen with the share price over the coming weeks. I do know that the Company will report their half yearly result on the 4th of November and barring any major macro impact, proportionate delivery of the FY2021 EBITDA guidance will see the Company share price re-rate. My research shows that PushPay have a huge runway for growth, COVID-19 is providing an acceleration to digital and a textbook case of operational leverage is on display. Further acquisitions will follow and dismiss the Company’s target of US $ 1m Revenue at your peril.

I remain fully invested and only new research or disappointing Company news will change that.

Good luck with your decision.

Rokewa

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Thanks Rokewa, this is a really helpful post. Much appreciated. This kind of feedback is why I haven't given up on much of the inane commentary on HotCopper!

PPH Price at posting: $7.14 Sentiment: None Disclosure: Not Held
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0 Great analysis

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Pushpay SaaS Valuation, page-17

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