I hold CXZ. For a stock trading at a $12M EV, with cashflow positive operations, an entrenched position within GM and a possible growth runway, I think there is an asymmetric risk/reward opportunity here.
I have spoken with both Lucerne Investment Partners and Aaryn and I am comfortable with the rationale behind these historical changes of interest/positions. The rationale was summarised on HC threads at the time.
The barriers to entry are not insurmountable, but moderate-high:
There is over $5m in development costs for other 1st tier providers, a training cost of over 10,000 users, encapsulated business rules based on CTP, a difficult to untangle integrated solution with other GM partners, a trusted relationship with GM built over many years of doing business, a transition cost (time, development, training, roll-out, support and uncertainty of output/results) and switching risks to GM.
CXZ's solution for GM is also extremely cost-effective; it is a very lean solution.
There's a lot of movement happening in the background right now with GM. GM has offered OnStar as a connected/fleet service for years. It looks like GM is now ready to take it to the next level.
At GM's 2020 capital market day, the company discussed licensing, subscriptions and customer insight/data opportunities from the connected fleet. This is a big area of focus for them going forward.
Obviously, the stock is of a more speculative nature, but it holds a place in my portfolio. As is always the case, it is important to carefully consider the risk on any investment and see if it fits with your particular risk profile.
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