In the past couple weeks CRWD is up 33% and DDOG is up 45%. Several other stocks have also rebounded sharply (up) after incredible earnings calls and growth. Whatever sector rotation based on valuation that transpired in July and August, the continued execution of some of these companies and the blistering growth that continues to accelerate their revenues is bound to eventually take them higher. Those that stumble will however get punished. PINS might be in that category right now as they try to figure out how to convert and monetize their revenue model at a higher level. I have exited my very small position in PINS completely and picked up a stock called COUP. Conversely, DDOG posted 88% y/y revenue growth in their recent and first public earnings call. That represents an acceleration in growth (not just real numbers, but % growth) at the highest level of any companies out there this size. They also added 90% more to their customers over $100k. The past 4 quarters revenue growth (most recent is last) by my calculations have been:
82.8%
76.4%
82.2%
87.7%
While they don’t appear to be slowing down at all, they will have some very tough comparisons next quarter and are trading at an eye popping 38x sales. I will not be adding to my relatively small 3.5% position, but will watch this company closely to see if they can continue to defy gravity. If I did not think they could, I would deleverage my positions.
CRWD on the other hand was unduly punished after getting mentioned in the Presidents Ukraine telephone call and political fallout scandal. Last week, it was revealed that they had nothing to do with it and were more or less vindicated. I did not buy or sell more shares as I waited for the rumors to be validated or debunked. Their next earnings call will be Dec 5 and I will stand firm until then, though I’m very happy to see the 33% rebound. Current positions and allocations to follow. Happy Sunday in November!!
