Why I Recommended Shorting VistaPrint Before the Close Wednesday

| About: Cimpress N.V. (CMPR)

I am working on a consulting basis with comScore, attempting to selectively build out comScore's penetration among hedge funds. I will include below a recommendation that I shared with a comScore client who had asked specifically about VistaPrint (VPRT).

This is a perfect example of how I always recommend that investors use comScore data NOT on a stand-alone basis, but IN THE CONTEXT of your pre-existing knowledge of the company/stock. In this case, I had my own opinions about the stock that I shared as well...

Sent: Wed, July 28, 2010 2:02:02 PM
Subject: VPRT

I like long DRIV and short VPRT and GSIC [GSI Commerce] headed into the close, all with
earnings reported after the close.

I feel the strongest on VPRT, they are expected to be +$2. Doing some work on
GSIC and DRIV. If we trade these, I don't think they should be very big trades,
I'm not "pounding the table," but if you agree on some/all of these, let's trade
them. Again, short VPRT is my favorite of these.

Sent: Wed, July 28, 2010 2:11:25 PM
Subject: VPRT guidance

I have it from FristCall as $169-$174 revenue guidance for this quarter, and the
Street is at $168.8, so not showing a lot of confidence that management can even
hit the low end of guidance. Last quarter they missed consensus revenue by ~$3mn
and the stock tanked by $10, eventually $15 or 25% of the pre-earnings price. I
think they're set up to do the same this quarter, so maybe you should put more on
this. I will head over to the office shortly and we can discuss more. Have a look at the Y/Y revenue growth rates which have slowed from 23%, to 20% in 2 of the last 3 quarters, to 15% in 1Q. Even if they get back to 20% y/y rev growth this quarter, they'll be below consensus and miss their range
entirely. If they miss big on revs for a second quarter in a row, the stock could take a pretty decent sized hit, I think.

Please review the attached and tell me if this makes sense. ComScore data,
though not highly correlated to their revenues, shows user traffic to U.S. and
international sites -15% y/y in the June quarter. For the U.S., this is the first
time they've ever had negative y/y traffic, and it's by a meaningful margin, so
it would support the thesis that they're going to have a lot of trouble making
their guidance/consensus on the top line.


Feel free to contact me to discuss Internet stocks. Thanks for reading.

Disclosure: No personal VPRT position