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Wim Dankbaar
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See my entry on Linkedin Owner Broadcast Media industry 2003 – 2011 (8 years) Overveen owner/director Stickerstation Benelux Entertainment industry 2000 – 2003 (3 years) Amstelveen... More
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  • Workday Bubble Created By Analysts

    Workday announced quarterly results yesterday. Revenues came in better than expected at 107 million against a consensus estimate of 100 million. Workday also upped guidance for annual revenues by roughly 10 million:

    For fiscal year 2014, Workday now expects revenue in the range of $436 million to $446 million, from its prior range of $425 million to $440 million. Analysts currently expect revenue of $439.44 million for the year.

    Read more:

    Wall Street analysts have jumped in by raising their price targets by an average of 20 %, anywhere from 70 to 88 USD per share.

    Let's forget that Workday is already the most overvalued large cap stock on Wall Street, with widening losses and a market cap of a whopping 40 times trailing revenues. Let's put these upgrades into perspective. The analysts translate a 10 million upward revenue guidance into a 20% increase in valuation. The current valuation is 13 billion. So they want to make you believe that in fact Workday is worth 2.6 billion more. 20% of 13 billion is 2.6 billion. And this is based on a 10 million upward guidance. Hence the 10 million increase is worth 2.6 billion?

    Come on! These Wall Street crooks are not even kissing you before you get f*cked

    Tags: WDAY
    Aug 29 9:32 AM | Link | Comment!
  • Share Price Disconnection Of LIWA With Cash And Book Value.

    Can anybody explain to me why the stock price of Lihua International (NASDAQ:LIWA) is so low? Am I missing something?

    The book value is 9.84 per share.

    I have always learned that if management decides to dissolve the company and distribute the assets that remain among the shareholders, the book value is what is left over for them. Of course with the thriving performance of LIWA, there is nobody even thinking about terminating the company, but if they would, you would get 9.84 per share, right?

    The cash value is 5.64. So the share price is lower than the bag of cash they are sitting on! You can buy that bag of cash for under the price of the cash! There is no debt. The PE is only 2.5. The CEO said "The best is yet to come" in the last earnings release.

    It has grown revenues by more than 50% annually over the past 4 years (from 160 million to 853 million). This qualifies as a growth stock. And most of those growth stocks are not even profitable like Lihua is. Yet they have Price/Sales ratios of over 10. How does this compare to Lihua's PS ratio of 0.17 ? Normally such a stock should be above 30 instead of 5. So what am I missing? Is this Mr. Market being stupid for the time being? Or what is the catch? I don't get it. Somebody help me please!

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in LIWA over the next 72 hours.

    Tags: LIWA
    Jul 24 10:04 AM | Link | 1 Comment
  • Will Workday Miss Its Revenue Target?

    To answer the question right away: I think so.

    As I tried to point out in a previous article, I believe that Workday (NYSE:WDAY) is a contemporary example of irrational exuberance, not seen since the bursting of the bubble.

    In Workday's latest earnings call the company forecasted annual revenues as follows:

    "For the year we anticipate total revenue of $420 million to $435 million or growth of 53% to 59%."

    However, if we look at revenue over the last four quarters, we see that revenue growth is not accelerating. The company did not manage to add more than 10 million revenue each quarter. This means that in percentage the growth is actually decelerating, rather than accelerating. In order to reach its revenue target the company needs to add more than 10 million each of the next four quarters.

    I see no reason why this should happen, given the past performance. Moreover Workday targets large companies as customers. These companies are mostly standardized on Workday's giant competitors like Oracle, Salesforce and SAP, who increasingly offer good cloud alternatives for Workday's products. I believe it will therefore prove more and more difficult to convince these companies to switch to the smaller, and thus riskier Workday, as the costs to switch to a new vendor are gigantic for large companies.

    Guidance for the current quarter is not encouraging either. In fact, less than 10 million revenue growth is projected by management:

    "we expect total revenues for the first quarter to be within a range of $83 million to $87 million..."

    The midpoint of that range, 85 million, adds less than 4 million to last quarter's revenue of 81.5 million, well shy of the 10 million added in the previous quarters.

    But let's stay optimistic and assume that Workday could keep the pace of adding 10 million revenue over each of the next four quarters. This would break down as follows:

    Q1 90 million

    Q2 100 million

    Q3 110 million

    Q4 120 million

    This optimistic scenario, assuming no economic headwinds, totals to 420 million, the bottom of their revenue target range, which will be considered a miss.

    Add to this that Workday is currently valued at 25 times that forward revenue (38 times trailing revenue) which makes Workday the most overvalued technology stock on Wall Street with a market cap above 1 billion. There is simply no other technology stock with a market cap above 1 billion and a price to sales ratio above 22. ARM Holdings (NASDAQ:ARMH) and Splunk (NASDAQ:SPLK) come close, but ARMH is very profitable and Splunk is nearing break even. Yet these companies are considered very expensive at these levels. Add to that the fact that Workday projects to increase its net operating loss (a whopping 119 million over the past year), plus the fact that the lockup period expires on April 10, and it is safe to expect that the odds for disappointments far outweigh the odds for pleasant surprises.

    Tags: WDAY
    Mar 17 10:37 AM | Link | 1 Comment
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