Hi conviction can sometimes require looking wrong for a period of time. I wish you strength and patience because your analysis looks strong, and at some point the “I want it now” crew will realise they want it “now”, and hopefully at much higher prices!
I like SentinelOne, for all the reasons mentioned. However, a drag on their stock price is the continued dilution of their shares. Consistently 6-8% dilution annually.
SentinelOne is now a mature enough business to no longer need to fund itself with further dilution. If management believes the story they are telling, especially now that they are free cash flow positive, they can stop the dilution. That management didn't mention this at all in their Q3 results was not quite a red flag but definitely a raised eyebrow. Perhaps they are waiting for more of a sustained signal about positive free cash flow in Q4 before they commit to starting to live at the stage of growth they have now achieved?
My assumption is that the market price has already baked in the 20% plus revenue growth each quarter. What is needed for the next move up in price is continued improvement in free cash flow and operating margins, continued wins of major corporate/government customers and a clear signal that company insiders are confident enough in their growth story that they no longer need to routinely dilute their stock.
I couldn’t agree more Duane. It’s the one thing I look at about this business and wish would get cleaned up. Generally, I’m in favor of compensating employees with ownership for the sake of alignment, but you can do that without being excessive.
I’m willing to be patient with it for now as they get to that sustainable free cash flow generation, mature into their different growth avenues (cloud, data, purple), and let the new CFO cook for a handful of quarters. Confident she can help get that under control with her experience at scaling much larger enterprises.
You have an excellent point about the new CFO. I'd noticed the new CFO but had not connected the dots like you did.
The new CFO could reflect getting a CFO who is a better fit for the new stage of development SentinelOne has reached.
That is the kind of insight you can gain when attending an investor conference and seeing and hearing the people yourself.
A related observation I'd had about SentinelOne was that their investor facing materials weren't at the same level of quality and sophistication as other companies at their stage. If the new CFO is a better fit for SentinelOne at its current stage, we should see a marked improvement in the quality of SentinelOne's investor facing material at Q4.
Hi conviction can sometimes require looking wrong for a period of time. I wish you strength and patience because your analysis looks strong, and at some point the “I want it now” crew will realise they want it “now”, and hopefully at much higher prices!
Thanks Tony! Agreed. I don’t mind volatility so I’m feeling fine 😏
The drawdown today puts the stock back where it was in October. And I certainly wasn’t upset or concerned about the stock then
I like SentinelOne, for all the reasons mentioned. However, a drag on their stock price is the continued dilution of their shares. Consistently 6-8% dilution annually.
SentinelOne is now a mature enough business to no longer need to fund itself with further dilution. If management believes the story they are telling, especially now that they are free cash flow positive, they can stop the dilution. That management didn't mention this at all in their Q3 results was not quite a red flag but definitely a raised eyebrow. Perhaps they are waiting for more of a sustained signal about positive free cash flow in Q4 before they commit to starting to live at the stage of growth they have now achieved?
My assumption is that the market price has already baked in the 20% plus revenue growth each quarter. What is needed for the next move up in price is continued improvement in free cash flow and operating margins, continued wins of major corporate/government customers and a clear signal that company insiders are confident enough in their growth story that they no longer need to routinely dilute their stock.
I couldn’t agree more Duane. It’s the one thing I look at about this business and wish would get cleaned up. Generally, I’m in favor of compensating employees with ownership for the sake of alignment, but you can do that without being excessive.
I’m willing to be patient with it for now as they get to that sustainable free cash flow generation, mature into their different growth avenues (cloud, data, purple), and let the new CFO cook for a handful of quarters. Confident she can help get that under control with her experience at scaling much larger enterprises.
You have an excellent point about the new CFO. I'd noticed the new CFO but had not connected the dots like you did.
The new CFO could reflect getting a CFO who is a better fit for the new stage of development SentinelOne has reached.
That is the kind of insight you can gain when attending an investor conference and seeing and hearing the people yourself.
A related observation I'd had about SentinelOne was that their investor facing materials weren't at the same level of quality and sophistication as other companies at their stage. If the new CFO is a better fit for SentinelOne at its current stage, we should see a marked improvement in the quality of SentinelOne's investor facing material at Q4.