$SPT short pitch:
– Social media management platform that trades at >10x forward Sales.
– COVID beneficiary – expected to rerate similar to other high flyers that miss on expectations.
– Core offering aggregates clients’ social feeds (e.g. Twitter, Facebook, Instagram, etc.) onto one integrated dashboard for easier management.
– TAM significantly overstated and management’s projections of 30% CAGR are unrealistic.
– Cyclical business driven by marketing budgets.
– Expected to be negatively affected by changes and increasing API pricing at $TWTR.
– Competition in the space is intensifying and customer acquisition costs are set to go up.
– Sprout Social trades at 10x NTM Sales, whereas direct comp $CMX is at 2.5x NTM Sales.
– Risk/reward spread is favorably skewed given where the company is trading today.
Exp. gain: 30-40%
Full write-up (free guest account required):