The Saint Bartholomew's Day of the Analysts
07 December 2021
In the film "Le Pacha", Jean Gabin, who plays a police commissioner who is fed up with the underworld, calls for a Saint Bartholomew's Day for mobsters. Me, when I see these particular markets at the end of the year, I start dreaming of the Saint-Barthélemy of analysts.
On Thursday evening, DocuSign - the American company specializing in electronic signatures - had a market valuation of $46 billion. Of the 15 analysts who follow the stock, 14 are Buy.
On Friday, after the publication of the third quarter results, the stock lost 40% during the session.
In normal markets, for a capitalization of this level, this kind of amplitude is rare, observed only in cases of scandal or fraud. Here there is no fraud or scandal. There are even results above expectations. There is simply a lower order book forecast for the fourth quarter: it will be +20% instead of +30%. " We've seen a slowdown in the urgency to equip ourselves with our solution ," says President Dan Springer. Is this surprising? Did you really need a PhD in nuclear physics to imagine that after an explosion in demand in 2020, it would eventually slow down once the pandemic was digested?
If you look at just two numbers, it doesn't seem so hard: $550 million in sales for the quarter and a $10 million loss. This company couldn't have been worth $46 billion on Thursday night. Period. And it's still extremely expensive after the drop, at $27 Billion.
Is this an isolated case?
Here is Snowflake (one of the new American unicorns in the cloud) with its results published last Wednesday: Revenue of $330 Million and loss of $150 Million. Tonight Snowflake is worth $104 Billion. And of the 24 analysts who follow it, 14 are Buy and 10 are Neutral. None are selling.
While waiting for Snowflake to follow DocuSign's example, let's stay away from these values and console ourselves by watching the Pacha: the music is by Gainsbourg and, in the end, it doesn't end well for the crooks... https://youtu.be/FyCLSGbdV10
Have a good week
Charles
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