TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.</p>
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<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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When we first looked at Snowflake at the time of the IPO, we saw an incredible business with great management and unbelievable business model. But the stock quickly went well beyond our valuation comfort levels, and last quarter we said we couldn’t justify owning it. We reserve the right to change our minds. The number that stood out this quarter was 168% - Snowflake’s net revenue retention in the quarter. We still think Snowflake is expensive – and you can arguably get a similar growth rate and excellent business model at half the valuation with Crowdstrike…but like many compounders (Adobe, ServiceNow), sometimes you never get the entry point you want. We think the drawdown in growth presents that opportunity.

Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.


Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<p>In this insight, we provide an updated valuation analysis on the <a href="https://www.smartkarma.com/entities/roblox-corp" target="_blank" data-smartkarma-citation="entities:29697:1" rel="noopener">ROBLOX Corp (RBLX US)</a> direct public listing. The company has provided a guidance that it plans to complete its direct listing on or near March 10th. The company has also provided the full year results in 2020. Roblox plans to sell 198,917,280 shares in this direct listing. In January 2021, the company sold about 12 million shares of convertible preferred stock in a private placement at $45 per share, valuing the company at<a href="https://www.barrons.com/articles/roblox-sets-date-to-go-public-through-a-direct-listing-51614036401" target="_blank" rel="noopener"> $29.5 billion. </a></p><div class="content-highlight"><p>Our revised valuation of Roblox is an implied market cap of $49.4 billion and implied price of $75.3 per share. Our valuation of the company has been slightly lowered by 1.2% versus our previous estimate. <strong>At a valuation of $49.4 billion, this would represent 67% higher levels than the last private market value of $29.5 billion.</strong></p></div>

In this insight, we provide an updated valuation analysis on the ROBLOX Corp (RBLX US) direct public listing. The company has provided a guidance that it plans to complete its direct listing on or near March 10th. The company has also provided the full year results in 2020. Roblox plans to sell 198,917,280 shares in this direct listing. In January 2021, the company sold about 12 million shares of convertible preferred stock in a private placement at $45 per share, valuing the company at $29.5 billion. Our revised valuation of Roblox is an implied market cap of $49.4 billion and implied price of $75.3 per share. Our valuation of the company has been slightly lowered by 1.2% versus our previous estimate. At a valuation of $49.4 billion, this would represent 67% higher levels than the last private market value of $29.5 billion.

Roblox Direct Public Listing Valuation Update

<p>In 4Q20, Amazon turned in another sensational quarter, but essentially hasn’t moved since September as it has been “growing” into its valuation after a meteoric move in 1H20. In the past year, Amazon has spent an incremental $11.5B on COVID related costs (~10% of 2020 opex), increased the square footage of its logistics network’s square footage by 50%  and also added ~650,000 (!!!) employees, doubling its employee base in what also turns out to be the largest mobilization of workers in the US since World War II. And yet…since September 2, the stock is down 4% from its alltime high. We think Amazon is worth closer to $6,000 then $3,000 and think that it has potentially the same type of setup as last year when we began writing (on Smartkarma) about Amazon. In years after the company has huge capacity expansions, it tends to outperform as the operating leverage of capacity utilization shines through.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

In 4Q20, Amazon turned in another sensational quarter, but essentially hasn’t moved since September as it has been “growing” into its valuation after a meteoric move in 1H20. In the past year, Amazon has spent an incremental $11.5B on COVID related costs (~10% of 2020 opex), increased the square footage of its logistics network’s square footage by 50%  and also added ~650,000 (!!!) employees, doubling its employee base in what also turns out to be the largest mobilization of workers in the US since World War II. And yet…since September 2, the stock is down 4% from its alltime high. We think Amazon is worth closer to $6,000 then $3,000 and think that it has potentially the same type of setup as last year when we began writing (on Smartkarma) about Amazon. In years after the company has huge capacity expansions, it tends to outperform as the operating leverage of capacity utilization shines through.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

<p>Roblox, one of the leading global game platforms, announced on Friday (8 January) that it plans to go public through a Direct Public Listing (DPL), instead of the traditional IPO. Ahead of this direct public listing, <a href="https://www.cnbc.com/2021/01/08/roblox-expects-direct-listing-on-nyse-in-february.html" target="_blank" rel="noopener">Roblox</a> raised $520 million in private financing, valuing the company at $29.5 billion or $45 per share.</p><div class="content-highlight"><p><strong>Our valuation analysis suggests a base case implied market cap of $50 billion and a target price of $76.20 per share for Roblox. This would represent 69% higher level than its most recent private capital raise of $520 million, valuing the company at $29.5 billion or $45 per share. The direct listing valuation range is from $40.5 billion to $60.5 billion, according to our valuation sensitivity analysis. </strong></p></div>

Roblox, one of the leading global game platforms, announced on Friday (8 January) that it plans to go public through a Direct Public Listing (DPL), instead of the traditional IPO. Ahead of this direct public listing, Roblox raised $520 million in private financing, valuing the company at $29.5 billion or $45 per share.Our valuation analysis suggests a base case implied market cap of $50 billion and a target price of $76.20 per share for Roblox. This would represent 69% higher level than its most recent private capital raise of $520 million, valuing the company at $29.5 billion or $45 per share. The direct listing valuation range is from $40.5 billion to $60.5 billion, according to our valuation sensitivity analysis. 

Qualtrics International / Equity Capital Markets

<p><strong>Our base case valuation of Qualtrics is $19.0 billion in terms of implied market cap or $31.6 per share, which represents a 32% upside from the high end of the initial IPO price range of $24 per share. Given the solid upside, we have a positive view of the Qualtrics IPO.  </strong></p>

Our base case valuation of Qualtrics is $19.0 billion in terms of implied market cap or $31.6 per share, which represents a 32% upside from the high end of the initial IPO price range of $24 per share. Given the solid upside, we have a positive view of the Qualtrics IPO.  

United States

Adobe Systems Incorporated develops, markets, and supports computer software products and technologies.  The Company's products allow users to express and use information across all print and electronic media.  Adobe offers a line of application software products, type products, and content for creating, distributing, and managing information.

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Adobe Systems (ADBE US)

Snowflake 4Q21 Earnings: Their Revenues ARE Worth More Than Yours

Snowflake had an incredible quarter and we think its a reasonable entry point for the highest valuation software stock in the market.

Aaron Gabin

Roblox Direct Public Listing Valuation Update

Our revised valuation of Roblox is a market cap of $49.4 billion and implied price of $75.3 per share which would represent 67% higher levels than...

Douglas Kim

Amazon 4Q20: The GOAT Departs

Amazon CEO Jeff Bezos is stepping down. We doubt he steps away. 2021 is a unique setup. Its the first time Amazon was up during a big capacity...

Aaron Gabin

Roblox Valuation Analysis

Our base case valuation for Roblox is $50 billion and a target price of $76.20 per share. This would represent 69% higher than its most recent...

Douglas Kim

Qualtrics Valuation Analysis

Our base case valuation of Qualtrics is $19.0 billion in terms of market cap or $31.6 per share, which represents a 32% upside from the high end of...

Douglas Kim

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