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

Palantir Technologies  / Equity Bottom-Up

<p>Palantir’s earnings call was a master class in obfuscation.</p><p><strong>Since 4Q20 earnings on February 16, 2021, five C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily for them, Cathie Wood and ARK has bought 20M shares for $480MM! </strong></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>

Palantir’s earnings call was a master class in obfuscation.Since 4Q20 earnings on February 16, 2021, five C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily for them, Cathie Wood and ARK has bought 20M shares for $480MM! 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.

Palantir 1Q21 Earnings: ARK’s Buying What They’re Selling

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<strong>Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share.</strong> Given the moderate upside in the share price using our base case valuation, we have a Positive view of the UiPath IPO. </li>
<li>We forecast the company to generate sales of $982.5 million (up 61.7% YoY), gross profit of $877.8 million (up 62.0% YoY), and an operating loss of $71.2 million in FY ending Jan 2022. From FY ending Jan 2021 to FY ending Jan 2026, we estimate the company's sales to increase by 37.9% CAGR.</li>
<li><p>UiPath is one of the global leaders in the RPA (robotic process automation) market. Robotic process automation is a form of business process automation technology based on software robots or on artificial intelligence. <span>The company provides a comprehensive range of automation solutions via numerous interrelated software offerings. </span></p></li>
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Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share. Given the moderate upside in the share price using our base case valuation, we have a Positive view of the UiPath IPO. 
We forecast the company to generate sales of $982.5 million (up 61.7% YoY), gross profit of $877.8 million (up 62.0% YoY), and an operating loss of $71.2 million in FY ending Jan 2022. From FY ending Jan 2021 to FY ending Jan 2026, we estimate the company's sales to increase by 37.9% CAGR.
UiPath is one of the global leaders in the RPA (robotic process automation) market. Robotic process automation is a form of business process automation technology based on software robots or on artificial intelligence. The company provides a comprehensive range of automation solutions via numerous interrelated software offerings. 


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/tuya-inc" target="_blank" data-smartkarma-citation="entities:32158:1" rel="noopener">Tuya Inc (TUYA US)</a> provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.</p></div><div><p>Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).</p></div><div><p>In <a href="https://www.smartkarma.com/insights/tuya-ipo-initiation-connected-future" target="_blank" data-smartkarma-citation="insights:48695" rel="noopener">Tuya IPO Initiation: Connected Future</a>, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/tuya-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49137" rel="noopener">Tuya IPO: Valuation Insights</a> we noted that the IPO price range is reasonable but full at the high-end. </p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. </p></div></div></div>

Tuya Inc (TUYA US) provides a backend service for IoT (internet of things) device makers. Tuya offers its customers a Platform-as-a-Service (PaaS) for IoT devices that handles the connectivity, device software and application development.Tuya has priced its IPO at $21.00 per ADS to raise gross proceeds of $915 million, above the previous IPO price range of $17-20 per ADS, according to Bloomberg. At the final IPO price of $21 per share, Tuya will have a market cap of $11.8 billion. The IPO got off to a strong start due to indications of interest for $500 million worth of ADSs in the offering from existing investors (Tencent Holdings (700 HK) and Hillhouse Capital) and new investors (Canada Pension Plan Investment Board, Dragoneer Investment Group, GIC and Tiger Global Management).In Tuya IPO Initiation: Connected Future, we opined that Tuya’s PaaS solutions are well-positioned to benefit from the rising need for third-party IoT PaaS providers who can provide the required tools. We concluded that Tuya’s fundamentals are attractive. In Tuya IPO: Valuation Insights we noted that the IPO price range is reasonable but full at the high-end. Updating for the final IPO net raise, our base-case DCF derived price target of $20.65 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on securing a modest share of the addressable market. 

<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>In this insight, we provide a valuation analysis of JFrog which raised the IPO price range to $39 to $41 per share from $33 to $37 due to higher investors' demand. The company and existing shareholders are selling 8 million shares and 3.57 million shares, respectively. At $41 per share, the JFrog IPO could raise $474 million. </p><p><strong>Our valuation analysis suggests an implied market cap of $5.0 billion and a target price of $55.2 per share for JFrog.</strong> The IPO price range is from $39 to $41 per share and assuming the IPO is completed at the high end of the IPO price range, our target price would represent a 35% upside to this price level. Given the solid upside, we have a positive view of this stock.</p><div class="content-highlight"><p>The key investment thesis of JFrog is that it is a company has been able to capitalize on its first mover's advantage in this new product category of <strong>Continuous Software Release</strong> to scale up its business significantly without spending large sums of money on sales &amp; marketing and this is one of the key reasons why the company has quickly become profitable.</p></div><div data-position="2"></div><div id="outstream-video-1-QGNH2BT1UM0X01" data-position="outstream-video" data-ad-status="rendered">
<div id="e5464f5f9a45c6ecb332029f886a7059" data-google-query-id="CLzB7aWa7OsCFc-UlgodSPQJNw"><div id="google_ads_iframe_/5262/markets/article_1__container__"><iframe width="1" height="8" id="google_ads_iframe_/5262/markets/article_1" title="3rd party ad content" name="google_ads_iframe_/5262/markets/article_1" scrolling="no" marginwidth="0" marginheight="0" frameborder="0" srcdoc="" data-google-container-id="2" data-load-complete="true"></iframe></div></div>
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In this insight, we provide a valuation analysis of JFrog which raised the IPO price range to $39 to $41 per share from $33 to $37 due to higher investors' demand. The company and existing shareholders are selling 8 million shares and 3.57 million shares, respectively. At $41 per share, the JFrog IPO could raise $474 million. Our valuation analysis suggests an implied market cap of $5.0 billion and a target price of $55.2 per share for JFrog. The IPO price range is from $39 to $41 per share and assuming the IPO is completed at the high end of the IPO price range, our target price would represent a 35% upside to this price level. Given the solid upside, we have a positive view of this stock.The key investment thesis of JFrog is that it is a company has been able to capitalize on its first mover's advantage in this new product category of Continuous Software Release to scale up its business significantly without spending large sums of money on sales &amp; marketing and this is one of the key reasons why the company has quickly become profitable.




United States

Atlassian Corporation provides technology solutions. The Company designs and develops enterprise software platform for project management, collaboration, issue tracking, integration, deployment, and support services. Atlassian serves customers worldwide.

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Atlassian (TEAM US)

Palantir 1Q21 Earnings: ARK’s Buying What They’re Selling

Since 4Q20 C-Suite executives from Palantir have sold $250MM (!!) in stock, with CEO Alex Karp selling $137MM in just the past 3 months. Luckily...

Aaron Gabin

UiPath IPO Valuation Analysis

Our base case valuation of UiPath is $60.7 per share, which represents a 21% upside from the high end of the IPO price range of $50 per share.

Douglas Kim

Tuya IPO: Trading Debut

Tuya has priced its IPO at $21 per ADS above the marketed range of $17-20 per ADS. Our sensitivity analysis points to a meaningful upside based on...

Arun George

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

JFrog IPO Valuation Analysis

In this insight, we provide a valuation analysis of JFrog IPO. Software companies Snowflake Inc. and JFrog Ltd. increased the size of their U.S....

Douglas Kim

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