Yeah, it does seem strange, a couple of weeks ago, on May 10th (13 trading days ago, so 2.5 weeks), MP1 closed at $5.24 and had a market cap of $781m. Their share price and market cap are now +30% higher at $6.84 and $1.02 billion respectively. You might expect this sort of move with a microcap or nanocap stock that not many people are following, but by ASX standards, Megaport is a little bigger than a microcap, and it has reasonable broker/analyst coverage.

However, they've been promoting HARD! 82 Insto Investors attended the Megaport promotional sessions run by Morgans, UBS & Canaccord Genuity, and at least 5 of those were US-based, plus 40 analysts/brokers attended, and the new CEO held 9 one-on-one meetings with insto's, plus did an AFR interview, as shown in that straw by @Valueinvestor0909 - and the company had been heavily shorted, so I think we've seen some short covering over the past two weeks, with most of it being in the past week, as well as some genuine buying by insto's and retail investors who are jumping on the short-term uptrend.

Take a gander at this AFR article from March 9th: Bevan Slattery stands with Megaport’s short sellers (afr.com) [by Joe Aston, AFR Columnist]

Plain Text: https://www.afr.com/rear-window/bevan-slattery-stands-with-megaport-s-short-sellers-20230309-p5cqso

Here's an excerpt:

Enterprise networks business Megaport was back in the news on Tuesday as chief executive Vincent English abruptly followed company secretary Emily McCaffery out the door, leaving chairman and founder Bevan Slattery to step in as CEO while the search for English’s replacement is conducted. The stock has fallen 14 per cent since.

Megaport’s share price is down 64 per cent in 12 months, caught up in the wider tech sell-off. It is also one of the most shorted stocks on the ASX, with 9.5 per cent of its shares currently in the hands of short sellers.

Founder, major shareholder and Megaport chairman Bevan Slattery. Photo: Louie Douvis

Slattery has put on quite the extravagant pretence of defying Megaport’s short sellers. In May 2021, he posted on LinkedIn that “someone” had just gone “11 million shares deep into a short position on [Megaport]… I’ve had four calls from investment banks and brokers just today asking if I’d be interested in selling some of my stock… Answer was a resounding no. I don’t know where they can think they will get the stock to cover [their short positions] especially because I’m too busy breaking out the [popcorn] and getting ready to watch the show.”

It was a profoundly delusional and ludicrous statement from bombastic Bev, who had up to that point – from March 2018 – stood beside Megaport’s short sellers and dumped $140 million of his own stock into the market.

In the subsequent 22 months to today, Slattery has flogged a further $60 million of his Megaport shares. He sold $6.15 million of his shares as recently as October. So that’ll be where short sellers could have got the stock to cover their positions!

Since Slattery broke out the popcorn, Megaport stock has fallen 63 per cent. Far from a short squeeze, hedge funds have made a killing.

Apparently, Bev is the only one allowed to sell – while serving as chairman (and now CEO) of the company. Institutional investors are not permitted to take a negative view. It’s juvenile.

Bev is, of course, one half of a comically ineffective militia against Australian short sellers with his pal Craig Scroggie of NextDC fame, the two stooges of southeast Queensland.

Craig Scroggie and Bevan Slattery on a Ferrari-driving weekend in 2018 courtesy of The Star casino.  Instagram

Scroggie (AKA the ginger maniac) famously claimed to have “zeroed out hedge funds and others that were looking to profit off the trade” from NextDC’s April 2020 capital raising.

Again, Bev took to LinkedIn to attack “Australian funds… who were mostly stock flippers and hedge funds [who] have chosen to throw their toys out of the cot… One capital raising where a company said ‘no’ to hedge funds/shorters/stock flippers and said ‘yes’ to new sophisticated long-only US funds for these people to lose their minds.”

Of course, this is not what happened at all. Actually, Scroggie zeroed out (until then) supportive shareholders Ellerston Capital, the Future Fund and sophisticated US funds Parametric and Dimensional Fund Advisors, while over-allocating to Greencape Capital, which dumped its entire holding the same week! The spurned shareholders took their revenge at NextDC’s annual meeting that November.

NextDC is also in the top 15 most shorted stocks on the ASX. With corporate governance like this, is anyone surprised?

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So, Joe Aston is critical of Bevan Slattery and Craig Scroggie and their "war on shorters", and over the past year, up until late April - when MP1 were trading at under $4/share (down a hell of a lot from the $21.46/share they closed at on 15-November-2021), the shorters have been cleaning up on MP1. However, it's been going Bevan's way again during May, which started with that EBITDA-Guidance-Update-for-FY23-and-FY24.PDF and the Q3FY23-Investor-Presentation.PDF they released on April 28th along with their Monthly-ActivitiesAppendix-4C-Cash-Flow-Report.PDF, and has been accelerated further (upward) by their heavy promo schedule since Michael Reid took over the CEO role a couple of weeks ago.

But zoom out and look at their 3-year chart. They're coming off a low base. So a 30% SP increase in 2.5 weeks, or a 25% increase in just the past week hasn't taken them very far compared to where they have fallen from.

Take a look at that rally in July last year when they went from $4.83 to $9.32 in 5 weeks. Their share price basically doubled. However, from there they dropped all the way back down to under $4. And that rally last July was sharper and stronger than this current one, but it wasn't sustained for further than those 5 weeks. And less than a year later they were trading at lower levels than they were when that July 2022 rally started.

Shorters and people losing faith can drive a share price down, down, down, and despite these occasional rallies that are basically orchestrated by MP1 management to try to stem the bleeding and create some positive momentum again, the overall share price trend doesn't look bullish to me.

I am not saying that BS manipulates share prices, but he is often involved when share prices rise sharply - think: Rent.com.au, Pointerra (ASX:3DP) and Intellihr in 2020 (recently bought out for 6 times what he paid for his shares). And he generally does OK. He has sold a LOT of Megaport stock at much higher levels than where they are today.

Further Viewing: Submarine Networks World HOTShot - Bevan Slattery, Founder of SUBCO and HyperOne - YouTube

He has his fingers in a LOT of pies.

Normally I would say that you won't often go wrong following succesful billionaires, as in investing in what they are investing in, but Bevan is a bit of an exception, in that he can make a small (for him) $2m or $3m investment in a nanocap stock, see its share price more than double, and then get out. As long as he's below 5% he doesn't have to tell us when he sells. Trouble is, once we get the news that he's on the share register, most of the upside has already occurred in many cases, and there's usually downside coming.

Megaport is different to those investments I just mentioned, because Bevan founded Megaport, and he's definitely still involved in the management of Megaport, or has been in between the abrupt departure of the previous CEO and the appointment of this new one. I'm fairly sure a lot of this recent promo stuff through these brokers and the other promotional activity is either partly or mostly BS's idea. He doesn't like the shorters to win, and they've been winning up until May 10th.

I remain unconvinced that MP1's SP can sustain this upward momentum for much longer. Hopefully for their shareholders it can go on with it, but it wouldn't surprise me to see another retrace like the one we saw after the July 2022 rally. They might rise a fair bit more first, but I reckon they'll resume that downtrend again at some point. I've always thought there was too much hype when this thing was trading up around $20, and the bubble would have to burst at some point, and it certainly did. As far as what they're worth, I have no idea. I don't know how much of a competitive advantage Megaport have. My limited understanding is that there isn't much of a moat there. Any one of a number of large multinational tech companies could replicate what Bevan has done with Megaport without infringing on any patents that he might have. The systems might not work exactly the same, but the benefits to their respective customers would be very similar and some of these mega-companies don't mind running various business divisions at a loss for years to reduce competition and increase market share (particularly Amazon). They have VERY deep pockets.

Flexible/elastic bandwidth/connectivity whatever-you-want-to-call-it, Bevan doesn't own the idea, he has just created a solution that works, and others could do something similar. Just like he created NextDC, but he doesn't own the idea of data centres, he just created one of Australia's first decent data centre companies, who now have to compete with the likes of Amazon Web Services (AWS) and Microsoft, as well as local specialists like Macquarie Telecom (MAQ).

He's one very smart cookie, no doubt about it, and he has certainly made a lot of money along the way, but I still won't buy MP1 or SLC shares. I don't think they are likely to be good medium or long term investments from here. I could be wrong of course. That's certainly happened before. But that's my view, FWIW.

All I can say is I only saw it being used once in a Oracle Cloud implementation without disclosing the client details. FWIW I believe we are still using it.

I don't really hear it being talked about at our workplace. They mainly talk about using the DCs (eg NTT, NextDC or the data centres used by the government orgs and tertiary ed) to do cloud connectivity

I would prefer Megaport attending more tech conferences instead of fronting instos for promotion.

Maybe set up a booth or presentation slot at one of those cloud conferences such as Oracle Openworld, Oracle Cloud day, Microsoft. to get the word out.

I think if MP1 can put in a strategy to get government orgs, tertiary ed on board then I'll change my tune. These are the hardest customers to crack due to their regimented nature and strict processes but also the most stable. Can't just keep chasing private firms all the time. Bear in mind I'm thinking at a top down level and looking outside rather than inside MP1 so I could be very wrong also. Although I did see that mention about the QLD govt meeting but that still looks like early days.