I hold AD8 as 2% of portfolio in my super.
There's lots to like with their product:
- its basically a monopoly
- pricing power has yet to really work its magic
- the TAM is huge and they have only conquered a small fraction
- the world is re-opening so the live music bit of the business will be back up and rolling soon
However,
as per Rapstar, it is VERY expensive. It has failed to produce any meaningful evidence of exponential increase in revenue (through no fault of its own), and now has a declared that it will likely not do so for a number of quarters to come.
So delay upon delay before it can stand in the spot light, arms aloft, bathing in the rapturous applause of the market.
And yet is still valued as if this is a given.
The rate of innovation is increasing. Who is confident that there will not be some new disruptive technology that will be outt here eating AD8's lunch in a couple of years, when everyone reckons they will regain their rightful crown.
Great companies can be priced at various extremes in relationship to their current and expected earnings. We are all taught that Amazon and Monster suffered huge swings in SP but headede up and up and if only we had held all the way through, our only problem would be deciding how many luxury yachts we needed in the Mediterranean vs the Caribbean. But, I have held PPH, APX and A2M with the same expectations of greatness, watched with glee as the SP scaled to ridiculous heights and consoled myself with the mantra of "Amazon, amazon". Only to be disappointed. I took the opportunity to sell PME at the ridiculous SP of $67, what was the multiple... 85?
Perhaps AD8 should be treated the same?
I still HOLD for now.
