TD,
Let me run with some more speculation. One the one hand, SEBL is at a very rich valuation right now, and will likely continue to be richly valued until they miss a quarter.
On the other hand we have two of your ideas:
1. SEBL dominates CRM greater than SAP dominated ERP (I don't know one way or the other as I don't know a lot about the enterprise SW biz prior to SEBL's rise).
2. SEBL's potential mkt (CRM/eCRM/demand chain mgmt) is several times larger than the ERP mkt.
Your ideas seem to imply that SEBL could have a long and fruitful life ahead of it (if it executes well).
Here's a possible valuation scenario: SEBL continues to meet expectations for the next several quarters and the stock rallies accordingly (let's call this Phase 1). Then the firm misses a quarter and the stock drops drastically (at least 50%+). After that, SEBL begins a new phase (say Phase 2), as a larger firm, with a slower growth rate, and a lower valuation.
The question is, do you think that in Phase 2, SEBL's stock price could eventually reach (or maybe even surpass) the peak stock price in Phase 1?
Personally, I think SEBL will see its maximum mkt cap in Phase 1, and then just plod along in Phase 2. Looking at the major ERP vendors, only SAP recovered (in terms of mkt cap) after an earnings miss, but I think that was a fluke.
That's why I am so focused on SEBL's current challenges. I think that one quarterly miss, and it's curtains for the stock. |
