LZ trade ideas
6/12/24 - $lz - interesting at $8 but still unconvinced; need G!6/12/24 - vrockstar - NASDAQ:LZ - scanning some fringe names this morning that are on a long list of "haven't check in a while". and had sent this text to a friend that's closer to this stuff to inquire his opinion. would love to hear yours in comments if any? this is my current thoughts/ and that text (verbatim):
"You have an opinion of legalzoom (LZ)? It’s been on my internet cos list for ages and doing some fringe scans this morning. Margins are good, they are now spending less every year on opex (both sales and R and D), and still growing HSD. Currently profitable. But still a lot of stock comp which is par for the sub 5-10bn cap cos (it’s 1.4bn). Net cash and health balance sheet. 2x sales for 7-8% growth. What gives. Are they just running a treading water race (seems this way). If tech isn’t growing at least 15%, there’s someone that’s doing faster and eating the industry pie. That’s my sense. And if opex is declining this is then solving for profitability. At 1.4bn you don’t do this if you plan to scale this into an industry leader esp w net cash balance sheet and having spent so much already to have the brand established. Am I thinking about this the right way? My conclusion is every asset has a price so if I got it for 1.25-1.5x sales or say 800mm, interesting but not convinced it’s more than a trade (eg compounder). Alternatively if mkt rips today on inflation/ fed… this is the last horse that will run fastest. Clear sidelines for me unless you think the product/ industry is still beginning of S curve and so world needs to catch up to doing online legal stuff. I’m which case it’s cheap, by a lot. What’s your take? I’ll throw it to my fam and see if anyone comes back w thoughts too.