3/28/25 :: VROCKSTAR :: 
BLZE
Watchlist, but need lower px
- i'm more positive on this stock than negative, but i am not convinced of a few factors in the ST that have not much to do w/ the business but the "zipcode" of what it does that keep me sidelines looking for a lower px
- i wouldn't expect a 250 mm ent value company to be pumping out cash in this industry, bc "why not spend to grow" becomes obvious first question. but with that being said, cash gen (and ideally ex SBC - i'll get that to that in the pt below) is really "king" in this market that will dump everything correlation 1 and so while many "investors" in today's tape are tea reading gurus, a few of us still prefer to base our decisions on mgmt/ execution and cash generation (or at least the "obvious" visibility of cash gen). andBLZE remains in scale up mode
- on the topic of SBC, i can't "fault" a co of this size/ budget and they *should* be incentivizing well the team. i can see they r generating more year on year gross profit for the amt they're incrementally spending on opex (i mainly look at sales expense) and that's a green flag. but ostensibly to overcome the SBC element of FCF and start generating what i'd call "organic" FCF, you need probably 2 years at the mid teens growth stage. and that's just hard to justify here (from a "looking at it from other people's perspective" i.e. the market won't pay up for that in this tape)
- i need to do more work on mgmt. mgmt is the make or break on co's of this size, so hence it makes sense to read a few transcripts/ listen to a call for that intangible comms style etc. i will need to revert there.
- so at say low DD EBITDA mgns and growing (steady state perhaps teens+) for an infra play, underscaled (i.e. not benefiting from mkt out flows which are disproportionately nailing low liquidity stuff)... i'd defn need to pay something closer to 8x this (2025*) year on a conservative number. so superficially (though it comes w a lot of years of playing this game for sport)... instead of a cons of $24 mm (which for a name like this always tends to skew more "forgiving") let's say it's $20 and put 8x on that. you're at $160 mm EV. obviously not a great downside to "eat" if you took a full position here. at this stage in the tape i'm only accepting stuff where i'd literally pile in and hold 2 or 3 positions that go -25-30% lower. i'm avoiding anything (*anything* that could have any realistic probability of doing -40 or -50+). so while i don't think that extreme case is necessarily a base case... it's not like there are any obvious buybacks (they don't have that capacity). i'm not sure in the world of software-infra outside a PE grabbing this and taking it private - which i don't want to pay up for as part of my thesis (only as a "bonus" to own)... it's not like the tape will buy this first... and not the leaders e.g.
BOX 
PURE etc. and i get they don't exactly comp - but in a sense - in this world - "they do".
- so minimally i'd need sub $4 to take stock of where risk is/ mkt at that pt (and perhaps and likely if it's a correlation 1 sell off i probably would prefer other things)... but nevertheless. happy to add it to the ol watchlist and set that trigger for trading view to hit me with that obnoxious *BING* usually on the most stressful days :)
have a good weekend all
thanks for flagging this HB. curious on your opinion of above, or if u can augment on more idiosyncratic bottoms-up/ mgmt/ biz moat etc. factors if any
V
BLZEWatchlist, but need lower px
- i'm more positive on this stock than negative, but i am not convinced of a few factors in the ST that have not much to do w/ the business but the "zipcode" of what it does that keep me sidelines looking for a lower px
- i wouldn't expect a 250 mm ent value company to be pumping out cash in this industry, bc "why not spend to grow" becomes obvious first question. but with that being said, cash gen (and ideally ex SBC - i'll get that to that in the pt below) is really "king" in this market that will dump everything correlation 1 and so while many "investors" in today's tape are tea reading gurus, a few of us still prefer to base our decisions on mgmt/ execution and cash generation (or at least the "obvious" visibility of cash gen). and
BLZE remains in scale up mode- on the topic of SBC, i can't "fault" a co of this size/ budget and they *should* be incentivizing well the team. i can see they r generating more year on year gross profit for the amt they're incrementally spending on opex (i mainly look at sales expense) and that's a green flag. but ostensibly to overcome the SBC element of FCF and start generating what i'd call "organic" FCF, you need probably 2 years at the mid teens growth stage. and that's just hard to justify here (from a "looking at it from other people's perspective" i.e. the market won't pay up for that in this tape)
- i need to do more work on mgmt. mgmt is the make or break on co's of this size, so hence it makes sense to read a few transcripts/ listen to a call for that intangible comms style etc. i will need to revert there.
- so at say low DD EBITDA mgns and growing (steady state perhaps teens+) for an infra play, underscaled (i.e. not benefiting from mkt out flows which are disproportionately nailing low liquidity stuff)... i'd defn need to pay something closer to 8x this (2025*) year on a conservative number. so superficially (though it comes w a lot of years of playing this game for sport)... instead of a cons of $24 mm (which for a name like this always tends to skew more "forgiving") let's say it's $20 and put 8x on that. you're at $160 mm EV. obviously not a great downside to "eat" if you took a full position here. at this stage in the tape i'm only accepting stuff where i'd literally pile in and hold 2 or 3 positions that go -25-30% lower. i'm avoiding anything (*anything* that could have any realistic probability of doing -40 or -50+). so while i don't think that extreme case is necessarily a base case... it's not like there are any obvious buybacks (they don't have that capacity). i'm not sure in the world of software-infra outside a PE grabbing this and taking it private - which i don't want to pay up for as part of my thesis (only as a "bonus" to own)... it's not like the tape will buy this first... and not the leaders e.g.
BOX PURE etc. and i get they don't exactly comp - but in a sense - in this world - "they do". - so minimally i'd need sub $4 to take stock of where risk is/ mkt at that pt (and perhaps and likely if it's a correlation 1 sell off i probably would prefer other things)... but nevertheless. happy to add it to the ol watchlist and set that trigger for trading view to hit me with that obnoxious *BING* usually on the most stressful days :)
have a good weekend all
thanks for flagging this HB. curious on your opinion of above, or if u can augment on more idiosyncratic bottoms-up/ mgmt/ biz moat etc. factors if any
V
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.