GROWTH HURDLES

$FSLY recently lost 27% on weak guidance

$NET lost 14% in Nov. 2019 on cautious analyst reviews

$DOCU lost 16% on weak guidance in 2019

$ETSY fell 21% in Aug. 2019 on weak results

$LVGO crashed 40% in Sept. 2019 - Down 54% from IPO price

$SHOP lost 28% in 2019 as revenue growth declined

$TWLO down 27% in 2017 as $UBER was moving away from their services

$ZS down 23% on weak guidance in 2019

$ROKU lost 14% in 2019 after Comcast and $FB announced competing products

$ESTC lost 15% in 2019 on weak guidance

$AYX down 25% in Sept. 2019 on a tech stock sell-off

$CRWD down 28% in Sept. 2019 on a tech stock sell-off

AND the list goes ON

Volatility is an INHERENT component of growth

$FSLY is not the only name that took a hit

Growing businesses sometimes have a limited revenue base and suffer from customer concentration

Growth might *temporarily* falter once a key customer leaves

Competitors might eat some of the business’ lunch

External shocks can negatively affect growth

Why is that Well, the market is more sensitive to growth stocks

Is the business closing deals and getting new customers?

Multiples expand further and stock rides on momentum

Is the business losing a customer or guides down for a single quarter?

Heavy selling occurs and multiples contract

Do these short term hiccups matter Some questions we can start with

Has the long term story (market growth, moat…) changed?

Is the business still innovating?

Can it be replaced / customers doing it in-house?

Are customer loyal / is the product still sticky?

Has optionality changed?

Have barriers to entry decreased?

Have suppliers / third parties gained bargaining power?

Have switching costs decreased?

Has the legal / social / political factors evolved?

Has the business enough cash to continue running?

Are key management figures or founders leaving / cashing out?

Are margins pressured?

Any other factor you pay EXTRA attention to?

@FromValue @us_stock_invest @tweakie @mhagemann @saxena_puru @momiage0088