Remember, CNBC and Old Wall Mainstream media are in the business of selling you stock. Their prized software IPO from April isn't looking so hot now...
Rubrik (RBRK) is down over 18% since Hedgeye’s Software analyst Felix Wang’s short call on April 24, the day before the stock began trading.
In his initial report titled Lipstick on a Pig, Wang noted, “While we anticipate a hot IPO for a few days, we are more skeptical on Rubrik's future growth and believe the best times are behind them.”
This week the company reported mixed earnings and positive guidance, yet the stock still slumped. RBRK opened at 38.60/share and has since fallen to 31 and counting.
“It comes down to losses. This is the biggest concern about this company,” explained Wang. “Their net loss was up 130% YoY… If your net loss is up 130% people are going to worry about your cash flow, people are going to worry about the sustainability of your model, and that, to me, is the bigger point here as to why the stock continues to be a huge underperformer in software.”
The hype surrounding its partnerships and technological advancements appears to be overblown, and the company's path to profitability remains uncertain. With deteriorating margins, slowing ARR growth, and high operational costs, we anticipate further downside.
Stay Short RBRK.
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