OFFICIAL STOCK MARKET AND ECONOMY THREAD VOL. A NEW CHAPTER

[johnnyredstorm]

since we're talking splits, wouldn't mind an NVDA split either

while we’re at it, I hope shop splits too

What does it mean by Amazon splitting?

Yes, noob question.

I been trying to learn about stock trading for the past month and got distracted by these meme stocks. Once the AMC stock gets back to the price I bought it at I’m selling and getting back to YouTube University to get back to learning the fundamentals

What happens if AMC never gets back to the price you bought it at and only keeps going lower? What’s your plan? What’s your max pain? You should never enter a position without having answers to those questions before you click buy. Maybe AMC bounces again, but the reality is there is zero fundamental reason for it to. It’s a dying business with decreasing sales that’s in a sector seeing a shift to D2C that will shrink its margins and hurt its long term outlook. I don’t know what your average is or initial investment, but know what you own and where it can go. It doesn’t have to go up, just like it doesn’t necessarily have to go down either. But you should be prepared for the worst case scenario at all times and be comfortable with your decisions.

I watched my dad baghold 1,000 shares of VJET from $55 all the way down to $1, through a reverse split, over the course of 8 years before the most ridiculous stock market of the millennium brought him to break even and not once was there ever a fundamental reason for the stock to go up. Be smart, manage risk, have a max pain and a plan.

good thread on Amazon’s earnings. That ad growth

 

[deleted user 7639]

Spoiler: $PRCH - Porch Group | Jonah Lupton Substack

$PRCH - Porch Group
Customer website: Porch.com
Corporate website: PorchGroup.com
Stock price: $14.90
Market cap: $1.2 billion
Enterprise value: $1.4 billion
Shares outstanding: 81.5 million
Headquarters: Seattle, Washington
Founded in: 2012
Founded by: Eric Schleicher, Ha Phan, Matt Ehrlichman, Ronnie Castro, Scott Austin
Current CEO: Matt Ehrlichman
Employees: 400+
Funding: $120 million [click here]
Phone: 800-604-2454 or 855-277-5045
Email: [email protected]

Porch on Facebook - 164k followers [click here]
Porch on Pinterest - 140k followers [click here]
Porch on Twitter - 20k followers [click here]
Porch on YouTube - 5k subscribers [click here]

2018 revenues: $36 million with 81% gross margins
2019 revenues: $57 million with 83% gross margins
2020 revenues: $73 million (est.) with 76-78% gross margins
2021 revenues: $171 million (est.) with 79-81% gross margins

Porch historical timeline [click here]
Porch expands partnership with Lowes, May 2016 [read here]
Porch partners with FinMkt, June 2020 [read here]
Porch announces reverse merger with PropTech SPAC, July 2020 [read here]
Porch starts trading on Nasdaq after SPAC merger, December 2020 [read here]
Porch announces $120+ million of acquisitions, January 2021 [read here]
Interview with Porch.com CEO, October 2020 [watch here]

Investor Presentation, July 2020 [click here]
Investor Presentation, December 2020 [click here]
Investor Presentation, January 2021 [click here]


Porch Group aka Porch.com aka $PRCH operates as a vertically integrated software company for both homeowners and service providers. You could also say that $PRCH resembles a marketplace business model with a lead generation service for contractors and other service providers.
$PRCH might only have a $1.2 billion market cap but the business model is quite unique and complex so I’ll do my best to simplify it. I should mention when $PRCH first launched 8 years ago the company was primarily focused on connecting contractors with homeowners however they have now evolved into a full service homeowner platform.

Over the years $PRCH’s management team realized it was critical to not only build relationships with customers before they became homeowners but also maintain those relationship in perpetuity. $PRCH decided to build software products for inspection companies and moving companies then gave them the option of either paying for the software as a traditional SaaS subscription product or they could use the software for free but had to share their customers with $PRCH. The majority of these inspection and moving companies picked the latter which gave $PRCH early access to these soon-to-be homeowners.
As you can see below $PRCH is focused on getting in touch with these new homeowners as soon as possible which gives them the best chance of maximizing LTV (lifetime value).

Once $PRCH has a potential customer in their database they begin building a relationship in an effort to become their “one-stop-shop homeowner operating system”. $PRCH wants to be right there to step in and assist with everything from inspection services, to moving services, to home insurance, to setting up internet/cable, to finding local landscapers, to finding local painters, to finding local security companies and on and on and on. $PRCH understands that many homeowners are moving to new areas where they need help finding reputable service providers that have already been screened and reviewed by other $PRCH customers.

It’s clear that $PRCH has developed one of best customer flywheels I have ever seen — giving away free ERP and CRM software to 11,000+ service providers (like inspection companies and moving companies) in exchange for their customer database. This genius strategy gives $PRCH a significant competitive advantage going forward. Due to this incredible flywheel, 65% of all U.S. homebuyers are going through some product on $PRCH’s platform and as a result 27% of all U.S. homebuyers are introduced to $PRCH’s “Moving Concierge” approximately six weeks prior to their move which is when most major homeowner purchasing decisions are made.

$PRCH has several wholly-owned brands, including Inspection Support Network(ISN), Elite Insurance Group, HireAHelper and Porch.com. In 2019, $PRCH brands processed $2.2 billion of gross receipts through its platform however this is just the beginning as $PRCH believes their current TAM with the help of several recent acquisitions is more than $300 billion.
COMING PUBLIC:
$PRCH came public in 2020 through a reverse merger with the PropTech Acquisition SPAC [read here].

Tom Hennessy, CEO of of the PropTech Acquisition SPAC said “Porch aligns well with the objectives laid out in our property technology investment thesis. Porch brings significant innovation to the residential real estate industry by delivering critical home services in a scalable, software-based platform. Porch’s early access to millions of homebuyers through its 11,000 contracted companies brings to the public market an established company with a track record of significant revenue growth. Porch’s massive addressable market and software platform are well-positioned to deliver high gross margin, attractive unit economics and a well-defined path to achieve profitability in 2021. We are partnering with a world-class leadership team that shares our vision.”

Prior to $PRCH coming public via SPAC they had raised $120+ million from an elite group of investors including Battery Ventures, SV Angel and Founders Fund.

The chart below shows how much capital $PRCH raised as a private company and when they raised it. This information is also available on Crunchbase.

BRANDS:
As I mentioned above, $PRCH has many different brands, each of which addresses a different segment of the homeowner and/or homebuyer market. Some of these brands were created in-house while others came via acquisition. You can read about each of these brands at PorchGroup.com/companies

As far as I can tell each of the $PRCH brands is either a B2C service which is creating demand from homeowners and then being passed off to the service providers in the form of leads or it’s a B2B SaaS product (ERP/CRM) which is being used by the service providers as a subscription fee product or it’s being bartered for customer databases.

I don’t have enough room in this newsletter to deep dive on each brand but they all have their own website if you want to read more about them [click here]
M&A STRATEGY:
$PRCH might only be a $1.2 billion company and a recent SPAC company but they are not afraid to do M&A deals. Matt and his management team believe that acquiring other homeowner focused companies at reasonable valuations will help lower their CAC (customer acquisition cost) while increasing their customer LTV. In just the past couple months $PRCH has done 4 acquisitions totaling $122 million. These 4 deals further emphasize $PRCH’s ambitions to be a vertically integrated platform for homeowners.


I pulled these summaries from $PRCH’s Investor Presentation in January.


Based on recent comments from $PRCH’s CEO, it sounds like M&A will continue to be a big component of their growth plan moving forward. As long as they stay disciplined on price I don’t see anything wrong with this. Many of the homeowner segments that $PRCH operates in are extremely fragmented so perhaps they can execute a successful rollup strategy. One of the typical concerns with aggressive M&A strategies is dilution assuming the company has to issue more shares to complete the acquisition however it seems that $PRCH is being very diligent and only buying companies that will be accretive to earnings so any dilution from additional stock offerings would be absorbed with the addition of those new revenues and earnings from the company being acquired.

B2C (Business-to-Consumer):
As stated earlier, many of $PRCH’s brands are constantly acquiring new customers/homeowners looking for different products, services, contractors, etc. These homeowners/leads are then passed along to their service provider partners for a fee.

B2B (Business-to-Business):
Service providers are using $PRCH’s ERP and CRM software products to run their businesses more efficiently. $PRCH gives them the option of paying SaaS fees or providing access to their customer databases.

ISN (Inspection Support Network) is used by thousands of inspection companies around the country. Most of these companies are opting to give $PRCH access to their customers at the perfect time…as they’re in the process of buying or selling a home. This is when $PRCH pounces all over them.


Hireahelper.com provides software and leads to moving companies but it’s also a marketplace for consumers to find reputable moving companies. More than 3,000 moving companies have joined HireaHelper which doesn’t cost them anything however they do pay a 29% commission on any business generated from the marketplace. HireaHelper allows consumers to see prices, availability and reviews before hiring a moving company. The average rating on HireaHelper is 4.8 stars out of 5.0 and that’s after 172,768 customer reviews.



CONTRACTORS:
$PRCH also runs a service for finding reliable contractors that have been screened/vetted by the company including background checks, insurance checks, etc. Every homeowner I know has a problem finding a trustworthy, dependable contractor that won’t price gauge them so $PRCH is trying to reduce that friction and take one more burden away from homeowners while generating significant revenue opportunities for contractors. If you scroll down you’ll see some links to interviews with different contractors whose businesses have dramatically expanded thanks to $PRCH.



Electrical contractor on Porch [watch here]
Painting contractor on Porch [watch here]
Landscaping contractor on Porch [watch here]
Plumbing contractor on Porch [watch here]
Learn more about Porch Pro: https://porch.com/pro
PARTNERS:
$PRCH has partnered with dozens of companies to offered the best products and services at the best prices. This includes everything from insurance to self-storage to security to cable/internet. $PRCH collects lead gen fees from these companies.


INTEGRATIONS:
As I was wrapping up my research this morning I came across an article that talked about $PRCH’s new integration in the Facebook marketplace and although I didn’t get a chance to test it out I figured it was worth a mention. More companies are learning how to leverage social media to not only build awareness but also engage with potential customers and generate higher quality leads for the sales team. I was also impressed with what $PRCH is doing across their different social media channels, especially Pinterest.

REVIEWS:
One of the only red flags I came across while doing my due diligence on $PRCH were some bad reviews on TrustPilot although overall the company gets 4 out of 5 stars with 67% of the reviews being EXCELLENT and only 17% being BAD which is a better ratio than their competitors such as Thumbtack. I do think reviews are an important data point but not the only one.



$PRCH does provide some protection against losses and sleazy contractors although $1,000 doesn’t seem like much. I guess it’s better than nothing. I did read some of the bad reviews and most of them are related to contractors that took deposits and either never finished the job or went too slow or did a poor job or overcharged them.


MARKET OPPORTUNITY:
I think it’s pretty obvious that $PRCH is going after some pretty big markets when you consider the hundreds of billions of dollars spent every year by homeowners for different services not to mention our country is currently going through a massive real estate boom as more people leave the cities and move to the suburbs. $PRCH is perfectly positioned to capitalize on this trend thanks to the customer flywheel we mentioned earlier.

$PRCH has only scratched the surface of what is possible as they continue building the leading platform for homeowners and service providers.

FINANCIALS:
We finally get to the financials where the story gets even more exciting. Even though I love what $PRCH is doing and I totally buy into their vision and applaud their customer flywheel, at the end of the day it’s the financials that really drive valuation and stock price appreciation.
$PRCH recently raised their 2021 revenue guidance to $170 million which would be 134% YoY growth…but…as you can see from the chart below, a chunk of those revenues are coming from recent acquisitions. However even without the recent acquisitions $PRCH would have seen revenues grow by at least 66% this year which is still remarkable especially when you consider gross margins are expected to be 80% this year.
Add it all up and you have a $1.2 billion company growing revenues at 134% with 80% gross margins and a massive TAM plus a ton of accretive M&A opportunities on the horizon. This is the kind of story that gets me excited and why I’m so attracted to small cap growth stocks.




Looking at full year estimates for 2021 you can see that $PRCH is still expecting to lose money this year however their growth potential plus their gross margins should give them enormous operating leverage in the future. I’d expect $PRCH to be profitable within the next couple years as the company has already acknowledged the importance of becoming cash flow positive as soon as possible.
from Tikr.com
VALUATION:
For every high-growth small cap company it’s always a challenge figuring out the right valuation. Rarely can you use P/E multiples since these types of companies are still in hypergrowth mode and more focused on growing revenues than turning profits… as they should be.
You can also use P/E multiples or EV/S multiples or the Rule of 40 which is a popular valuation metric amongst tech/software companies. Regardless of which valuation metric you use for $PRCH, they look undervalued compared to other software companies as well as they industry peers such as Angi HomeServices (formerly AngiesList).
Right now $PRCH is trading at just 7x 2021 sales which is way too cheap in my opinion. I don’t know the right multiple, nobody does, but I do believe the company deserves a higher multiple, perhaps in the mid teens given their growth rate, gross margins, TAM and M&A strategy. In this scenario, giving $PRCH a P/S multiple of just 14 based on 2021 sales estimates would give the stock 100% upside by year end.



CHARTS:
I’m not going to spend much time on the technicals since there’s no obvious moving averages to support the stock price unless it pulled back into the $13.50 range and met the 50 day moving average although I think that’s unlikely. I included this chart to show the stock has recently pulled back 22% from a high of $19.20 which I believe now offers an attractive entry price. If we did get a further pullback to the 50 day moving average I would be very aggressive with my buying/adding.

MANAGEMENT:
From everything I’ve seen and read thus far $PRCH appears to have a strong management team. Most executives from recent acquisitions will be staying with the company for the foreseeable future to assure a smooth transition.

For full team bios [click here]
The only caution flag with regards to management is the CEO’s rating on Owleralthough honestly 69/100 is not horrible. It’s probably a little bit below average but it’s nothing that’s going to keep me up at night. I’ve also seen plenty of comments saying that he’s a great founder and leader.

CONCLUSION:
To wrap up this writeup I just want to reiterate that I’m a big fan of this company, their mission, their business model, their customer flywheel and their fundamentals. It’s very hard to find a company growing this fast with high gross margins in an TAM that’s practically endless. I’ve been looking for a couple ways to play the real estate boom in the small cap sector and I’m glad I found $PRCH. Of course the company is not perfect and there’s definitely some competition in this space but the market is big enough for multiple winners.

I know a lot of contractors from electricians to plumbers to painters to roofers to remodelers…. and every single one of them sucks at marketing. These men and women might be amazing at their craft or trade but they’re not good at marketing and they’re not good at finding new customers which means they rely on companies like $PRCH to help them generate demand and grow their businesses through referrals and lead generation programs.

If $PRCH was just another marketplace that connected contractors and homeowners I don’t think I’d be very excited but the fact that they have pivoted into a vertically integrated SaaS platform with a tremendously valuable flywheel has me very excited about the future for $PRCH.
I think the current valuation is way too cheap and the stock should be trading in the $20s very soon and perhaps in the $30s by this time next year. My focus for this newsletter is to find companies under $10 billion market cap that I believe can 5x over the next 5 years and $PRCH is definitely one of those companies. With that said $PRCH is now my third largest position at 6.4% so I’m clearly very bullish on this company. I expect more investors to start learning about $PRCH in the coming weeks and then we’ll likely see this stock trading higher when that happens.
Thanks for reading and feel free to reach out to me with any questions or comments.

johnnyredstorm
アミーゴ based outta Seattle and you likely knowing something =)

 

[johnnyredstorm]

That’s the stock he thinks can 5x? I’ll read his thoughts. Wasnt turned on by the investors presentation but I’ll be objective.

MDB through 398 looks sexy tomorrow. Manage risk in case of a failed breakout but this could offer a $10 trade. I would use a starter and add only if a trend develops. You don’t need to be a gunner on a stock with range like this one, 5 shares could get you a nice return.

if you’re new and want to learn, take a look at that chart and see if you see what I see.

 

[anderson]

I was scrolling down forever on that spoiler to get to the bottom of the page

 

[frankmatthews]

Tbh i actually was expecting another small leg up in the markets before a significant correction, maybe 4k on the spx, but the massive gains both institutional and retail on this whole reddit debacle are going right back into this market. Not to mention more stimulus, theres no telling how much it can run from here. A pe of almost 40 on the s&p already has me in a state of confusion, very trigger shy in either direction at this point.

 

[johnnyredstorm]

Uber bot Drizly. I think they should go for the kill on owning the entire delivery stack and grab Blade.

 

[ballinsam23]

I been trying to learn about stock trading for the past month and got distracted by these meme stocks. Once the AMC stock gets back to the price I bought it at I’m selling and getting back to YouTube University to get back to learning the fundamentals

Since we're on a sneaker forum. Think of AMC and GME like Team Jordans.

You got your hands on these Team Jordans (historically have 0 resale value). For some reason, some Team Jordan resale value went from $75 to $500. Weeks later after everyone realizing wow these are actually Team Jordans and not Cement 3s, Bred 11s, etc so the price went do back to $75. Everyone got a pair now.

Are you gonna hold on to these Team Jordans, with no historical or profitable value, for years hoping one day it'll be some collector item and you can resell it for more down the line? Hell no.

 

[アミーゴ]

Lol my next door neighbor left PRCH in July - I have many, many thoughts that are not appropriate for this forum.

D deleted user 7639 mins sending me the article and I’ll get his thoughts

 

[frankmatthews]

if you’re new and want to learn, take a look at that chart and see if you see what I see.

Bull flag on a breakout of its ATH?

 

[antidope]

Happy birthdays? Time is fake yall are tripping.

 

[アミーゴ]

Happy birthdays? Time is fake yall are tripping.

You mean a flat circle

 

[iheartboost]

AMZN is waaaay out of my tax bracket, I need some $75 stocks

 

[johnnyredstorm]

AMZN is waaaay out of my tax bracket, I need some $75 stocks

I don’t buy stocks usually over $1000 but honestly, the best stocks to trade and own are othe ones between $50-500. You get some awesome range, and powerful moves out of bases. Don’t neglect a stock because of its $ price, they’re usually priced that way for a reason and are worth owning. Too many new people ignore these stocks and focus on the 1-5 dollar range and those are that cheaply priced for a reason

 

[johnnyredstorm]

Spoiler: $PRCH - Porch Group | Jonah Lupton Substack

$PRCH - Porch Group
Customer website: Porch.com
Corporate website: PorchGroup.com
Stock price: $14.90
Market cap: $1.2 billion
Enterprise value: $1.4 billion
Shares outstanding: 81.5 million
Headquarters: Seattle, Washington
Founded in: 2012
Founded by: Eric Schleicher, Ha Phan, Matt Ehrlichman, Ronnie Castro, Scott Austin
Current CEO: Matt Ehrlichman
Employees: 400+
Funding: $120 million [click here]
Phone: 800-604-2454 or 855-277-5045
Email: [email protected]

Porch on Facebook - 164k followers [click here]
Porch on Pinterest - 140k followers [click here]
Porch on Twitter - 20k followers [click here]
Porch on YouTube - 5k subscribers [click here]

2018 revenues: $36 million with 81% gross margins
2019 revenues: $57 million with 83% gross margins
2020 revenues: $73 million (est.) with 76-78% gross margins
2021 revenues: $171 million (est.) with 79-81% gross margins

Porch historical timeline [click here]
Porch expands partnership with Lowes, May 2016 [read here]
Porch partners with FinMkt, June 2020 [read here]
Porch announces reverse merger with PropTech SPAC, July 2020 [read here]
Porch starts trading on Nasdaq after SPAC merger, December 2020 [read here]
Porch announces $120+ million of acquisitions, January 2021 [read here]
Interview with Porch.com CEO, October 2020 [watch here]

Investor Presentation, July 2020 [click here]
Investor Presentation, December 2020 [click here]
Investor Presentation, January 2021 [click here]


Porch Group aka Porch.com aka $PRCH operates as a vertically integrated software company for both homeowners and service providers. You could also say that $PRCH resembles a marketplace business model with a lead generation service for contractors and other service providers.
$PRCH might only have a $1.2 billion market cap but the business model is quite unique and complex so I’ll do my best to simplify it. I should mention when $PRCH first launched 8 years ago the company was primarily focused on connecting contractors with homeowners however they have now evolved into a full service homeowner platform.

Over the years $PRCH’s management team realized it was critical to not only build relationships with customers before they became homeowners but also maintain those relationship in perpetuity. $PRCH decided to build software products for inspection companies and moving companies then gave them the option of either paying for the software as a traditional SaaS subscription product or they could use the software for free but had to share their customers with $PRCH. The majority of these inspection and moving companies picked the latter which gave $PRCH early access to these soon-to-be homeowners.
As you can see below $PRCH is focused on getting in touch with these new homeowners as soon as possible which gives them the best chance of maximizing LTV (lifetime value).

Once $PRCH has a potential customer in their database they begin building a relationship in an effort to become their “one-stop-shop homeowner operating system”. $PRCH wants to be right there to step in and assist with everything from inspection services, to moving services, to home insurance, to setting up internet/cable, to finding local landscapers, to finding local painters, to finding local security companies and on and on and on. $PRCH understands that many homeowners are moving to new areas where they need help finding reputable service providers that have already been screened and reviewed by other $PRCH customers.

It’s clear that $PRCH has developed one of best customer flywheels I have ever seen — giving away free ERP and CRM software to 11,000+ service providers (like inspection companies and moving companies) in exchange for their customer database. This genius strategy gives $PRCH a significant competitive advantage going forward. Due to this incredible flywheel, 65% of all U.S. homebuyers are going through some product on $PRCH’s platform and as a result 27% of all U.S. homebuyers are introduced to $PRCH’s “Moving Concierge” approximately six weeks prior to their move which is when most major homeowner purchasing decisions are made.

$PRCH has several wholly-owned brands, including Inspection Support Network(ISN), Elite Insurance Group, HireAHelper and Porch.com. In 2019, $PRCH brands processed $2.2 billion of gross receipts through its platform however this is just the beginning as $PRCH believes their current TAM with the help of several recent acquisitions is more than $300 billion.
COMING PUBLIC:
$PRCH came public in 2020 through a reverse merger with the PropTech Acquisition SPAC [read here].

Tom Hennessy, CEO of of the PropTech Acquisition SPAC said “Porch aligns well with the objectives laid out in our property technology investment thesis. Porch brings significant innovation to the residential real estate industry by delivering critical home services in a scalable, software-based platform. Porch’s early access to millions of homebuyers through its 11,000 contracted companies brings to the public market an established company with a track record of significant revenue growth. Porch’s massive addressable market and software platform are well-positioned to deliver high gross margin, attractive unit economics and a well-defined path to achieve profitability in 2021. We are partnering with a world-class leadership team that shares our vision.”

Prior to $PRCH coming public via SPAC they had raised $120+ million from an elite group of investors including Battery Ventures, SV Angel and Founders Fund.

The chart below shows how much capital $PRCH raised as a private company and when they raised it. This information is also available on Crunchbase.

BRANDS:
As I mentioned above, $PRCH has many different brands, each of which addresses a different segment of the homeowner and/or homebuyer market. Some of these brands were created in-house while others came via acquisition. You can read about each of these brands at PorchGroup.com/companies

As far as I can tell each of the $PRCH brands is either a B2C service which is creating demand from homeowners and then being passed off to the service providers in the form of leads or it’s a B2B SaaS product (ERP/CRM) which is being used by the service providers as a subscription fee product or it’s being bartered for customer databases.

I don’t have enough room in this newsletter to deep dive on each brand but they all have their own website if you want to read more about them [click here]
M&A STRATEGY:
$PRCH might only be a $1.2 billion company and a recent SPAC company but they are not afraid to do M&A deals. Matt and his management team believe that acquiring other homeowner focused companies at reasonable valuations will help lower their CAC (customer acquisition cost) while increasing their customer LTV. In just the past couple months $PRCH has done 4 acquisitions totaling $122 million. These 4 deals further emphasize $PRCH’s ambitions to be a vertically integrated platform for homeowners.


I pulled these summaries from $PRCH’s Investor Presentation in January.


Based on recent comments from $PRCH’s CEO, it sounds like M&A will continue to be a big component of their growth plan moving forward. As long as they stay disciplined on price I don’t see anything wrong with this. Many of the homeowner segments that $PRCH operates in are extremely fragmented so perhaps they can execute a successful rollup strategy. One of the typical concerns with aggressive M&A strategies is dilution assuming the company has to issue more shares to complete the acquisition however it seems that $PRCH is being very diligent and only buying companies that will be accretive to earnings so any dilution from additional stock offerings would be absorbed with the addition of those new revenues and earnings from the company being acquired.

B2C (Business-to-Consumer):
As stated earlier, many of $PRCH’s brands are constantly acquiring new customers/homeowners looking for different products, services, contractors, etc. These homeowners/leads are then passed along to their service provider partners for a fee.

B2B (Business-to-Business):
Service providers are using $PRCH’s ERP and CRM software products to run their businesses more efficiently. $PRCH gives them the option of paying SaaS fees or providing access to their customer databases.

ISN (Inspection Support Network) is used by thousands of inspection companies around the country. Most of these companies are opting to give $PRCH access to their customers at the perfect time…as they’re in the process of buying or selling a home. This is when $PRCH pounces all over them.


Hireahelper.com provides software and leads to moving companies but it’s also a marketplace for consumers to find reputable moving companies. More than 3,000 moving companies have joined HireaHelper which doesn’t cost them anything however they do pay a 29% commission on any business generated from the marketplace. HireaHelper allows consumers to see prices, availability and reviews before hiring a moving company. The average rating on HireaHelper is 4.8 stars out of 5.0 and that’s after 172,768 customer reviews.



CONTRACTORS:
$PRCH also runs a service for finding reliable contractors that have been screened/vetted by the company including background checks, insurance checks, etc. Every homeowner I know has a problem finding a trustworthy, dependable contractor that won’t price gauge them so $PRCH is trying to reduce that friction and take one more burden away from homeowners while generating significant revenue opportunities for contractors. If you scroll down you’ll see some links to interviews with different contractors whose businesses have dramatically expanded thanks to $PRCH.



Electrical contractor on Porch [watch here]
Painting contractor on Porch [watch here]
Landscaping contractor on Porch [watch here]
Plumbing contractor on Porch [watch here]
Learn more about Porch Pro: https://porch.com/pro
PARTNERS:
$PRCH has partnered with dozens of companies to offered the best products and services at the best prices. This includes everything from insurance to self-storage to security to cable/internet. $PRCH collects lead gen fees from these companies.


INTEGRATIONS:
As I was wrapping up my research this morning I came across an article that talked about $PRCH’s new integration in the Facebook marketplace and although I didn’t get a chance to test it out I figured it was worth a mention. More companies are learning how to leverage social media to not only build awareness but also engage with potential customers and generate higher quality leads for the sales team. I was also impressed with what $PRCH is doing across their different social media channels, especially Pinterest.

REVIEWS:
One of the only red flags I came across while doing my due diligence on $PRCH were some bad reviews on TrustPilot although overall the company gets 4 out of 5 stars with 67% of the reviews being EXCELLENT and only 17% being BAD which is a better ratio than their competitors such as Thumbtack. I do think reviews are an important data point but not the only one.



$PRCH does provide some protection against losses and sleazy contractors although $1,000 doesn’t seem like much. I guess it’s better than nothing. I did read some of the bad reviews and most of them are related to contractors that took deposits and either never finished the job or went too slow or did a poor job or overcharged them.


MARKET OPPORTUNITY:
I think it’s pretty obvious that $PRCH is going after some pretty big markets when you consider the hundreds of billions of dollars spent every year by homeowners for different services not to mention our country is currently going through a massive real estate boom as more people leave the cities and move to the suburbs. $PRCH is perfectly positioned to capitalize on this trend thanks to the customer flywheel we mentioned earlier.

$PRCH has only scratched the surface of what is possible as they continue building the leading platform for homeowners and service providers.

FINANCIALS:
We finally get to the financials where the story gets even more exciting. Even though I love what $PRCH is doing and I totally buy into their vision and applaud their customer flywheel, at the end of the day it’s the financials that really drive valuation and stock price appreciation.
$PRCH recently raised their 2021 revenue guidance to $170 million which would be 134% YoY growth…but…as you can see from the chart below, a chunk of those revenues are coming from recent acquisitions. However even without the recent acquisitions $PRCH would have seen revenues grow by at least 66% this year which is still remarkable especially when you consider gross margins are expected to be 80% this year.
Add it all up and you have a $1.2 billion company growing revenues at 134% with 80% gross margins and a massive TAM plus a ton of accretive M&A opportunities on the horizon. This is the kind of story that gets me excited and why I’m so attracted to small cap growth stocks.




Looking at full year estimates for 2021 you can see that $PRCH is still expecting to lose money this year however their growth potential plus their gross margins should give them enormous operating leverage in the future. I’d expect $PRCH to be profitable within the next couple years as the company has already acknowledged the importance of becoming cash flow positive as soon as possible.
from Tikr.com
VALUATION:
For every high-growth small cap company it’s always a challenge figuring out the right valuation. Rarely can you use P/E multiples since these types of companies are still in hypergrowth mode and more focused on growing revenues than turning profits… as they should be.
You can also use P/E multiples or EV/S multiples or the Rule of 40 which is a popular valuation metric amongst tech/software companies. Regardless of which valuation metric you use for $PRCH, they look undervalued compared to other software companies as well as they industry peers such as Angi HomeServices (formerly AngiesList).
Right now $PRCH is trading at just 7x 2021 sales which is way too cheap in my opinion. I don’t know the right multiple, nobody does, but I do believe the company deserves a higher multiple, perhaps in the mid teens given their growth rate, gross margins, TAM and M&A strategy. In this scenario, giving $PRCH a P/S multiple of just 14 based on 2021 sales estimates would give the stock 100% upside by year end.



CHARTS:
I’m not going to spend much time on the technicals since there’s no obvious moving averages to support the stock price unless it pulled back into the $13.50 range and met the 50 day moving average although I think that’s unlikely. I included this chart to show the stock has recently pulled back 22% from a high of $19.20 which I believe now offers an attractive entry price. If we did get a further pullback to the 50 day moving average I would be very aggressive with my buying/adding.

MANAGEMENT:
From everything I’ve seen and read thus far $PRCH appears to have a strong management team. Most executives from recent acquisitions will be staying with the company for the foreseeable future to assure a smooth transition.

For full team bios [click here]
The only caution flag with regards to management is the CEO’s rating on Owleralthough honestly 69/100 is not horrible. It’s probably a little bit below average but it’s nothing that’s going to keep me up at night. I’ve also seen plenty of comments saying that he’s a great founder and leader.

CONCLUSION:
To wrap up this writeup I just want to reiterate that I’m a big fan of this company, their mission, their business model, their customer flywheel and their fundamentals. It’s very hard to find a company growing this fast with high gross margins in an TAM that’s practically endless. I’ve been looking for a couple ways to play the real estate boom in the small cap sector and I’m glad I found $PRCH. Of course the company is not perfect and there’s definitely some competition in this space but the market is big enough for multiple winners.

I know a lot of contractors from electricians to plumbers to painters to roofers to remodelers…. and every single one of them sucks at marketing. These men and women might be amazing at their craft or trade but they’re not good at marketing and they’re not good at finding new customers which means they rely on companies like $PRCH to help them generate demand and grow their businesses through referrals and lead generation programs.

If $PRCH was just another marketplace that connected contractors and homeowners I don’t think I’d be very excited but the fact that they have pivoted into a vertically integrated SaaS platform with a tremendously valuable flywheel has me very excited about the future for $PRCH.
I think the current valuation is way too cheap and the stock should be trading in the $20s very soon and perhaps in the $30s by this time next year. My focus for this newsletter is to find companies under $10 billion market cap that I believe can 5x over the next 5 years and $PRCH is definitely one of those companies. With that said $PRCH is now my third largest position at 6.4% so I’m clearly very bullish on this company. I expect more investors to start learning about $PRCH in the coming weeks and then we’ll likely see this stock trading higher when that happens.
Thanks for reading and feel free to reach out to me with any questions or comments.

johnnyredstorm
アミーゴ based outta Seattle and you likely knowing something =)

Read it so my first impression is this is a glorified telemarketing company that wants to steal Angie’s list’s model. What I want to see is this becomes an e-commerce platform for the entire homeowners stack which would need integration from all the players vs just being a place for lead generation to give you a list of Yelp reviews organized in one centralized location. I’m not sure if I believe in the moat and opportunity here. But numbers look good and with some risk management, a swing trade could work if you like what you read.

 

[noir.]

Anyone use clubhouse? My boy swears it's gonna change the game like fb did. I'm in Android so I don't have access to it. We'd have to get a Niketalk room at some point.

yep i'm on there, i can't help but think ch is popping because of a semi-captive audience, but i love being in rooms where we all have common interests, learning from people & listening to people whom i've never thought i'd get to hear speak. i'm huge into architecture/vintage furniture & interior design, so i was in a room full of black architects one night, it felt amazing, same with photographers, in the morning you have the breathwork & guided meditation rooms. occasionally i'll get into the mood for some ratchetry so they have that available also, lol. i just hope they don't tank once outside opens back up fully, i know they're also struggling with ways to monetize it.

 

[antidope]

You mean a flat circle

Money is fake also but no one is ready for that. Spending 13 years looking at the markets has done nothing but shown me that this all PRETEND.

 

[アミーゴ]

Money is fake also but no one is ready for that. Spending 13 years looking at the markets has done nothing but shown me that this all PRETEND.

It’s a figment of your imagination, fairy dust

 

[johnnyredstorm]

Bitcoin is real

Money isn’t





More I think about PRCH the more I dislike their model. Instead of them giving software away for free for customer info and cold calling, it should be them operating as the platform that connects you with all your homeownership needs and automating all of the billing, scheduling, back end stuff. Like an UBER for homeowners. I go on there, it connects me with a contractor, books me a date and time, let’s me know my fee, etc all within the app within seconds. I’d buy that company.

 

[buddhashark]

What is everyone’s thoughts on the future of advertising driving the economy? I absolutely hate any company that’s setup to eat primarily on ads. I’d much rather pay for what I want to consume. That’s why I’ll never hold Facebook or Google. But I recognize human nature is to want ‘free’ stuff and that business model isn’t going anywhere. It’s how a lot of new industries (especially tech) were able to monetize. I appreciate the art of advertising but I hate having it jammed down my throat.

Netflix was a breath of fresh air and it’s nice to see major studios that have relied to ad-supported television follow suit with ad-free subscription models. The problem is none of them are profitable. And I don’t see how they can be without raising prices beyond what cable currently costs, which I don’t think people will pay. Is there any sustainable future for streaming without advertising? Or any other business for that matter?

 

[johnnyredstorm]

DOCU ESTC ETSY FVRR AAPL APPS GRWG IIPR MDB NET NTLA OKTA PENN PINS PLTR (bounce play) RDFN ROKU SE SHOP SNAP TTD and ARKG all look good for tomorrow. Doesn’t mean they’re all going to work, you have to learn how to create and execute a plan that fits your style. But these are all chart patterns you should be looking for when searching for a new trade to make. Not some ******** hot boiler room pump and dump that isn’t sustainable. There’s 5-15% that can be made at minimum from these set ups IF they work out. Doesn’t mean they will, remember that. If you need help understanding what the play is, lmk the stock and I’ll draw it out on a chart for you. But for you new guys it’s important to see this stuff for yourself first to train the eye and then ask questions when you’re unsure or want confirmation.

creating a plan from there is a bit harder because that’s when you deal with sizing and emotions, but keep it simple with these basic rules, starter position that you can afford to risk $1-3 on, only adding into a position if a trend forms (higher lows and higher highs, stock moving up and to the right), having a defined stop and sticking to it, raising the stop as the trade works, having a defined area to trim and take targets or sell completely.

I’m definitely not trading all of those tomorrow. I probably if I even trade any of them would focus on apple, pins, apps, arkg, MDB

take a look at CRWD. It’s not ready yet, but what chart does it look like from above that it can become?

look at TSLA never lost Friday’s low, never had a reason to sell. Strong one.

 

[tomdiginson]

DOCU ESTC ETSY FVRR AAPL APPS GRWG IIPR MDB NET NTLA OKTA PENN PINS PLTR (bounce play) RDFN ROKU SE SHOP SNAP TTD and ARKG all look good for tomorrow. Doesn’t mean they’re all going to work, you have to learn how to create and execute a plan that fits your style. But these are all chart patterns you should be looking for when searching for a new trade to make. Not some bull**** hot boiler room pump and dump that isn’t sustainable. There’s 5-15% that can be made at minimum from these set ups IF they work out. Doesn’t mean they will, remember that. If you need help understanding what the play is, lmk the stock and I’ll draw it out on a chart for you. But for you new guys it’s important to see this stuff for yourself first to train the eye and then ask questions when you’re unsure or want confirmation.

creating a plan from there is a bit harder because that’s when you deal with sizing and emotions, but keep it simple with these basic rules, starter position that you can afford to risk $1-3 on, only adding into a position if a trend forms (higher lows and higher highs, stock moving up and to the right), having a defined stop and sticking to it, raising the stop as the trade works, having a defined area to trim and take targets or sell completely.

I’m definitely not trading all of those tomorrow. I probably if I even trade any of them would focus on apple, pins, apps, arkg, MDB

take a look at CRWD. It’s not ready yet, but what chart does it look like from above that it can become?

look at TSLA never lost Friday’s low, never had a reason to sell. Strong one.

I had a good chunk f change in CRWD, got impatient and sold like a few weeks too early and that ***** took off. SMH.

 

[johnnyredstorm]

I had a good chunk f change in CRWD, got impatient and sold like a few weeks too early and that ***** took off. SMH.

Can’t look back. I exited in the 200-220 area from a 135 average trimming until I finally sold out completely. Probably a mistake since it’s a FCF machine but what can you do. Part of the game.

 

[アミーゴ]

Nothing wrong at all with taking profits boys

 

[ballinsam23]

I'm intrigued by SNAP going into earnings. Very intrigued.

 

[Zo gif]

$SNDL holding steady