Liquidity Risk Model: Best short candidates
ChargePoint (CHPT) - Burns $400m annually, a figure which is rising fast. Expected to run through most of its cash balance by early to mid-2024. Forecasts expect sales to continue slowing. Not expected to breakeven until 2026.
Floor & Decor (FND) - Requires nearly immediate outside financing, primarily due to very high capex spending. Net debt $1.8bn (vs. $200m in 2018). Sales are expected to slow further during 2023.
Natera (NTRA) - Diagnostics company will run out of cash by Sep having burned $700m+ in the past year. Not expected to breakeven until at least 2028. Trades at 5x 2023 and 2024 sales.
Edition: 155
- 03 March, 2023
Healthcare
New short thesis on this $10.8bn Mkt/Cap firm in the Diagnostics & Research industry - key points include: (1) Increased frequency of complaints about its billing practices. (2) Insurance providers have been reluctant to reimburse for microdeletion screening. (3) Disparate trends between receivables and deferred revenue signal deteriorating revenue quality. (4) NTRA may have pushed current-period expenses into the future. (5) Executives and directors have engaged in some unusual divestiture activity in recent periods. (6) Valuation metrics leave room for further downside.
Edition: 122
- 29 October, 2021