ESTC - Elastic - Strong financials and settled a lawsuit with Amazon

I've been in and out of this trade since 2019. In 2019, elastic sued Amazon for trademark infringement. They settled last week on "undisclosed terms". Elastic also had a major management change a couple weeks ago which caused a massive one day price drop. Shay Bannon, the founder and former CEO dropped to Chief Technology Officer and a new CEO was brought in. Earnings are being announced a bit later than expected on March 3. During the announcement of the change of CEO, Shay Bannon already said that they will beat on revenue and earnings: https://www.elastic.co/about/press/elastic-promotes-ashutosh-kulkarni-to-ceo No competitors other than Splunk the dinosaur and the companies who have forked elasticsearch. I'm a software engineer. My company uses elasticsearch. There's no chance we would use a fork of elasticsearch because of the potential for it to get abandoned. I think they are going to do well on earnings, but I predict the big news here will be a new partnership with Amazon. The CEO change and the lawsuit settlement (which, if taken to court would have resulted in a victory for elastic) occuring so close together combined with a slightly delayed earnings announcement leads me to believe that something big will be announced during the earnings call. Combined with 43% YoY revenue growth and a P/S of only around 9-10, this is a slam dunk earnings play. Positions: 3/18 100C. Started buying last week, and will continue to average in over the next few days.

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ESTC - Elastic - Strong financials and settled a lawsuit with Amazon

bullish

I've been in and out of this trade since 2019. In 2019, elastic sued Amazon for trademark infringement. They settled last week on "undisclosed terms". Elastic also had a major management change a couple weeks ago which caused a massive one day price drop. Shay Bannon, the founder and former CEO dropped to Chief Technology Officer and a new CEO was brought in. Earnings are being announced a bit later than expected on March 3. During the announcement of the change of CEO, Shay Bannon already said that they will beat on revenue and earnings:

https://www.elastic.co/about/press/elastic-promotes-ashutosh-kulkarni-to-ceo

No competitors other than Splunk the dinosaur and the companies who have forked elasticsearch. I'm a software engineer. My company uses elasticsearch. There's no chance we would use a fork of elasticsearch because of the potential for it to get abandoned.

I think they are going to do well on earnings, but I predict the big news here will be a new partnership with Amazon. The CEO change and the lawsuit settlement (which, if taken to court would have resulted in a victory for elastic) occuring so close together combined with a slightly delayed earnings announcement leads me to believe that something big will be announced during the earnings call. Combined with 43% YoY revenue growth and a P/S of only around 9-10, this is a slam dunk earnings play.

Positions:

3/18 100C. Started buying last week, and will continue to average in over the next few days.

read-time
1 min
100.00
Target Price
6/ 10
Confidence
1-2 Months
Timeframe
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Earnings Release
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News
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SEC
Filing
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Sentiment
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