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I don’t use TA, but Bollinger charts are of interest because they are statistically based and the idea originated from the use of control charts (and which I used in the early 80s) to control industrial processes. Control charts allow operators to differentiate between random noise (inside the lines) - when you should not adjust anything as you would only make the variability worse - and special causes (outside the lines) of variability when action is needed to understand why and correct. So I guess when a SP coincides with a Bollinger line there is a 96% ( 2 standard deviations) probability it is not random noise but something special going on. . I don’t trade, so don’t use, but like the idea. However it could just as well be the case that the outlier is caused by by some big sellers or buyers just wanting out or in for their own special reasons, and adherence to Bollinger would just cause the herd to follow.

I will stick to trying to understand the fundamentals of companies to inform by investment decisions.

Just by chance the latest factsheet of the Buffettology fund (1.4% holding in DT) outlines their view on valuing shares and SP volatility. They too use DCF analysis.. They bought in at iPO and again some months later perhaps at one of the secondary placings..

‘We frequently get asked for running commentaries on share price movements relating to our investee companies. Reacting to, or being asked to justify, movements in share prices is a mug’s game. The day-to-day whims of Mr Market are mere distractions. Equally foolhardy is the premise that risk and share price volatility are somehow equated. Risk is defined by permanent capital loss, not volatility. The Efficient Market Hypothesis has much to answer for in this respect by misguiding investors. If you are a true investor, you will know to value a company by the stream of income (i.e. cash) that you expect to receive over the time you intend to hold the investment. This is how a businessperson would value an investment opportunity. At SDL, we build models to test how robust we think that future cash stream is likely to be (we are actually more interested in testing to destruction). Then by discounting the stream back at 10% - a very high hurdle - we are building in a larger margin of safety than those who rely on using weighted average cost of capital, which is another illegitimate offspring of the EMH via the Capital Asset Pricing Model. Armed with that valuation, we can then profit from volatility by taking advantage of Mr Market having a funk. Of course, if you don’t know how to value a company properly, your only resort is to be guided by the share price and your own whims. But that is another story.”

Ndn71. - I Agree “highly speculative” is not an appropriate label. Most of my share holdings are in well established companies with predictable earnings and relatively to those DT is much more speculative because of the intrinsic uncertainty of the cash flow. DT has great potential but on quite a different risk/reward spectrum IMHO.

What one does on a rainy day!

VH - no! But I believe in his approach and WB believes in Graham.

As an unashamed Value investor, who has bought into the investment thinking of Graham/Buffett, I thought it worthwhile reviewing DT, and it’s SP, from this perspective. There has been a lot of “debate” as to whether the brokers are right or wrong or whether DT is under- and over-valued, oversold etc. As a Value investor this discussion is meaningless unless one has a view as to the intrinsic value of the company against which to make comparisons. (IMHO).

My stance is that the intrinsic value is the present value of future cash flows calculated at an appropriate Discount Rate (DR). Brokers will almost certainly have used this method to come up with their target prices which I suspect is the present value per share using their DRs. They will have needed to take a view on the revenue growth rate and improvements in net margin (costs) and the terminal value of DT after the evaluation period. The outcome will be incredibly sensitive to these assumptions – as my simple DCF model has shown - so these broker “targets” only represent views of future possibilities, but necessarily tempered, IMHO, with a great deal of uncertainty.

Now if we take the broker’s view that 700 -1000p is a not unreasonable result of informed, but never the less guesstimated, assumptions – because that is what they are because of the uncertainty – then I would have thought these figures should be discounted by at least 50% in order to account for Graham’s “Margin of Safety” when assessing “fair value”.

So at the current prices my view is that the downside risk is far outweighed by a vision of what is possible to be achieved in the future. But having said that, we need see the revenue rates and net margin continue to increase to make DT profitable in the next year or so, as this must have been assumed in the broker’s estimates to come up with the values they do. It can be done, but will it? I maintain my bet at current prices, but will not be adding anything further, if at all, until there is more clarity as to where we are heading. This is a highly speculative share, but with good reason to continue to be optimistic IMHO.

C2025 - reviews give useful insights but views differ just as they do on this BB. Personally I would rather rely on facts and for subscription type offerings - they are the measurement of the Annual Recurring Revenue (ARR) together with the Churn Rate (CR). The ARR is the main Key Performance Indicator on which management I’d incentivised. For this reason the next few updates are going to be critical for our understanding of where we are heading.

As others have pointed out this share is speculative, but to me it is a reasoned bet and I have assumed the risk with eyes wide open. It is not a share for the faint hearted or one for anyone who cannot accept a volatile ride or losses - all imho.

Ndn71 -Me too actually and I agree with you. Beats me and can only speculate why they are buying back their own shares. The point I was trying to make is that they have the cash to splash and having cash is good. I would rather that they invested it in their R&D and marketing efforts, or as you say keep it in reserve for a rainy day,- but they know more about their business than I do so can only hope they are doing the right thing.

Meantime Happy New Year All - may DT also find those trade winds and calmer seas.

The only thing I can add to Sanchez’s review, is that DT’s cash position is healthy -even buying back its own shares - and currently has a positive 1-4% EBITDA margin. Profitability ( that includes non cash A &D) me is not too important at the present time - positive cash generation is of greater relevance. I still buy into their outlook :

‘ Following a successful IPO, and with a strong financial profile and a fast-growing customer base, Darktrace is well-placed to take advantage of a rapidly expanding market. Darktrace remains focused on accelerating the deployment of its technology worldwide and investing in long-term growth for the benefit of all its stakeholders. In this new era of cyber threats, Darktrace's customers have never needed its technology more, and it will continue to focus on meeting their needs and helping them to adapt as the threat landscape evolves.”

This discussion is not adding any value to this bb.

If you take out the word big - an undefined word - then Charles is right in that the secondary placements were only to iis or those with access to SETS trading. As far as I know only 3 new iis have holdings above 1% - these are Stamford Deland, Go ETF Solutions and Invesco Advisors. (Ref Market Trader).

Perhaps, Charles, ii Investors would be a better description. For every share sold there is a share bought - if not instantly in SETS/ Placements or over a short period of time if through MMs.

In my view the next few updates will answer many of the uncertainties. Key to me will be the progress In the revenue growth rate and all the secondary indicators such as ARR, churn rate, new offerings from their R&D efforts and their uptake, customer numbers and their size etc. In other words the facts not hearsay. I remain optimistic that DT will deliver.

But at least, now, some the discussion is again on the merits of the company and its offering rather than just the sort term movement of the SP.

Sanchez - it seems to me you are a trader not an investor . To quote Buffett “Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
Absolutely fine being a trader using technical analysis, but an investor needs to understand the fundamentals of a company and just how value and wealth is to be created. Quite different animals I suggest.
Merry Christmas all.

Very little on this bb recently on the fundamental drivers of the SP - those being their technological strength and marketing acumen. So perhaps worthwhile noting a good review of their R&D efforts in 2021 on their web site and some clues as to future direction of these efforts.

Willy - it is quite a complex story but covered extensively in the risk section of the IPO Prospectus which you can download from this link.

https://sec.report/nsm/Darktrace-P-L-C/Portal/NI-000024950/NI-000024950

This may have already been posted/ commented upon - if so apologies. The plot thickens.

https://www.theregister.com/2021/12/17/autonomy_lynch_extradition/

Just a reminder that the ML issue was covered quite extensively in the risk section of the IPO prospectus and, along with the Deliveroo flop, was one reason for the IPO price being fixed at about half the initial estimate. Very unfortunate for an otherwise great company.

Patel wants to await the outcome of the civil case being heard in the UK- but not expected before early next year - before taking a decision. . A judge has given her only until 16 December.

I still think this is a bigger issue, or perceived issue, than many assume and is spooking the market and is not unrelated to the recent SP movements. As many others have pointed out uncertainty is not a friend of the market.

The background.
https://www.ft.com/content/be3e5995-aae0-442e-aa9d-ba2f76203e07

Grotty. Good analysis of the present situation akin to comparing PE ratios which is absolutely fine for established companies with more established and predictable earnings.

My view is that comparing snapshots of the present sales and revenues is less relevant for high growth companies like DT and its competitors. To me what is more important is what can be achieved with the future growth in earnings and commensurate reduction in costs. And then, as part of this, I think it is relevant to compare current metrics like growth rates and their projections - DT has a revenue growth rate of 40%, SentinelOne’s rate is 127% - in order to have a more complete understanding of present evaluations. If these current rates were to reflect the future rates SentinelOne would will the race by miles.

DT is again demonstrating that it’s year-on-year growth rate is accelerating and I think we all look forward to see this trend continuing. To me this is the key to its valuation and how well it will compare with its competitors in the future.

I think bobocaca is right using the word “supported” for the SP. It was already up 3% at about 430p when they started buying at about 11am and ended the day about the same level after relentless drip buying. So stabilising the SP could indeed be the name of their game for the moment..

Charles I'm not sure what "fair value" means with speculative stocks that cannot be definitively valued so I don't see 800p in that light. Based on some assumptions on revenue and cost a PV of 800p at a DR or 10% is to my mind not an unreasonable possibility but DT still needs to deliver and and keep demonstrating that they can meet and better these expectations.

To me an outline of a picture is emerging but we have a long way to go to see whether it will be a masterpiece. But I remain cautiously optimistic notwithstanding the choppy seas.

My last post reflects my optimistic side. On the pessimistic side the question arises in my mind as to whether it would it not be better to have invested that money in the business - either R&D or marketing? For growth stocks with huge potential I would be happier if it was deployed to further the growth opportunities. Usually money is handed out in dividends or share buy backs when business opportunity is limited - IMHO.