Key insights
- This is an opinion piece on VRRM, a software company, arguing that its recent 70% stock price drop is an overreaction to losing 10% of its revenue from a single client. The author believes the company has real revenue from corporate and government clients and sees a base case of $12 per share, a potential 3x return. While the author is bullish on the stock, the impact on the broader US equity market is minimal as it focuses on a single, non-systemic company.
What I like about it is that it's not some meme stock. The revenue is real, and the customers are corporate and government entities. The current sell-off is definitely an overreaction. Yes, they lost 10% of their revenue from Avis, but that doesn't justify a 70% drop in the stock price. My initial position was 200 shares @ $4.11, and another 500 @ $4.50. I will enter another 5000 next week, hoping for a pullback to $4.30.
I don't expect it to go back to $25. However, if everything stay the same now, my base case is $12, easy 3x