AVID stock is ready to go up?!?

[OneWorld]

Sell now, I am about to invest, and I always back losers, it must be in my genes or something

[DC-Choppah]

Up 5.5% today to $8.64

So I am up 44% for the shares I bought at $6.00 after the last dip and have held on to.

This stock is refilling that last big gap down based on nothing more than business as usual and new swing traders entering the market.

Stay in and plan for an OK report next year and you will make some good $$$ along with the hedge funds and other traders playing this game. You will have to decide to cash out before the report or after.

If you go out after, put in a stop to catch it if it falls fast. Be happy either way.

You will need to find a place to park that new boat!

[DC-Choppah]

Trading at $9.16 today.

OK, if you got in over the last months you are in the money now and are beating the market.

I got in at $6.00 in August, so would be up 52% in 6 months if I cash out now.

If you believe next earnings report will be a bust, then,
now is a good time to set a stop at a place below where it is trading now. If it stops-out be happy. If it goes up, bring your stop up with it (trailing stop). Let it stop out before the report and don't be in it across the gap.

If you believe next earnings report will be good, then ride it out. If you are wrong and it sinks, have a stop set to catch it when it falls so you still make money. Wait until it bottoms out and buy it up at the low price and play the next round just like this one.

Either way you should be locking in these gains now.

[ManFromGlass]

I find this fascinating although there are some terms I must look up.
I assume that you must also have some stocks in your portfolio that are not performing as you had hoped so on average are you up, down or breaking even? (I don’t know the correct investment terms)

[DC-Choppah]

I made 42% gross annual compounded return (CAGR) last year.

Stocks like AVID help me get there. But the market (VOO S&P index) made 22% by itself.

So to do better than the market you have to trade some stocks that move faster than the market itself - like AVID and many others.

AVID is hovering between making money and going out of business so it swings back and forth nicely. The analysts are clueless in these cases.

Musicians understand rythm, tempo, and swing and groove, so I hope some musos are following along here.

[Blazzoblaster]

I made 42% gross annual compounded return (CAGR) last year.

Stocks like AVID help me get there. But the market (VOO S&P index) made 22% by itself.

So to do better than the market you have to trade some stocks that move faster than the market itself - like AVID and many others.

AVID is hovering between making money and going out of business so it swings back and forth nicely. The analysts are clueless in these cases.

Musicians understand rythm, tempo, and swing and groove, so I hope some musos are following along here.

Personally, I would take profits as the stock is trading at the ceiling of resistance. For OVER 10 years now the stock has been range-bound. The stock failed to hold 9.55 and it will most certainly test support at ~7.50 a share if it fails that LOOK OUT as the next support level is ~6.5 a share. The stock hasn't traded above $10 in a couple of years and in this economy with the market really booming I would say that the prospects of it crossing that level is NIL

[DC-Choppah]

Based on Mr. Blazzo's excellent analysis I had set a limit at $9.45 to get out completely.

That hit today so I sold my AVID shares @ $9.45. Thank you Blazzo.

If you have been following this thread, I bought those shares at $6 in Aug 2019. So I am up 57% in 7 months. Once I go over an effective 100% return for a year on any trade I always get out.

I am quite happy with that.

I am now on the lookout for an irrational fall in price on this stock to play the next big swing.

Mr Red Bladder, thank you kindly for your thoughts you have shared.

[DC-Choppah]

OK so the whole market went down and took AVID with it.

But the overall market went down about 14% from its peak while AVID went down 27% from its peak at nearly the same time.

AVID Earnings call on 9 March.

Hmmmm

When to re-enter?

[The Red Bladder]

Avid is - as I have said before several times - a ridiculously volatile stock.

Right now, the markets are acting volatile anyway - add the two and it's a case of "Buckle-up Boys. It's going to be a bumpy ride!"

If Avid misses its targets, it will drop like a stone - after all, it gets all its stuff made in China, it has some bogus deal with a Chinese distributor (that seems to have died an unnatural death anyway).

If Avid meets its targets, I doubt that there will be too much up-side, unless it beats the targets into total submission and actually begins to book real profits! Yer - and pigs will fly!

It is still a loss-making company with negative assets and equity. Right now, we are possibly heading into the teeth of a howling world-wide recession, so remember what Warren Buffett said, "Whan the tide goes out, we all get to see who has been swimming naked!"

The questions are (1) Does Avid have a future? (2) Does the market think that Avid has a future?

(1) Avid has a future just as soon as it pulls its collective socks up and starts innovating the way it used to about 20-15 years ago! Right now Adobe and Blackmagic-Design are pulling the cherries out of Avid's mouth by innovating like crazy - esp. BMD with their hardware and their DaVinci-Resolve package.

I have to talk to audio and video people in the industry and they are using independent companies that have to watch the pennies and they are migrating steadily to DaVinci-Resolve and Adobe Premiere for video and Resolve and Reaper/Logic/Cubase for audio. There are still many Media Composer and ProTools users out there, esp. in Hollywood and its satellites, but the movement is definitely there. (I spoke to what I consider the world's most famous and preeminent cinematographer and he told me that he colour grades in Resolve. Make of that what you will!)

(2) That's the hard one to answer - there are two types of money. Clever money and stupid money. Clever money knows what is really going on behind the scenes. Stupid money (that's you and me BTW) can only look at the figures from the sidelines. Clever money bought in at around $3 when the company was delisted and sold last year at between $8 and $10 - and I spoke to clever money at length and clever money was very happy to get away from Avid.

Over the past few months, that other type of stupid money - huge investment funds that have to invest in thousands of companies and do so by algorithms only - are seeing a company that has a profits growth rate of nearly 100% (from less than nothing to almost nothing) and is trading at about 8% below fair value and they are not seeing the industry's insider stories about competition that is firing on all guns. The algorithms say that Avid has a future, so they buy small packages to fulfill their remit for tech stocks. Combine that with retail buying and that accounts for small trades making Avid such a volatile stock.

There are other red flags - the board gets about $200k p.a. each. The CEO gets nearly $5m. Those are figures more in line with a company TEN TIMES the size of Avid! This is a small company that is losing money! The executive suite and the board gets paid more than last year's losses! The expression 'milking it' springs to mind!

The company issued further stocks last year, thereby diluting shares by 2%.

It has a market cap of about $320m and total liabilities of over $400m - of which $230m is good-old-fashioned debt. It is sitting on about $35m in unsold inventory and has receivables of nearly $70m still to come in. I can go on and on and on . . . well, you get the idea!

That does not mean that the stock won't go up again for some crazy and unfathomable reason!

[ManFromGlass]

The heck with investing in Avid, how do I get a seat on the board?
I’ve never had a golden parachute before.

From my small view of the industry there are so many studios invested in ProTools it’s hard to imagine that software being replaced by anything. That being said I’ve heard a fair bit of grumbling about the cost of the latest round of required upgrades to (perhaps) stay competitive. Not that we haven’t been there before. So is the emperor not wearing any clothes?

[Hugh Robjohns]

...there are so many studios invested in ProTools it’s hard to imagine that software being replaced by anything.

.. Pretty much every pro studio had invested in Studer tape machines in the 70s/80s/90s... they've almost all been replaced now...

It happens when a technology doesn't 'keep up' in whatever way or for whatever reason.

[Eddy Deegan]

I would imagine it starts as a trickle and then accelerates over time. The early departures from something probably do so because their fuse is a little shorter due to other frustrations with the product or technology, but then others see them do it and it snowballs from there.

This may not be particularly noticeable at first, but once it becomes obvious it's probably too late to stop it, especially if viable (or even better) alternatives have emerged in the meantime.

[ManFromGlass]

and that’s the interesting thing with PT. They are adding features that are useless to me (ie:Atmos mixing features, slight improvements on lame midi integration).

PT is entrenched as a "standard" and unless there is a new magical something that replaces software altogether then they could remain that way for a long time. If I go into a small studio and see they have a small SSL board then the expectations in my mind are set to expect a higher standard even if it doesn’t pan out. Marketing.

[The Red Bladder]

PT is entrenched as a "standard" and unless there is a new magical something that replaces software altogether then they could remain that way for a long time.

The standards game just does not work like that! It really is as Eddy stated: a slow creeping process until it tips over and suddenly everybody switches. CDs were on the horizon for quite a long time and then came the day in mid-summer when almost every record shop in Europe just dumped all the vinyl and replaced everything with CDs.

Digital recording was knocking about forever (it is, after all, a 60s technology!) and all sorts of audio programmes from small companies like Turtle Beach and Sintrillium tried manfully to grab the recording market and Sony and others were stupid enough to think that we wanted to use digital tape (we didn't!) - but it was Digi Design's use of dedicated hardware that made it viable and with the advent of ProTools HD (proper converters and unlimited track-counts) all them Studers and Otaris were swept away!

Films were always made (in Hollywood) using Panavision cameras and lenses. Cinemascope films (2.4:1) were nearly always done on 35mm film using anamorphic lenses. And yes! People complained about Panavision being arrogant and elitist and over-charging! Rebel camera people spoke of a small German rival called Arri and a young cinematographer called Deakins even bought his own 35mm 'Arriflex' (known only in Hollywood as a news-gathering camera in 16mm) and shot the film 1984 on his own Arriflex.

Them days of chemical film is over! Now you'd be hard-pushed to find a top film using film anymore - it's all Arri Alexas LF (large format sensors) or Super-35 and 2.4:1 is done by cropping. If you want super-wide, the Arri Alexa 65 beckons! And once you have tried an Arri Signature Prime lens, well, all those old lenses with their blotchy 'bokeh' and zooming and breathing on focus seem so primitive!

Most films are now colour-graded in Resolve and it is only a matter of time before that leaks backwards into the editing suits of Hollywood. And what Hollywood does today, everybody else does tomorrow.

[DC-Choppah]

The license fees for AVID software may seem like a lot, but for the production houses, it is chump change.

The bigger expense is having to relearn all of the stuff that people already know how to do. That is not a technological issue. Therefore I expect the revenues from AVID software to increase in line with their estimates. The game here is to switch to subscription base successfully and get to more stable revenues. Similar to other software companies.

I see no reason why AVID won't have a good earnings report. The bigger issue is if the 'analysts' have a realistic expectation or not.

I am not back in yet though. Too much other turmoil in the markets right now. I never regret not being in.

[ManFromGlass]

So in general subscription based software has gained acceptance? I haven't researched the current state of it but recall great resistance as the bigger companies switched over to it. The resistance I noted was from single users, I have no idea about how large companies got on with it.

[Wonks]

Significant users will have already been negotiating their own prices for outright purchasing, so they will have done the same with the subscription model as well. Unfortunately, the small guy always pays more than the big guy.

[Eddy Deegan]

So in general subscription based software has gained acceptance? I haven't researched the current state of it but recall great resistance as the bigger companies switched over to it. The resistance I noted was from single users, I have no idea about how large companies got on with it.

In those parts of the software industry where the product is aimed at corporate customers rather than individuals, a subscription model is significantly more common than it was in the past. We use it ourselves (our product is volume-based; the more data you push through it the more it costs).

The benefit to us is a smoother revenue stream which makes planning and forecasting significantly easier.

The benefit to the customer is similar, in that they can predict their spend once they have forecasted their usage growth.

The benefit to both is that the revenue stream can adjust on neat boundaries (ie: per month) to cater for fluctuations in use of the software, so the customer pays for what they use, effectively.

We further simplify these changes by grouping usage into a small number of bands, with a fixed price per month per band which means that minor (and often medium) fluctuations in the usage remain at a steady cost.

For our largest customers we have also negotiated fixed pricing regardless of usage.

So far it's a model that has worked extremely well for us and our customers, although as an individual I much prefer a perpetual license when buying software for my own use.

To be fair, in our case should the customer cease to maintain their subscription they do get to use the product indefinitely, just restricted to the range of dates for which their subscription was active, given very limited support and updates constrained to bugfixes only.

Public cloud providers like Microsoft Azure and Amazon AWS adopt a completely variable subscription model where you literally pay down to the cent based on per-hour (for resources such as virtual machines) or metered (for resources such as network traffic) usage of their services, which works well for the gigantic amount of usage they have.

The advantage is that it's very fair. The disadvantage is that it makes it very difficult for the customer to predict costs and perform meaningful analyses of the massive cost breakdowns of usage they get every month (millions of records in some cases). But then that's where our stuff comes in to help, so it all goes full circle in the end!

[ManFromGlass]

Most interesting. So with Avid/ProTools their subscription is yearly (I’m not 100% on that). I need the software 5-6 times a year. As a small user I either buy in and that’s the cost of doing business or I take my files to the studio down the hall and pay a few bucks to have them loaded into PT and sent off.
From the corporate perspective would small users be considered a "bonus"? What I mean is that the main revenues are from corporate users and any small users picked up along the way doesn’t hurt but also doesn’t really impact the company being able to somewhat predict their future viability.

[Eddy Deegan]

Most interesting. So with Avid/ProTools their subscription is yearly (I’m not 100% on that). I need the software 5-6 times a year. As a small user I either buy in and that’s the cost of doing business or I take my files to the studio down the hall and pay a few bucks to have them loaded into PT and sent off.
From the corporate perspective would small users be considered a "bonus"? What I mean is that the main revenues are from corporate users and any small users picked up along the way doesn’t hurt but also doesn’t really impact the company being able to somewhat predict their future viability.

I can't speak for Avid; I was just giving some additional context with regards to subscriptions and the software industry.

The main difference between Avid and the stuff I was talking about is the use-model, which in their case is not volume-based, rather it's a capability you're paying for periodically which permits unlimited use of that functionality for the duration of the license.

They also deal direct with individuals whereas we do not. It's not that we wouldn't, but ours is not the sort of product that a single individual would likely wish to use or find affordable.

As Avid are in the business of dealing with individuals, if I put myself in their position I would be unlikely to offer anything other than the standard license costs to 'small' users because I don't have any practical means of determining what they are using the product for without getting quite intrusive.

You say you use it 5-6 times a year, and I believe you, but if Avid were to offer much cheaper deals for infrequent users then they would have to engineer checks into things to enforce that, else people would simply abuse the license system.

Pro-tools appears to be a good solution for many people, a lock-in for others (for various reasons) and potentially opt-outable for yet more. Their license model isn't something I would sign up to myself, but I'm none of the above.

Regardless of one's views of the company, how it's run etc. the choice is a simple "use it or don't" really. If you decide/need to use it then you accept their licensing requirements.

Some will pirate I guess, but that's morally indefensible in my view and they deserve every crash, bug, virus infection or malware catastrophe they encounter along the way!