Oh Come On!
Investor, Venture Capital Background
Bending Spoons looks expensive at 14x revenue for a digital tobacco business whose portfolio is a fast-melting ice cube. The model could work given the endless supply of failed VC-backed apps with deeply loyal customers to buy and raise prices on, and Bending Spoons may lever up to take out some very big names. Yet the market does not credit existing SaaS companies with the same ability to raise prices on locked-in customers. x.com x.comÂ
Bending Spoons' equity is not a good investment at a double-digit revenue multiple. Its management may be good value investors, but paying that multiple is like buying Strategy at twice net asset value. x.com x.comÂ
Bending Spoons is not compelling because so much of its strategy is M&A, at a magnitude far beyond the typical. It made roughly 17 acquisitions over the past five years versus 3 for Broadcom, a count that may be off but is directionally right. M&A is not bad in itself, and Bending Spoons beats Accenture and Constellation Software among acquisition-led names, but there are better opportunities. x.com x.comÂ
Bending Spoons' acquisition economics make its valuation look better than a rigid P/E cutoff suggests. It pays 2-3x revenue for targets and often earns back the investment in a couple of years, putting its effective P/E below 10x by this reckoning. At $33, the stock is about 12x estimated 2027 adjusted EBIT; the principle is buying below intrinsic value, not blindly rejecting anything above 10x earnings. x.com x.comÂ
Bending Spoons' growth is bought on credit, while Constellation Software can deleverage quickly, and valuations should eventually reflect that. Both grow just 3-5% organically, and Bending Spoons' organic rate halved twice (13% to 6% to 3%). Yet Bending Spoons trades at 19x FY25 sales versus 3.8x, with net debt at 3.1x revenue versus 0.2-0.4x and interest at 11% of revenue versus 2.6%. Bending Spoons needs the next deal to pay for the previous one. x.comÂ
AI's ability to remove friction from cancellations is likely to be a big part of Bending Spoons' undoing. Its model buys expiring software and raises prices, depending on customers staying despite that. The damage will not play out in a day; the company needs later and larger acquisitions to keep the story going. x.comÂ
Bending Spoons is a unique model of buying cheap, forgotten software businesses and cutting costs that could scale past $20B of annual revenue, but it is hard to forecast. The biggest red flag is organic growth slowing from low double digits to low single digits, raising pressure on its debt-fueled acquisition strategy, since layoffs are one-time boosts with large severance costs. Strong net revenue retention may rely on price hikes; churn after two or three years is the key question. x.com … Show more
Okta, Salesforce and Atlassian look insanely expensive at nine times forward revenue against roughly 10% year-over-year growth. Many SaaS firms also have high sales and marketing costs. A commenter flags inference spending, which SaaS investors worry could compress margins; if free cash flow, growth, retention or gross margins weaken, their price-to-sales multiples could collapse. x.com x.com x.com x.comÂ
ServiceNow's growth looks likely to keep slowing, yet it trades at 50x 2027 GAAP EPS versus 20-25x for Microsoft, Google and Amazon growing as fast or faster. Subscription revenue grew about 21%, but the customer base is flat, so growth relies on upselling modules. Operating margin dipped and stock-based pay rose. Customers are mixed on its AI products and delay over price. Big SaaS firms near 20% growth often slide faster than expected, and its long-term targets look hard to reach. x.com x.comÂ
Airtable's switch to smaller teams puts Bending Spoons' overhaul playbook into practice. In the quoted post, @fedesimio says a large part of Airtable's team is being laid off because smaller teams ship more and better; a new Core team has shipped over 30 requests in three weeks. Bending Spoons would be a great buy if its stock gets close to $30 again. x.comÂ
Constellation Software has no way to benefit from AI and little organic growth, so 21x GAAP EBIT looks fair, with perhaps a downside skew if churn rises across its portfolio in the next five years. The market's negative reaction is rational. Its small vertical software businesses were run financially rather than for product, many still on-prem, with no central AI strategy as software gets cheaper to build. Organic growth was 2% in constant currency; inorganic growth is fundamentally different. … Show more
