Kornit Digital (KRNT) Pulls Guidance. Quick Note on Other Stocks
Kornit has just pulled Q1 2020 guidance, saying revenue will be roughly 35% to 45% below the low end of its prior revenue guidance ($47 million) due to global disruptions from COVID-19. Management cited several customers postponing orders or ceasing operating entirely for now. Given the stock is over 40% off its high some of this news should be priced in, but the stock is still taking a hit today. Part of this retreat is also likely due to weak market conditions after the rally over the past three days. In terms of what to do now, I’m dropping coverage today. I wouldn’t argue if you wanted to hold on to a small position as Kornit will recover once business activity can pick up. The big question is what happens between now and then, and what else you could invest in with the capital (i.e. the opportunity cost of holding KRNT until it recovers). With a relatively large number of stocks under coverage I’m dropping Kornit to focus on titles that have a better chance of performing well in the near-term. It will go back on my watch list for potential inclusion in the future. SELL
On a more positive note, the market’s rally this week has put many of our stocks back in the black and made our timing of doubling down on Sunnova (NOVA) and SurveyMonkey (SVMK) look quite good, at least for now. The flip side of this is that things are still very tenuous. We are certainly not out of the woods yet and this market remains on edge.
For now, you should continue to remain defensive and take things slow on the buy side. We’re going to have sharp ups and downs in the coming weeks as the country tries to find the light on the other side of this tunnel. As more opportunities open up we’ll begin to move incrementally more aggressive.