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HubSpot Drops After Citron Says It Will Be Big Loser Of The Market Rotation

HubSpot Drops After Citron Says It Will Be Big Loser Of The Market Rotation

HubSpot Inc (NYSE: HUBS) plummeted nearly 3 percent Tuesday on a new short report by Citron Research, which forecasted a 34-percent near-term decline and a 67-percent long-term fade from $75 to $25.

“At BEST this can be valued at Constant Contact whose takeout price would put HUBS valuation at $27,” Citron’s Andrew Left wrote in the report.

Left considers HubSpot a “low hanging fruit” to suffer the profit-favoring market rotation. His valuation factors in a lack of pricing power, transparency and intellectual property; a decline in U.S. growth and business partners; a management exodus; and a broken business model.

The marketing and sales software platform is also facing competition from the likes of Alphabet Inc (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB).

“At best, HubSpot is worth SaaS [software as a service] comps,” Left wrote. “We give it the benefit of the doubt and give it take-out valuations… Hubspot is more in line with a content marketing company whose takeout valuations are 2x revenue.”

Depending on perspective, Left considers HubSpot worth, at most, $57, although likely lower than $30.

At time of publication, shares had largely recovered to trade at $76.95, down about 1.3 percent off the open. LEft will appear on Bloomberg TV Tuesday afternoon to further discuss his call.

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