Avalara, Inc.
Thesis
Avalara is a high gross margin business with a sticky product and a large underpenetrated total addressable market (TAM). The management team is reinvesting in sales and marketing, which is viewed as growth capital, and the company is expected to grow significantly over the next few years due to favorable market conditions and a high retention rate.
Did it work?
The pitch was a long thesis premised on durable high-margin growth, sticky retention, and a large TAM, but the stock declined 85.3% since the pitch. A drawdown of that magnitude decisively invalidates the core growth and quality narrative regardless of the stated horizon, as it implies severe deterioration in fundamentals or a collapse in the growth premium the thesis relied on. The direction of the return is squarely opposite to the long positioning.