When dealing with the stock market, it is relatively easy to be lulled into a false sense of security. If invested in a particular company, you might be inclined to only look at the bottom line results. You would not be alone in doing this, for many people, this is common practice. However Sahm Adrangi of Kerrisdale Capital is not many people, and he has recently taken QuinStreet.com, a data mining middleman for advertising sites, to town.
Sahm Adrangi is trying to point out to potential and current investors that this company’s current success is illegitimate. Sahm Adrangi points out how QuinStreet’s main customer has been a fake website for the past couple months. This website essentially scams people into clicking ads that promise to pay them, a desperate attempt to increase traffic.
Sahm Adrangi does not stop there either. He notes how that the problem with QuinStreet, and has been for years, is that their technology and entire business model is clunky. This has caused them to become ever more irrelevant throughout the years in Sahm Adrangi’s opinion. He backs this claim by citing the fact that much of QuinStreet’s eight-year stock history has been plagued by low exchange rates.
In an economy where things are constantly changing, it seems that QuinStreet is having trouble keeping up. This is not surprising either, taking into account the nature of technology. If a company like QuinStreet is going to survive, staying up to date with your competition is essential for success and continued growth. Sahm Adrangi seems to be giving out a warning call with this article. He is letting investors know that a spike in revenue does not necessarily mean a company is moving back towards good standing. In this case, the company in question is using deceptive practices in order to stay financially relevant. What investors should stay focused on is the fact that the business model is still dated, making further investments unwise.