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$API up 120% in a month // what could go wrong
Agora has now become my largest position so I wanted to outline how I'm thinking about holding the stock. For context, Agora had a lackluster initial 6 months of trading (relative to other high-growth names), but it appears the time has come for $API, whose stock has doubled in the past month.

At this point, I think the bull case has been brought to light especially with the buzz that Clubhouse is using Agora to power its social audio product. I remain bullish on the company, but here is what would have to happen for me to consider trimming my position:
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1/ market seems too early for video streaming in US -> The majority of the revenue today has been coming from China, which is largely ahead of the curve in certain livestreaming use cases. In the US, Clubhouse is a major win on the audio side, but I think the larger opportunity is in video-streaming so I would like to see more validation that we are at an inflection point in the US. What will be the clubhouse type of customer in newer use cases like EdTech or live commerce? Both those categories have been hot in the startup world, so I would look to see them land a notable new logo there. Outside of social audio, which are the markets that will catapult their US presence?

2/ clubhouse builds internally SOON -> Agora falls into the bucket of API companies that are "undifferentiated heavy lifting", but in the case of Clubhouse I'm not sure that's as true. The performance of their audio seems paramount to their end user experience, so I would understand the motivations to build this in-house. I think this is what separates Agora from Twilio and Stripe APIs in my head, which focus on a non-core business problem that makes more sense to "outsource". How long will Clubhouse stay on Agora?

Nandu Anilal's avatar
$42.3MFollowers
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