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Tableau: A CEO Change Is Not A Buy Signal

Summary

After a period of disappointing results and slowed down growth rates, Tableau has replaced its CEO with a former AWS executive.

The new CEO could take Tableau to the next level. However, he will need to address many troubling issues.

For now, until I can identify where the ship is headed, I am keeping Tableau on my watchlist.

Data visualization software vendor Tableau (NYSE:DATA) made a significant change to its top management this week, when the current CEO and co-founder of the Seattle-based company, Christian Chabot, moved aside and brought Amazon's (NASDAQ:AMZN) Adam Selipsky to replace him in the CEO position. Mr. Chabot will now be the chairman of the board. A change in top management had been in the air for a while, as the rapidly growing company had started slowing down and had failed to expand its ecosystem to large corporations. It seems that Tableau and Mr. Chabot acknowledged that the current approach brought the company to a certain level, and they needed a significant industry figure with vast experience in cloud computing who could understand market dynamics and take Tableau to the next level.

With a five-year CAGR of 80% in annual revenues and 30% YoY growth in quarterly revenues, Tableau is a rapidly growing company that was a tech investor's darling for a long time. Tableau and its investors had a troublesome dynamic in which Tableau beat consensus significantly and raised guidance each quarter. The market followed with higher expectations and price targets. That dynamic worked well for a while. However, it made market expectations rise to unhealthy and unreasonable levels when the market was ignoring the difficulties of expanding the business and the typical challenges of maintaining such a rapid growth rate.

As presented in the chart below, in the last year, Tableau's stock price dropped from around $130 to around $55 when the market...


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