The Baby in the AI Bathwater
A profitable money network — 80% margins, three activists, and a buyout firm circling.
NYSE: BILL · ~$37 USD · ~$3.8B market cap · May 2026
Every few years the stock market decides an entire group of companies is doomed, and sells them all at once — the good with the bad, no questions asked. Right now it’s software’s turn. The fear has a name: artificial intelligence. The worry goes like this — if AI lets anyone build their own tools, or talk a chatbot into doing the work, then why pay for software subscriptions at all? So the market has been throwing every “SaaS” name (software-as-a-service — companies you pay monthly to use their software) into the same bin marked obsolete.
Sometimes the market is right. But “sell everything in the group” is exactly how a genuinely good business gets thrown out with the trash. This is about one of those: a company called BILL. And the interesting part isn’t a hunch — it’s that some of the sharpest, most ruthless money on Wall Street has already shown up to buy it.
From $34 billion to $4 billion
In the 2021 bubble, BILL (back then “Bill.com”) was a market darling. The stock touched around $348 and the company was worth roughly $34 billion. Then the air came out of every fast-growing tech stock, and BILL fell with them — about 89% from that peak. Today it trades near $37 and is worth a little under $4 billion.
Here’s the twist that makes this a story and not an obituary: the business never stopped working. Revenue kept climbing. Cash flow turned positive. The customers stayed. Only the stock collapsed. That gap — a healthy, growing, cash-producing company priced like a failure — is what rang the dinner bell.
It isn’t really “software.” It’s a money network.
This is the single most important thing to understand, and it’s where the AI fear gets it wrong. BILL is the back-office plumbing for small and mid-sized businesses: it sends and collects invoices, automates the bill-paying, and runs corporate spending cards. Think of it as the bookkeeping-and-bank-account layer that a small company runs its money through.
The numbers behind it:
~494,000 businesses use the platform.
A network of 8.3 million members (the suppliers and customers those businesses pay and get paid by).
$330 billion of payments flow through it every year.
~85% gross margins — for every dollar of revenue, about 85 cents is left after the direct cost of delivering it.
~$312 million of free cash flow last year (the actual cash left over after running the business).
Why does “network” matter more than “software”? Because a network is hard to copy. AI can write code; it cannot, on its own, recreate 8.3 million connected businesses, the bank partnerships, or the money-transmitter licenses and compliance that let BILL legally move billions. A clever chatbot doesn’t replace the rails money actually runs on. If anything, AI makes BILL’s own automation cheaper to deliver — which, as we’ll see, is exactly what its new owners would want. The bathwater is the AI panic. The baby is the network.
So why is it this cheap?
A fair question deserves an honest answer. Three real reasons, not just vibes:
1. Growth has slowed. BILL used to grow ~15% a year; this year it’s guiding to about 9–11%. Still growth — but “decelerating” is a dirty word in tech, and the market punishes it hard.
2. The profit is “adjusted,” not yet “real.” On the company’s own adjusted numbers it earns roughly $2 a share; on strict accounting rules it barely breaks even. Critics say: stop spending so heavily on sales and marketing and let the profit actually show up. (Hold that thought — it’s the whole opportunity.)
3. Real competition on one flank. On the corporate-card side, well-funded rivals like Ramp and Brex (Brex was just bought by Capital One) are fighting hard, and Melio is undercutting at the low end. BILL’s moat is strongest in its core invoicing network and its tight relationship with accountants — not in cards. That’s a genuine pressure point, and worth respecting.
There’s also a quieter wrinkle most people miss: about 11% of BILL’s revenue is simply the interest it earns on customers’ money sitting in its accounts. That’s almost pure profit — but it shrinks if interest rates fall. So a rate-cutting cycle quietly nicks BILL’s most profitable slice.
The floor: you may be paying below fair value already
Here’s the part that turns “cheap” into “interesting.” Forget a buyout for a second. Suppose nothing exciting ever happens and BILL just keeps being BILL. It still throws off around $312 million of cash a year, and that figure grows. Put even a modest, conservative multiple on that cash and the business is worth somewhere around $47–56 a share on its own steam.
The stock is $37. A reasonable read of its standalone value is higher than that. You may be buying the business for less than it’s worth even if no one ever makes an offer.
That’s the floor. Not a guarantee — fear can keep a price down for a long time — but it means the downside isn’t “this goes to zero.” The downside is “I own a profitable money network with half a million customers and 85% margins, bought at a discount.” That’s the kind of worst case worth having.
Why now: the sharks have arrived
A cheap stock can stay cheap forever without a reason to wake up. BILL has three of them — three separate activist investors, all pushing the same direction within a few months of each other:
Starboard Value (~8.5%) — the heavyweight. It argued BILL is one of the cheapest software names anywhere relative to what it earns, and it won the argument: BILL settled, and Starboard’s head of research now sits on the board. The activists aren’t shouting from outside anymore; they’re inside the room.
Elliott Management (~5%) — one of the most feared investors on earth, with a long history of pushing companies to sell. Its mere presence makes a board take a bid seriously.
Barington Capital — smaller, but went public with a letter demanding the board hire a banker, form a committee, and explore a sale.
And crucially, management can’t block them. The founder-CEO owns about 2.6% of the company; all insiders together own roughly 3%. There’s no controlling family, no super-voting shares standing between ordinary shareholders and a fair offer. When three activists want a sale and management can’t say no, the odds of something happening go way up — and the “something” is a clean, negotiated sale at a premium, not an insider grabbing the company on the cheap.
How do we know what it’s worth? The neighbors just sold.
This is the strongest evidence, and it isn’t a guess. The whole sector is being bought up:
AvidXchange — essentially a smaller version of BILL — was taken private in late 2025 at roughly 4–5 times its revenue.
Brex was bought by Capital One for $5.15 billion in early 2026.
BILL today trades at about 2.3 times revenue — roughly half what AvidXchange fetched. Apply the price a buyer just paid for the smaller cousin to BILL, and you land around $60–65 a share. Independently, Wall Street analysts (Truist) peg a takeout in the $59–70 range. Two different methods, same answer — and one of them is a deal that actually closed.
And in February 2026, when news broke that the buyout firm Hellman & Friedman was in talks to take BILL private, the stock jumped ~40% in a day to about $50 — before drifting all the way back to $37 as the talks dragged on. Which sets up the actual opportunity.
The free option
Here’s the heart of it. The stock spiked to $50 on the takeover news, then sank back to $37 — roughly where it traded before the rumor. In plain terms: the market has already taken almost all of the “deal excitement” back out of the price. You’re being asked to pay close to the no-deal price for a company that is, right now, in a live, board-driven sale process.
The bet in simple arithmetic:
Buy near $37.
If a deal happens at $59–70 (where a peer just sold): roughly +60% to +90%.
If no deal and it settles to standalone value (~$30–35): a small loss, maybe −5% to −15% — and you still own a good business.
The downside is small because the premium is already gone from the price. That’s the definition of a free option: a lot to gain if the catalyst hits, not much to lose if it doesn’t.
What does a buyer like Hellman & Friedman actually do with it? Not magic — just the playbook the activists are already demanding. Take it private, cut the heavy marketing spend, let the 85% margins fall through to real profit, run it for a few years away from the quarterly spotlight, then sell it or re-list it at a higher price. The “synergy” isn’t combining two companies; it’s discipline. BILL is a textbook target for it: high margins, real cash flow, a clean balance sheet, and a beaten-down price.
What could go wrong
No honest write-up skips this. The biggest risk is time, not ruin. “Exploring a sale” has been going on for about six months with nothing signed, and these processes sometimes quietly die — which would let the stock drift while you wait. A buyout firm could also land a deal at the low end of the range, or higher interest rates could make the financing harder to pull off. And the founder might prefer to stay independent and just cut costs (still a fine outcome for shareholders, but no quick payday). On the business itself, the card-side competition from Ramp and a Capital-One-backed Brex is real and won’t go away.
Set against all that: this is not a broken company you’re praying recovers. Worst case, you own a profitable, cash-generating money network at one of the cheapest prices in its group, with three activists and a fresh board working to close the gap. The risks cost you time and patience — not the floor.
The bigger lesson
The market’s AI panic is doing what panics always do: painting an entire group with one brush. Some of those software companies really will be hurt by AI. But “the group is doomed” is a headline, not an analysis — and underneath it, a few genuinely good businesses are being sold as if they were the bad ones.
BILL is the kind of setup worth understanding even if you never buy a share: a sound business (the floor), priced for disaster (the discount), with a clear reason it might get re-priced soon (three activists and a sale process), and a peer transaction that tells you roughly what it’s worth (the proof). That combination — a floor plus a free catalyst — is the whole game. You’re not betting the company turns into something it isn’t. You’re betting the market eventually pays a fair price for what it already is. And if it doesn’t, you still own the network.
Disclosure & disclaimer. This is one investor’s analysis for education and discussion — not investment advice and not a recommendation to buy or sell anything. I may take a position in BILL. Do your own work and consider your own situation before investing; special-situation bets like this carry real risk, including that no deal ever happens. Figures are approximate and drawn from public filings and press reports (Bloomberg, Reuters, the Financial Times, company disclosures, and analyst estimates) as of May 2026; verify the latest numbers yourself.