What’s Mampilly’s “perfect buy” April 24 Trade Alert ad teasing?

Extreme Fortunes ad from Paul Mampilly hints: "I anticipate this unique company could soon see a surge more than a 15-fold surge in the months ahead — all by gaining a new, powerful foothold in the Internet of Things revolution." What's the stock?

By Travis Johnson, Stock Gumshoe, April 22, 2019

We tend to get a lot of questions when there’s a new Paul Mampilly ad pounding the pavement, presumably because Banyan Hill tries so hard to reach pretty much everyone who has a pulse and an email address (with the latter being far more important than the former), so we’ll jump in on this Monday morning and check out the latest pitch for his Extreme Fortunes newsletter (which at $2,995/yr is both expensive and high-risk, since no refunds are offered either on the initial payment or on the auto-renewals).

It’s a blessedly short tease, particularly if you don’t then go on to listen to the “wealth summit” presentation that tries to seal the deal… these are the clues we get from the email ad:

“I’m outlining my research on a unique opportunity I’ve spotted in the tech markets — one I’ve been waiting to enter for almost a year.

“And now, the perfect buy situation is here.

“I anticipate this unique company could soon see a surge more than a 15-fold surge in the months ahead — all by gaining a new, powerful foothold in the Internet of Things revolution.”

OK, so a 15-fold surge is, of course, ridiculous… particularly when attached to the term “months.” Yes, the lawyers let you get away with it because “months” doesn’t really mean anything, he could be thinking of 120 months… but the implication, of course, is that you’ll be diving into Scrooge McDuck’s Money Bin by the time the leaf peepers bring their traffic jams back to us in New England.

So before you think about this secret company, get that 1,500% return in “months” out of your head.

OK, ready to think rationally? Let’s check the other clues… we hear about a few of their customers:

“By leveraging its business intelligence software, this firm grew across the board into the servers of DHL, T-Mobile, eBay, National Geographic, Traeger and countless others.”

And get some metrics:

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


“The company’s revenue has grown 30% year over year … and is expected to jump 188% within the next two years.”

There’s even a little chart, indicating that they had $108.5 million in revenue last year and will have $142.5 million this year — that 188% number must be from the projected $214.4 million for 2021 (though that would be 188% growth from 2017 to 2021, $74.5 million to $214.4 million… which is close to accurate but isn’t close to two years).

What other clues? We’re told that they’re “based out of Utah” and that they have a bunch of institutional investors (AIG, Blackrock, NY State Commission Retirement Fund), and that it “deserved” to explode after its IPO but that the stock “never got underway” at that time.

And, of course, there’s a desperate timeline… the “urgent buy” goes out to his “most trusted readers” on Wednesday, so you must subscribe by midnight on Tuesday to get the info.

Or, of course, you could just read a couple more paragraphs, see the Thinkolator’s answer, and think for yourself. That won’t cost you $2,995, and hopefully won’t bias you too terribly about the stock’s future potential and cause any other rash action (though committing $3k to a newsletter sight unseen, with no hope of a refund, is pretty rash in itself).

So what’s that “secret” stock? Well, based on those clues the Thinkolator points us directly at Domo (DOMO).

What does Domo do? They offer a cloud-based business intelligence system — an integrated “dashboard” that pulls together business data for users. Here’s how they describe their mission:

“It started with highly respected, highly frustrated executives who felt locked out of their own business data. And when you get that much talent and experience focused on one problem—making data more accessible to business leaders—you get a phenomenal solution.

“The sum of Domo’s parts deliver a virtuous cycle of business optimization. Everyone knows more, works together better, and gets more done, faster.”

And yes, all those clues match perfectly — though the fiscal year is an odd one, so their FY 2019 is already in the books and they’ll be starting the second quarter of their 2020 fiscal year in about a week.

The IoT part of the story is a new one, though it does exist — they just released their “IoT Cloud” and a set of apps that help integrate IoT data into the dashboard/business intelligence system. That’s part of the latest update to their services, including their new “business automation engine”, all released at their “Domopalooza” annual conference last month.

I don’t know whether it’s those new product releases or the revenue growth that convinced Paul Mampilly to recommend the shares (or something else), but it is a recent IPO that spent its first months faltering and has not yet completed a full year as a public company — it went public last June and the shares popped immediately from the $21 IPO price to $27 (despite some controversial “red flags”), but they dropped immediately into the teens after that and didn’t get back above $27 until February.

There are a lot of “big data” and analytics companies out there, with more coming, and I don’t know a lot about which might have better products than others. The idea of “gathering all of a company’s data so we can use it more quickly and intelligently” is not new, of course, but I suppose Domo could do well if they’re providing a service that’s better than everyone else’s.

It will take some time to see if it’s going to work out for them — they are nowhere near being profitable, and they are still spending like crazy. Domo just had its first quarter ever where they spent less on Selling, General and Administrative costs (that’s sales and marketing plus overhead, pretty much) than they brought in in sales — and that’s all because of sales growth. The preliminary indication during this first year of public life is that they do have some scalability — their R&D costs, selling costs, and cost of goods have not climbed noticeably in the past year, while their revenue has grown by 30%, so as of the last year (their fiscal year ending in January) they are only burning through $1 in cash for every dollar in sales (meaning that it costs then $2 to make $1 in sales).

Analysts have some optimism — they think it might only cost them $1.50 to generate each dollar in revenue this year instead of $2, and that if the revenue hits $264 million in three years they could be breaking even… and as a subscription service provider their actual revenues will lag the expenses by a bit (if they sell a subscription they don’t recognize that revenue immediately, it trickles in through the subscription term). So it’s not hopeless, it’s just risky and dependent on them capturing more customers and maintaining pricing power.

If the analysts are on target that means the company has almost enough cash ($175 million or so) to get to break-even, but presumably they wouldn’t want to get that close to the bone (tech companies generally hate to run low on cash, and Domo even has $100 million in debt on its books that they used to get them through to the IPO), so they’ll be doing a secondary offering at some point. If I were their banker I’d probably suggest they do it now, when there’s a good deal of enthusiasm following their last earnings report and their “Domopalooza” product introductions, but that’s just from my cursory glance at the financials.

And yes, there is plenty of enthusiasm for cloud stocks in general, and for “big data” and data integration stocks particularly. Domo’s product offerings look and sound a lot like Tableau’s (DATA) to me, and there’s probably some overlap with other data visualization companies as well, though Domo’s claims about the ability to monitor your company and act on artificial intelligence-generated suggestions from your phone might be more assertive than others (Tableau was the first huge “visualization” company, they has some major disappointments along the way but are now a $10 billion company.

If you’d like to read some of the other commentary, Domo and some near-peers were featured in Investors Business Daily a couple weeks ago, and a Motley Fool writer was very excited about their latest quarterly results and growth potential and thought it “looked cheap” at $43 last month.

Personally, after a few minutes browsing the other business intelligence platforms available, from older leading firms like Tableau and Qlik (which was bought out a while ago) to lesser-known products like Clearstory, Datameer, Pyramid Analytics, birst/Infor, Zoomdata, Looker and GoodData, just to name a few, I can’t easily explain why Domo is clearly better or has more potential (there are a bunch that are specific to one kind of business, too, like Altair for higher-performance computing or New Relic for software development).

It’s growing pretty fast, with revenue growth in the 30% neighborhood, but the 10X larger Tableau is growing faster still, and there’s so much money floating around in venture capital world that all the startups who can post revenue growth are getting money thrown at them.

The valuations all around Cloud-world are nutty, of course, so I can see why someone could claim that there’s a possibility for DOMO to triple if enthusiasm picks up, just because there are plenty of unprofitable cloud companies and “big data” companies that trade at 10-20X sales, while DOMO trades at only 5X sales… but for such a small company, the revenue growth is not impressive enough to convince me that they’re taking share or making a big impact. That means I’d have to actually understand the company’s products really well to convince myself to buy shares, or know that there’s a good chance for them to take market share and grow faster than expected in the next few years or get bought out by Tableau or Microsoft or someone else with deeper pockets… so, since I haven’t taken the time to make those qualitative assessments, I’ll pass on this one for now.

I can’t be too dismissive of the idea just on valuation — I’ve bought plenty of “cloud” companies at much richer valuations in the past, including some that I still own like The Trade Desk (TTD), Shopify (SHOP) and Okta (OKTA), but in those cases I felt I had a better understanding of the size of the end market and the competitive landscape. “Nutty valuations” can be rationalized for the right stock, but make sure to understand why the companies you’re buying deserve to trade at a lofty price… and make sure to keep position sizing and diversification in mind when there’s one class of stocks like this that are popular and fun to own. If something happens to decimate all the high-priced cloud stocks at once, as happens from time to time, you don’t want to see your portfolio disappear.

It’s your money that matters, though, and you might well know a lot more about this industry than I do… and certainly these kinds of business-to-business cloud services stocks have sometimes done extremely well in the past, so feel free to let us know what you think — expect great things from DOMO in the year to come? Believe Paul Mampilly’s attention will drive the stock higher this week? Think they’ll grow to a richer valuation as they get to be better-known? Let us know with a comment below.

Disclosure: I own shares of The Trade Desk, Shopify and Okta among the stocks mentioned above. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.


Irregulars Quick Take Paid members get a quick summary of the stocks teased and our thoughts here. Join as a Stock Gumshoe Irregular today (already a member? Log in)

52
Share your thoughts...

avatar
25 Comment threads
27 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
41 Comment authors
rene6985jpksdaddocschell1maxine22bobojam1 Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Jan
Guest
Jan

I just read about this today. Thanks for the article.

Tim Singleton
Guest
Tim Singleton

I expect if I spent more time investing in dividend queens and less time buying investment newsletters I would probably have more money. I am pretty much resigned to killing all but three of my subscriptions come renewal time.

Stock Gumshoe made the cut, of course. 😉

Add a Topic
1881
mom1pop2
Member
👍0
mom1pop2

I’m with you Tim!

garymatt
Irregular
👍23
garymatt

I too often get surprised when something “auto” renews way sooner than it should and especially before I managed to cancel it. … and it doesn’t just apply to newsletters!

jpksdad
Member
👍0
jpksdad

I thoght I was alone in this usituation.

motordoc
Member
👍-39
motordoc

Amen to that

Tom M
Guest
Tom M

Three grand a year is pretty hefty. If DOMO was a $5 stock that could go to $50, that may be a good bet. Mampilly only has to sell about 340 subscription to make a million bucks. That’s a better bet on his part. If you buy 1000 shares of DOMO, it “only” has to go up about 27 times (current price $36) for you to make your million. I’m betting on M beating you to it. Thanks for the write up.

Add a Topic
5166
Dave S.
Guest
Dave S.

“they’re “based out of Utah””

Idiotic copy writers. If it’s not based in Utah, why mention Utah? Oh…right. “Based out of” means “based in”. Idiotic copy writers.

Thanks for your informative analysis,Travis. Nice boost to the stock today.

Dan
Guest
Dan

I would have to agree with Tim. It seems that every one has now discovered or “created” the perfect trading system. Let’s see, Alpha 9, As a former partner at a multi-billion-dollar Wall Street firm, his life reads like a movie scene:, Tim Wilson, Palm Beach Daily, Casey Dispatch, Lifetime Income, and the ever famous ex-CIA Officer/Consultant all who have a plan to discover the next great thing. And if you are lucky enough too get in to their club, it only costs $2-$5k. Wow what a deal! If they could deliver a reasonable sum on a daily basis, it… Read more »

Add a Topic
6483
Misterht
Guest
Misterht

The 1500% gain would be for Mampilly from his news letter…

radco3140
Member
👍16
radco3140

I’ve followed Mampilly for prox 2 1/2 years and have done quite well I think. Basically I just got tired of being upcharged to a “better” newsletter from Banyanhill. I originally felt Paul was a humble guy from India but after all his newsletters and “associates” I thought I’d better go with the “man” (TJ) and have had no regrets doing so….. Great job Travis.

Add a Topic
247
JayBee
Guest
JayBee

Who is the “man” that you refer to? I’m not following what you are getting at.

David
Guest
David

The “man” is TJ. Aka Travis Johnson aka Stock Gumshoe.

Add a Topic
1881
tanglewood
Irregular
👍442

The “man” is our own Mr Gumshoe, Travis Johnson (TJ)!

R K LAKHOTIA
Guest
R K LAKHOTIA

Once I did subscribe to Paul Mampilly’s letter ‘Profit Unlimited’. But they claimed more than the amount I input using a Credit Card. It mystified and perplexed. What factor compelled me to walk away was the avalanche of promotional emails that did not stop despite protests. Am sad over their (mis) behavior.

cabaoke
Irregular
👍64
cabaoke

Forgive me if this question is nieve but with all the stock promoters out there and their tendency to indulge in hyperbolic exaggeration it seems that their should be some sort of regulatory body to ensure there is no outright dishonesty. Not that I support more bureaucracy bur leaving it all up to Travis seems…like a travesty. lol
Thanks for all your hard work.

Alan O.
Guest
Alan O.

Hi Travis

First time question. BTW love your Colomboesque style. Have you covered the pre-ipo prospectus story by a guy called Altischer. He spins a good story about driverless transport that is about to turn chump change into $millions and about another 4 opportunities all for under $100. See what happens when we don’t buy newspapers, journalists go rogue and sell fortunes for a hot meal. Sorry for the rant. Could you tell me if this is legitimate. I have A.D.D. and going through this is a pain.

Many thanks

Joe
Guest
Joe

Thanks for the additional detail on DOMO, Travis. In fairness “rookie2294″ and bunion132” had Mampilly’s mysery stock nailed 3 days ago after I posted details of the teaser. (https://www.stockgumshoe.com/2019/04/microblog-paul-mampilly-bold-profiots/).
This, of course, does not lessen by any means the value of your analysis and discectomy of the company, its prospects, and Mampilly’s take. If anything, it goes to show the quality of members you have perusing your site.

Add a Topic
6596
Add a Topic
5552
rookie2294
Guest
rookie2294

Joe, thank you for my share of the compliment, but I can’t take much credit: I used to own a small position in DOMO and simply recognized some of its stats from the pitch you quoted. I was glad to see Travis analyze this one, even if his opinion on the underlying stock isn’t too surprising.

Add a Topic
6596
bunion132
Irregular
👍105

Oh goodness, Joe, thanks for the special mention but I was not one of the two people in your blog that “nailed” DOMO. More like I took the ball from there and ran with it. My curiosity led to researching on the stock and finding 3 short articles — NOT teaser ads — mentioned in the blog which named DOMO one of the best if not THE best in its niche. What I find amusing is that I requested for a contrarian point of view in my response and got it a couple of days later from none other than… Read more »

Add a Topic
5845
Add a Topic
285
Add a Topic
2536
John Lange
Guest
John Lange

What is your point, Joe? Thanks, Travis.

Add a Topic
5845
Joe
Guest
Joe

Mr Lange– I thought the point of my post was self explanatory, but to summarize:

Two sharp board members guessed that DOMO was the teaser stock 3 days ago, but that fact in no way diminishes my appreciation for TJ’s confirmation, insight and analysis of DOMO this morning.
Hope that explanation removes me from any suspicion by the board police.

Add a Topic
6596
Add a Topic
1881
Add a Topic
5845
sct2ali
Irregular
👍114
sct2ali

Cabaoke raises a ‘very’ valid point, but it is a pretty complicated issue with little or no chance of resolution or action, I think. I’ve been interested in such newsletters (on and, largely, off) for more than 15 years – mostly connected with the Agora ’empire’ of Bill Bonner et al (Stansberry, Oxford Club, etc). I began by subscribing to pricey newsletters (though, then, at like $500 per year, not the now usual $1,500 and up with no refunds), and dropping out for a full refund when their hype turned out to be just that…pure hype. I complained way back… Read more »

Add a Topic
6137
Add a Topic
4389
Add a Topic
366
cabaoke
Irregular
👍64
cabaoke

Thank you very much for the explanation. great cautionary info. Buyer beware right?

anastasia
Member
👍18
anastasia

DOMO could easily drop back to$30.17-$30.81 before any short term significative boost, even if its wtd alpha is +31.56 today.

Jean
Guest
Jean

I think OpenText should add data visualisation capability to its offering, perhaps by buying Domo.

SageNot
Guest

The market hasn’t even opened yet, & the Stock Gumshoe has hyped the price of
this stock by 8:30AM! You’re on fire Travis!

Add a Topic
1881
dan yariv weisbuch
Guest
dan yariv weisbuch

mampilly and IOT is a long and not a glorious history;
in the past under the IOT flag PM pimped STM, PH.

Add a Topic
5110
Add a Topic
5394
Roman
Guest
Roman

I’m a member of Profits Unlimited, and to be fair, we sold out of PH a loooong time ago. Paul is only human, and even he admits when he gets things wrong on occasion, but overall, I’ve done pretty well with his recommendations.

Add a Topic
5274
Add a Topic
5394
tatnic
Member
👍1
tatnic

STM was a good pick, so was FMI, CDNA, TNDM, etc. PM is not infallible but then no one is. His pick from years ago was TER in the IoT space which has been very strong lately. I don’t necessarily recommend you buy his newsletters but he’s as good as any of the others out there.

Add a Topic
5110
Add a Topic
5084
Add a Topic
4423
mona123
Irregular
👍2
mona123

is this the same pitch where Mampilly holds up the little gizmo and says it will change everything…even my underwear? He’s been pitching THAT pitch for quite some time. Have you done your magic on that particular stock? the Magic Mampilly Gizmo? what IS that Magic Gizmo…I’m just dying to know……..
I LOVE ME SOME GUMSHOE!!!!!! we need more like you, but then, there isn’t anyone like you is there? WILL YOU MARRY ME?…oops, I’m already married.

Jeff Furlong
Guest
Jeff Furlong

Mona,Mona from Yonkers?

mona123
Irregular
👍2
mona123

no, Mona from Palm Springs, CA…hope you find your Yonkers girl!

Add a Topic
370
Daniel Ackland
Guest
Daniel Ackland

Great read, explains topic well to a relative novice in tech stock investing. I have heard allot about Sierra Wireless “SW” tsx. It is relatively cheap $17.20 Canadian today. Travis you have any insight into SW potential or future?

Add a Topic
6265
Add a Topic
3345
Add a Topic
3784
Lynn
Guest
Lynn

Travis, is there any way you could do an elvauation on one of Mampillys stock picks
Ynvisble ?

Lynn
Guest
Lynn

Another Mampilly stock picks currently at .30
Another one of his prefect buys

Jay Baldwin
Guest
Jay Baldwin

Travis.
Thanks for the Scrooge Mcduck cartoon.
I laughed right out loud.
Woodie.

eliason
Member
👍5
eliason

“The internet of things”: A good sales pitch but that’s about it. Several years back the Motley Fools proclaimed Sierra Wireless as their “stock of the year” based on it becoming the internet of things champion for years to come. Since they recommended, it has been in a steady free-fall. This has led me to the conclusion that financial newsletters are basically a wealth machine for the newsletter writers…not the investor. Stock Gum Shoe is now the only newsletter I read since it is so good at picking apart the ridiculous claims made by the financial wizards. They have no… Read more »

Add a Topic
285
Lorna Lettman
Guest
Lorna Lettman

Those investment newsletters…..To be fair, I have had some Mampilly winners like W and STM. Just stay the hell away from Tim Sykes and his “Weekend Profits” at 3K and no refund. You will lose money on the occasional stock pick and only have a good weekend when he has no recommendation for you to buy (after 3:00PM on a Friday when all the gains are already in the bag!)

Add a Topic
5110
Add a Topic
3224
bobojam1
Member
👍0
bobojam1

You are so right. Altucher had him on his podcast promoting Sykes “Weekend Profits”,
Best to avoid them altogether!!

mdt123
Guest
mdt123

I am new here and this is the most informative – and- entertaining site for investments. One thing I am curious about is do these newsletters have some policy that their subscribers not disclose the stocks elsewhere. I have never subscribed to newsletters except one about Fidelity.

Add a Topic
3600
mdt123
Guest
mdt123

Answering my own question, I suppose if someone paid $thousands to subscribe they might not be inclined to post any of the info for free.

docschell1
Irregular
👍0
docschell1

I found you by accident when I became determined not to pay $1995 for Cannabis IPO Insider. I have subscribed to newsletters only to be bombarded with expensive teasers. Through research you can usually identify the teasers and then decide if it’s a worthwhile investment. I am now a member along with you and collectively we can identify the winners and losers. Look forward to all forthcoming info. Jimmie Joe

Add a Topic
636
Add a Topic
5845