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:
“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.
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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.
I just read about this today. Thanks for the article.
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. 😉
Thanks Tim!
I’m with you Tim!
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!
I thoght I was alone in this usituation.
Amen to that
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.
“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.
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 would have credibility.
The 1500% gain would be for Mampilly from his news letter…
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.
Who is the “man” that you refer to? I’m not following what you are getting at.
The “man” is TJ. Aka Travis Johnson aka Stock Gumshoe.
The “man” is our own Mr Gumshoe, Travis Johnson (TJ)!
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.
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.
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
Altucher is a nutty guy, that pitch has ben around for a year or so, maybe longer, and is about Uber. His spiel is almost certainly to buy “suppliers” to Uber as a back door, probably chipmakers selling into the car automation business. I don’t think I ever looked into which ones specifically.
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.
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.
Good job, gang — sorry I didn’t see those to give them credit. Glad to see a rookie and some bunions doing well together.
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 Travis, albeit under a separate thread!
As with many Gumshoers, I’ve noticed that many of the teaser ads resolved on this site get a bump up in price, followed by short-selling. So if one is patient enough to wait till the pump-and-dump action stabilizes, an educated guess for entry point would be in the $31-$34 range.
What is your point, Joe? Thanks, Travis.
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.
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 when, even to the SEC directly, and even testified in a court in Baltimore as part of the SEC suit against Porter Stansberry. In 2007, Porter and his investment firm, then called “Pirate Investor,” were ordered by a U.S. District Court to pay $1.5 million in restitution and civil penalties. Per Wikipedia: “The court rejected Stansberry’s First Amendment defense, saying ‘Stansberry’s conduct undoubtedly involved deliberate fraud, making statements that he knew to be false’.” Porter lost his appeal, and the Supreme Court refused to take up his case.
Problem is, for reasons that somewhat escape me (not being a lawyer), there are actually First Amendment issues involved here that are very tough to get around, I think. Per Wikipedia: “At the time of the trial, many media outlets spoke out due to their views that the case was relevant to First Amendment rights. A group of newspaper publishers urged the Supreme Court to reverse the decision by the Fourth Circuit Court of Appeals that Stansberry was liable, and signed an Amici Curiae in defense of Stansberry. They claimed that a guilty verdict was ‘a significant threat to the free dissemination of news about the financial markets and specific investment opportunities’ and could lead to a situation that ‘would be contrary to the spirit of our system of a free and independent press.’ When the Supreme Court refused to hear the case, a New York Times editorial column noted that ‘the implications of the S.E.C.’s action are potentially profound: newspapers or Web sites promising their paying readers stock information that later turns out to be untrue suddenly leave themselves open to fraud charges. Any financial commentator who passes on bad information in good faith could be sued’.”
To me, Porter is, in ways, a snake-oil salesman – and no “journalist.” (Same for other newsletters that engage in the most outrageous drivel in trying to peddle their expensive “premium” services.) But to my knowledge, only two of all those newsletter hype-sters have been successfully prosecuted over the past 15-20 years: Porter Stansberry, and a newsletter in like Vermont that lost a court trial and was fined like 15 years ago (forget its name).
Seems to me that any “regulation” of such newsletters should rest with the Federal Trade Commission – truth in advertising and all – but that doesn’t seem to be an option. Can’t imagine any effort to accomplish that getting off the ground, or going anywhere.
Thank you very much for the explanation. great cautionary info. Buyer beware right?
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.
I think OpenText should add data visualisation capability to its offering, perhaps by buying Domo.
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!
mampilly and IOT is a long and not a glorious history;
in the past under the IOT flag PM pimped STM, PH.
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.
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.
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.
Me too, Mona, but thanks for the lovely sentiment 🙂
Mampilly’s three most aggressive pitches along those lines over the past few years, most of them similar in theme and repeated many times, have been for STM, MU and AMD. I’ve written about most of those ads, but not recently.
I feel sorry for anyone in this game that doesn’t consult you first!
Mona,Mona from Yonkers?
no, Mona from Palm Springs, CA…hope you find your Yonkers girl!
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?
Travis, is there any way you could do an elvauation on one of Mampillys stock picks
Ynvisble ?
I didn’t know Mampilly had picked that one, but I did write about it last month when someone else was teasing the stock: https://www.google.com/amp/s/www.stockgumshoe.com/reviews/alternative-energy-speculator/hodge-teases-get-rich-on-the-tiny-stock-that-will-revolutionize-amazons-supply-chain/
Another Mampilly stock picks currently at .30
Another one of his prefect buys
Travis.
Thanks for the Scrooge Mcduck cartoon.
I laughed right out loud.
Woodie.