Domo Stock Forecast: A single transaction produces an extraordinary amount of valuable data for businesses. When years’ worth of data are compiled and analyzed, it can lead to unexpected – and highly profitable – insights. Wal-Mart learned this lesson early, and started applying advanced data analysis to transaction records to find patterns in consumer behavior.
One of the most highly-publicized results was the connection between emergency preparedness and strawberry Pop-Tarts.
Through data analysis, Wal-Mart discovered that consumers stock up on strawberry Pop-Tarts before a big storm. Now, the company increases Pop-Tart supply in locations expecting weather events, which means more sales and more profit.
Imagine the possibilities if such insights were available for every product, every sale, and every customer who considered a purchase but never followed through. Businesses would be far better prepared to offer the exact goods and services consumers want at the precise moment they want to buy.
That’s the idea behind compiling, storing, and analyzing big data, and Domo is working hard to bring these tools to enterprises of every size, in every industry. The question for investors is whether the company can be successful in achieving this goal – and whether it will be profitable along the way.
What Does Domo Do?
When it comes to maximizing the use of data, most companies face a number of issues.
First, there are multiple systems collecting information – customer databases, websites, sales logs, billing platforms, and so on. These tend not to talk to each other, so it is difficult to find patterns over multiple data points.
Second, compiling and storing the information is a major endeavor. Organizing it adds another obstacle, and making it available for retrieval is yet another challenge.
Third, companies often struggle to develop the tools necessary for mining collected data, and they don’t have the skills required to analyze and identify useful patterns and trends.
Finally, even when organizations have overcome all of these issues, they struggle to show their results in a way that is easy for decision makers to understand and act on.
On top of all these issues, there is security to consider. Consumer data is extremely valuable, and a variety of bad actors are constantly at work to infiltrate and appropriate the information businesses have collected.
Domo’s objective is to address all of these problems through a single cloud-based system. The company promises to connect all data collection platforms through the Domo hub, and it stores the information in an intelligent data warehouse. This makes data accessible to users anytime, anywhere.
Thanks to Domo’s Magic ETL (Extract, Transform, Load) software, business leaders can combine and transform data sources without any technology expertise.
The platform turns raw information into user-friendly displays instantly, so business decisions can be made and strategies developed in real-time. Perhaps most important, Domo offers state-of-the-art security to prevent data theft. Current clients include major brands like eBay, The Honest Company, and DHL.
With so much to offer, it’s easy to see why Domo went public on June 29, 2018. It promised investors a piece of the future of business in exchange for capital to improve the product line. Now, a year later, the question is this: Has Domo delivered for its investors, and will it be profitable going forward?
The Domo Controversy
Domo [NASDAQ: DOMO] went public at $21 per share, and its share price has been extremely volatile ever since.
Early investors saw share prices ranging from the low teens to the mid-forties. The company presents as a tech disruptor, so most shareholders are comfortable with the roller-coaster.
Domo’s fans continue to praise it for robust revenue growth and improving margins, as well as a price point that tends to be lower than that of competitors in the same space.
Of course, Domo has its fair share of detractors, and they make some excellent points. There are indications that the revenue growth is plateauing, and the company has not been profitable to date.
More alarming, there is no sign that Domo [NASDAQ: DOMO] will be profitable in the near future, and the company may not be able to hold its market share in the face of larger, better-funded competitors.
In short, Domo has inspired a lot of debate among analysts, who simply cannot agree on the company’s future potential.
It certainly could transform data collection, storage, and analysis across industries – but it seems equally possible that larger competitors will quickly create rival solutions that meet, then exceed Domo’s capabilities.
There is no doubt that investing in Domo [NASDAQ: DOMO] is risky. Tech fans will have to decide whether they think Domo can continue to develop market-leading data solutions, or if another company will eclipse the features of Domo’s platform. Two to watch are industry giants Salesforce and Alphabet’s Google.
Salesforce recently integrated Tableau analytics into its customer relationship management platform (CRM) – the same CRM that currently dominates the market. The combination may be too much for Domo to overcome.
Google has acquired Looker, which offers similar features to the Domo platform. Once Looker is integrated into Google Cloud, it may be difficult for Domo [NASDAQ: DOMO] to bring new customers on-board.
The bottom line is that Domo [NASDAQ: DOMO], like other tech start-ups, is an investment with high potential and high risk.
It may be able to hold its own with unique data analytics, and it’s even possible that Domo could do this without overspending. However, it’s as likely – and maybe more likely – that larger players will overtake Domo, leaving the company to fade into obscurity.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.