Looks like you put a lot of effort into this post so thank you.
You are getting a little heat on this post since it is your first one, and we all listen to those we believe the most. Believability is earned by being right in the past, and since this is your first post, you don’t have any yet.
As Bear says, the last quarter was stellar with AYX sales growth at 54%, expanding from the quarter before.
Most of the products you state as competition have been around for awhile, so they were here before that quarter.
AYX took a drop a while back when Tableau released their new product. Several on here didn’t see it as direct competition, and I think they were correct. I didn’t worry much about Tableau because they are one of AYX’s partners, even sponsoring their last event, so AYX wasn’t worried about it. I try to use some common sense, and AYX is not going to be close partners with a direct competitor.
So now we have Microsoft as a potential competitor. I just went to AYX’s website, and Microsoft is still listed as a close partner. So I would say AYX isn’t going to partner with a competitor, or stay partners with a competitor. Also, Microsoft is so big they don’t have to play games by sponsoring AYX’s event, being an important partner, and then turning around and surprising AYX by competing with them. Now if this was Amazon we were talking about I wouldn’t be surprised.
Deciding things by trust alone would in my opinion…
… be a mistake! Agree. I never did advocate that, did I?
Hit pieces by shorts have a recurring architecture. They are long and so full of references that one never finishes reading them all. Many links are irrelevant or misleading. There is enough sensible stuff in the hit piece to make it credible at first sight. And there is a certain insistence by the author…
One of the things in short supply is time with the information explosion we are living through. Just like with the wounded in war and in other catastrophes there is a need for triage. How do you triage information if not by the trust in the source?
Another “feature” of hit pieces is playing on the victim’s emotions, “I better sell before everyone else does.” The lengthiness is a good tool to implement this gambit. One has to understand one’s investments well to avoid it.
Like I said, innocent until proven guilty but trust must be earned.
To be honest, I’ve always been a little suspicious of AYX with respect to a moat.
This is one of the things which has kept me away from AYX, particularly the aspect of partial solutions. AYX may the Ferrari of solutions, but not everyone needs a Ferrari, particularly if they already have and are experienced with some other tool where either that tool might add capabilities, like Talend or some of the Microsoft options, and cover all of the companies needs (or enough that there is insufficient perceived value for a new product). To get companies to keep plunging for an expensive new product that perceived value of that product has to be significantly over what one has now, especially if the now keeps expanding. Some companies will already have that perception of need, either because they see a requirements area that has never been addressed before or because they have a realization of how crummy their current solution is. Those people should be easy converts. But, the more one digs into the TAM, the more one is going to run into people who either don’t perceive that gap or for whom growth of what they have or the addition of more modest tools will fit the perceived need more readily.
To be clear, this doesn’t mean that I am predicting any short term trouble for AYX at all. I’m just saying that there are possible vulnerabilities longer term and I and am I afraid I wouldn’t be watching closely enough to make a timely bail.
Tamhas,
I’m long AYX, even with my doubts regarding their moat. Their performance drowns out my reservations, at least for now. If I had to rely 100% on my own observational skills with respect to dissecting ERs, I too would be hesitant to hold the investment. But, there’s a community here of skilled, intelligent, knowledgeable and experienced investors. I bring years of industry experience, insight and a long term perspective to this board and contribute what I can when I think I have something worthy to add to the discussion. I take advantage of those who perform financial analysis far better than I. I hope it’s a fair trade.
As for who needs a Ferrari, everyone who sees their rivals driving one. There’s no standing still in this competitive environment. If you’re competitors are driving Ferrari’s and you’re in VW you’ll be left in the dust.
My investment strategy with stocks like AYX to to accumulate shares in both tax-free and taxable accounts. When the price appreciates to a level where I can recover my initial investment, I often sell the tax-free shares. It’s always nice to play with house money. I’m very long in AYX with house money and see no reason to sell my taxable shares. In fact, I often buy-the-dip on seeing FUD. A little luck helps too.
BTW I’ve used this method since the early days of ISRG, NVDA, and ANET. I sleep very well at night.
Every company here will cease to be a good investment at some point. AYX is actually long in the tooth for a “Saul” stock.
However, I strongly causation agianst using anything but the quarterly reports to take or sell a position in any company.
It really is pretty sumple. At current level of execution, can the company be more valuble than it is today?
Ignore unquantifiable external risks. This includes market, political and competition. These can and should be allowed to color the interpretation of the confrence calls.
As independent markers, they will cost you money.
I don’t make many absolute statements. I firmly believe what I just said.
I will repeat it. I invite everyone to book mark it and throw it in my face when I violate it. (Note I didn’t say “if” and I am about to take significant realized loss in Facebook because I did not heed this rule.
Ignore unquantifiable external risks. This includes market, political and competition. These can and should be allowed to color the interpretation of the confrence calls.
“So now we have Microsoft as a potential competitor. I just went to AYX’s website, and Microsoft is still listed as a close partner. So I would say AYX isn’t going to partner with a competitor, or stay partners with a competitor. Also, Microsoft is so big they don’t have to play games by sponsoring AYX’s event, being an important partner, and then turning around and surprising AYX by competing with them. Now if this was Amazon we were talking about I wouldn’t be surprised.”
Microsoft will happily partner with a smaller software company while learning about the market and building a competing product. Nobody seems to be mentioning their acquisition of the Revolution Analytics several years ago, they clearly have active ambitions in this space.
It certainly raises suspicions that you are a short who joined the Fool simply to spread fear and advance your short position.
So what? Won’t you rather understand the short argument and to consider or dismiss on its merits? Why long thesis posted by new folks to this board is welcome over short thesis? Just asking.
This is not the first time you have thrown “you are a short” at someone with negative view. It still baffles me why you do that.
Thanks for the post. I too noticed Microsoft’s foray into Alteryx’ space a couple weeks ago, but was away so didn’t look too much into it.
Then I got home, double-checked the last quarter’s results, and put the news in the same box as all the news for NVIDIA-killers, and the news of Google moving into HCI and killing Nutanix (still to-be-decided but I’ve put my money where my mouth is by buying calls for the first time ever).
Most of your post regards competitors that have been in the game for years. That hasn’t stopped Alteryx flourishing. Dreamer has it spot on. It’s important to be on the look-out for potential threats and disruptors, but we’re not going to be chased out of our holdings by announcements of a company wanting a slice of the pie. When the competitors actually start to take a significant slice of the pie so as to markedly slow the growth of AYX, then let’s talk. (e.g. Is this a trend that will continue or is this a slight hiccup of AYX, they’ve corrected it, and they’ll continue to grow rapidly.)
One day we’ll experience a non-market-wide drop of 20-30%, on real news, caused by a thesis change, and that will be the time to sell. That will hurt. Loss hurts more than gain. Can’t stop it hurting, just have to be aware of it. But before that happens, if we’re chased out too early we’ll miss out on triple digit returns.
Your argument - MSFT, with its reputation and significantly cheaper product, will seriously hurt AYX. So much so that you’re shorted AYX. Wow man! I’d wish you luck with that except I’m long AYX. That just seems ballsy. This is a story at the moment. Anyway, back to the point. MSFT earnings is a couple weeks before AYX. Do you think MSFT will break-down how well their Power BI Pro product is doing? Will there be some inferable data we can obtain from that in regards to AYX’ market?
This is not the first time you have thrown “you are a short” at someone with negative view. It still baffles me why you do that.
Hi Kingram,
What I actually said was NOT that “you are a short.” What I said is “It certainly raises suspicions that you are a short who joined the Fool simply to spread fear…”
Now Kingram, if a guy signs up on Motley Fool for the first time yesterday, in order to make his first post a short attack on a stock, he may be all innocent, and just trying to help us out like he says, but if signing up and immediately posting a short attack doesn’t “raise suspicions” to you, you are blinding yourself (or just trying to find something to criticize me about).
I, on the other hand, as the host of the board, felt an obligation to point out to others who might not realize it, that this was this guy’s first post ever on the Motley Fool, and that it certainly was “suspicious,” at least.
just trying to find something to criticize me about
Not at all. I just pointed out you have been sensitive about negative comments and quick to question the posters motive as “short”. You have done that to me too. Not a criticism, just saying don’t have to be suspicious or view it too negatively.
Not at all. I just pointed out you have been sensitive about negative comments and quick to question the posters motive as “short”. You have done that to me too. Not a criticism, just saying don’t have to be suspicious or view it too negatively.
King:
Saul is spot on:
As a former AYX long, I have been a seller of AYX shares
my primary bearish rationale
valuation will prove unsustainable.
And then to be concluded by this:
Note: The author of this post presently has a position in securities of this issuer and may trade in and out of any such positions at any time without notice. The author makes no representation or warranty as to the accuracy of the data or opinions contained herein.
Thank you for the post. I’m always open to hear the other side, as I try to not to fall in love with a stock.
One of the key items I have been learning on this board is to pull the trigger on a stock that disappoints, or even faintly looks like it might disappoint on future growth. A good case in point is SHOP. Many of us either lightened our holdings, or sold out based on declining growth rates. Saul has a sixth sense on many of his stocks, and I want to build that same skill through listening to all sides of a stock’s story.
I have often found that listening to shorts, or those with a different perspective helps me define why I like a stock. When shorts are proven wrong by earnings, my confidence in that stock increases. Some of my best long term holds (Netflix, Amazon) had plenty of negative press (still do), yet they keep on proving them wrong. Stocks get in my high confidence holding by demonstrating results.
I don’t mind short sellers, it’s part of the game. I do mind unethical short raids. I’m not saying this one is but I am saying it looked suspicious. The short seller has a psychological advantage over the long, the fear of losing is stonger than the pleasure of gaining. Boiler plate short raids are built with that in mind.
A post oozing charm and altruism like this one sounds all sorts of alarm bells for me. Sorry but that’s the way I’m wired. YMMV.
Yes, thanks, I posted it because I wanted to be helpful to a board full of what appear to be some pretty nice folks trying to understand their companies and compound their savings. I had read this board on and off for a while, and had seen some very good technical and industry commentary on other companies, and decided to contribute my research and opinions here.
So what? Are you questioning anyone posting when they declare they own the shares or long? No, so shorting is just a market activity. No need to view it with negatively.
There are 60 million shares and 5 million shares outstanding and a market cap of $3B, in other words the stock price is not going to be moved by a post on this board.
On the other hand, if you shut all views that doesn’t agree then that is not healthy.
As for who needs a Ferrari, everyone who sees their rivals driving one. There’s no standing still in this competitive environment. If you’re competitors are driving Ferrari’s and you’re in VW you’ll be left in the dust.
It is true in some areas of business that small differences in productivity are perceived of as competitive advantage and drive changes.
With software, not so much. If the current system does what is being asked of it, then it can be hard to convince people to spend money on a system that gives more because there is no perception of more being better. Software is a very weird discipline where there are 1000 to 1 documented differences in productivity between shops and yet the shops at the bottom of that gradient don’t change. Admittedly, it is sometimes expensive to change, e.g., a massive COBOL system. But, one would think the motivations were huge, but the pace of change is slow.
If anyone would ever come up with a system that would read COBOL and spit out well engineered code in modern language, it would be an incredible product. I know some of the people who have tried and failed.
So what? Are you questioning anyone posting when they declare they own the shares or long? No, so shorting is just a market activity. No need to view it with negatively.
King:
I wont clutter this thread up after this but you seem rather defensive of this short. I am merely pointing out that Saul is correct…he is short AYX.
As regards his argument, I don’t see anything new that has not already been discussed ad nauseum at the NPI…I know because I have been round and round with Tinker on these exact issues.
But you cannot ignore a poster’s motivation to come here out of the blue who is clearly short AYX at a time when the stock is at risk from a TA perspective: