DOMO - Domo: Forget Growth; Revenue Could Actually Decline In 2024

2024-03-08 14:45:12 ET

Summary

• Domo, a business intelligence software vendor, reported dismal Q4 results and a bleak outlook for FY25, causing a 10% drop in the stock.
• The company's lack of growth, crowded competition, and limited liquidity make it an unappealing investment.
• Domo's low revenue growth rate and pivot to a consumption model are unlikely to lead to a turnaround in 2024.
• The stock is cheap at ~1x revenue, but not worth the myriad risks that will be challenging to surmount.

Amid a record high for the S&P 500, the right move (at least in my view) is to chase value-oriented plays, but we should stay away from over-rotating toward value traps. And though it's hard to define exactly what a value trap is, I'd say nonexistent growth is one of the telltale signs....

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