How I Found the Next Surging Stock + Updated Analysis: Amplitude (AMPL)
How I Found the Next Surging Stock + Updated Analysis: Amplitude (AMPL)
Walking you through how I analyze new stock ideas – from start to finish, with some updated analysis courtesy of Wall Street.
Don’t you love being right?
I sure do.
In this post, I’m going to walk you all through my discovery, research, distribution, and finally confirmation on the Amplitude (AMPL) stock idea – in efforts to allow you all to perhaps do the same in the future.
Institutions have taken notice of this one, with Bank of America and Baird both releasing formal research on the stock Monday (10/25). Let’s discuss the process from potential winner to big bank validation.
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Discovery Phase:
This is the hardest phase of the entire life cycle – finding the stock idea. Lucky for me, I know that Unhedged.com exists. It’s the website I check every Monday to help build my “Investing Week Ahead” post for you all – Chris Sommers and his incredible team of analysts are always highlighting new companies that will be making their public debuts, and Amplitude was one of them.
– In this post, I shared my “meh” mentality for the company – mainly driven by how much competition (I thought) the company had in this vast world of “Data”.
The company has been growing revenue steadily (for a software company), SG&A expenses as a percent of revenue has been on the decline (a good thing), and their operating margin is inching close to break even.
The numbers don’t thrill me and the amount of competitors they have (Pendo, Mixpanel, Heap, Adobe, Google Analytics, Looker, Tableau) don’t excite me. I’ll pass for now.
And well – that was that.
Not until I made this video about Olaplex on TikTok and received such positive feedback that it forced me to revisit my original post – mainly looking for a starting place to further research Olaplex.
I thought.. if an under-the-radar company like Olaplex is going public and and is this well-received, maybe other upcoming under-the-radar companies will be well-received too?
Research Phase:
Where better to start researching a company you’ve never heard of than their S-1? For those of you who might not be familiar, the S-1 is a 300+ page document every company must file with the SEC (and therefore the public) detailing every inch of their business, their financials, and where they’re headed in the future.
In this form, I found the “[A] Letter from our Founders” – which began to answer a lot of the questions I had about the company.
Next, I stopped and checked out their Customers section of their website – which offered more
detail around how companies like Atlassian (TEAM), ABinBev (BUD), Ford (F), Walmart (WMT), and Square (SQ) are all leveraging Amplitude to better their businesses.
his is when I began to realize Amplitude was pioneering an entirely new form of cloud-based business around analytics and product management – similar to how some of our favorite cloud-based companies like Adobe (ADBE), Twilio (TWLO), and Salesforce (CRM) pioneered their own respective businesses.
With that being said, always be skeptical of companies announcing partnerships and truly try to understand what these relationships mean from a recurring revenue standpoint. In Amplitude’s case, it became clear that these relationships were both fruitful and growing at an exponential rate.
After totally diving into this company and thinking I understood just how important they are for businesses to better understand their customers, I got really excited and sent this email to Chris Sommers (and my co-founder Christian).
Distribution Phase:
Time for feedback! This is when I tell everyone my thoughts in an effort to stir up a conversation about the company, maybe its experience with the product, or simply pointing out something I might have missed.
The first obvious form of publication was here on Substack – linked above.
I then sent out this tweet – drop your boy a follow. I try and tweet about stocks and crypto but sometimes a frustrated tweet about the Tennessee Vols slips in. We’ll beat Bama next year – mark my words!
Confirmation Phase:
Seeing the stock price rise +40% in 2 weeks was incredible, but having two well-known investment banks confirm your excitement about a company is unparalleled.
Now that I’ve walked you through my entire thought process on this company and how I researched their stock – I want to also drop in the details that our friends on Wall Street have published in their own analyses. Let’s make sure you have all of the information to make the best decision for yourself.
In Conclusion:
Boom! There you have it. My entire process from discovering this company to finally learning more about them after these banks released their thoughts. I really hope this post can serve as a resource for you in your stock-picking journey throughout the future and don’t ever hesitate to ask me a question!
