It’s been a few weeks since I tried bringing Appian to the board.
I had noted that while it was generally moving in the right direction in terms of recurring revenue (cloud subscription revenue was rising sharply YoY), the overall YoY revenue growth was subpar (recent quarter 17%). There was still a substantial fraction of revenue being generated by professional services instead of software subscription, although the trend was towards increasing software subscription revenue. Market cap was only around 5B (“lots of runway”).
I had continued to read about Appian, quarterly reports, investor presentations, listened to the CEO talk on conferences etc…
I think we also noted that the Net Promotor Score of Appian’s was a little low, meaning it’s product is not really “selling itself”.
Appian has since continued to basically outperform most other stocks discussed here since May (I started investing in May, Appian was one of my initial first picks at 45$ that month). I have sold out at 96$ in order to redistribute that into my other higher confidence picks. That was what I concluded and decided to do in the end, based on my research. The stock dropped initially from this 96$ high, but then continued to steamroll to 150$ (and ~ 10B market cap). Essentially, Appian would have continued to become my third-most successful investment (judging from share price % increase, not total increase) next to Tesla and The Trade Desk.
I still don’t see on what basis this is occurring and none of the parameters I could possibly discern tell me that this should happen. Analyst reports say it is a slow grower, not a worthy investment. Revenue growth numbers look bleak (sub-20% grower). Is this just a case of bad luck and low-code has been realized to be “the future” within the last couple weeks, but not before? There were talks about how Microsoft would crush the low-code sector easily etc… (similar to Slack vs. Teams sort-of talk).
Don’t get me wrong here, I stand by my decision to sell and redistribute, but if some people could provide perspective and show me the errors/holes in my analysis, this would be fruitful for my future decisions.
Don’t get me wrong here, I stand by my decision to sell and redistribute, but if some people could provide perspective and show me the errors/holes in my analysis, this would be fruitful for my future decisions.
Based on your comments, it appears Appian’s business is not all that appealing to you. I don’t know the company, but assuming all your info is correct I’d have to agree.
Your “error” seems to be based entirely on the fact the stock price hasn’t moved the way you anticipated. In broad terms, it looks like you are letting price (an uncontrollable result) cloud your process of breaking down the business. In the long run price follows performance, not the other way around. That’s why you see so few mentions of specific prices when discussing companies here. If you don’t like APPN’s business performance, don’t get bogged down on the price of the stock. Stick with your filtering criteria as long as you believe they are the right ones for you. Otherwise, there’s a chance you’ll get distracted by every Hertz and Kodak that comes along (extreme I know, but it hopefully makes the point).
Ultimately, we are buying companies and not stocks.
I took a look at it after Motley fool recommended it and decided to pass on it since it’s only a 17% growth company. And since then, it has hit record high everyday and i wonder the same thing.
I saw on marketwatch that there is a rumor there will be an acquisition but it’s ONLY a rumor. If the rumor were to be true, someone must have leaked it from the inside.
I’m happy if this was just due to irrational market movements, I guess this is simply something that can just happen. I happened to redistribute my Appian proceeds in part to WORK (also not really a forum favorite by the way), and that gained almost 40% over a mere rumor in a single day, at least in the very short-term. Not complaining, but also not at all expected. I was underestimating how sudden/FAST market movements can happen. The market really is not efficient at all…
Perhaps I will be proven right in trusting my own research over the longer term, as I said I’m not very experienced yet and this year in particular is a mega rollercoaster. Difficult learning grounds, difficult to extrapolate learnings to a more “modest” market in the future (or maybe not?).
To reiterate, my point was that studying the numbers, the growth prospects (but more so the ACTUAL and CURRENT growth that is in plain sight, as far as I understand it) did not point towards this kind of success (in stock price) for Appian in my eyes (looking to learn here!), which is why I convinced myself to move to something different. This something different was not necessarily just plainly a “forum favorite” (take THIS, herd mentality!).
Then again, it is not helping my “investing learning” that WORK is now moving up irrationally, either. I understand that it is quite a difficult company, position-wise. But I personally saw something in it, definitely more potential than I saw with Appian, which to some might seem outright insane.
Overall, this market has me baffled. I want to focus on what I can actually understand and discern and make decisions based on the facts that I have at my disposal. I find this to be very difficult to do, still.
Overall, this market has me baffled. I want to focus on what I can actually understand and discern and make decisions based on the facts that I have at my disposal. I find this to be very difficult to do, still.
Rev, if it’s any comfort, you don’t have to be new to investing to have this frustration. It’s obviously more disconcerting when the market is irrational in the other direction, so consider yourself fortunate that you get to see this part first, because there will be plenty of short-term downward irrationality in your investing future. I think you alluded to the key in these passages:
Perhaps I will be proven right in trusting my own research over the longer term
and my point was that studying the numbers, the growth prospects … did not point towards this kind of success (in stock price) for Appian in my eyes (looking to learn here!), which is why I convinced myself to move to something different.
You’re simultaneously owning your investing future while looking to learn. THAT’s what the Foolish way is all about. When you say “I personally saw something in it”, that’s the stuff, right there. As far as concerns about irrationality goes, just remember the famous quote (attributed to Keynes, approximately), “The market can remain irrational longer than you can remain solvent.” The long-term-yet-vigilant approach that TMF espouses is a proven path to investing success, and I believe it gives honest and diligent individuals the best chance to meet or exceed the reasonable goal of beating the overall stock market return for retirement investing. I’m constantly heartened by the amount of new wisdom that comes from the ever-evolving TMF community, and I say that as someone who’s been around long enough to have paid the $29.95 annual dues just to have access to the TMF boards at all.
So, I hope you don’t worry about being baffled. You’ll continue to succeed as long as you stay inquisitive, studious, dedicated, and humble. In fact, I don’t think you’d be here if you weren’t already all of those things. Even though I don’t have the chops to wash the feet of the strong analytical contributors here, I’m glad to be a partner with you in the journey.