Predicting Profit with Alternative Data

Part 1: Using alternative data to estimate profitability

Alternative data has traditionally been used for estimating topline metrics and drivers:

• AMZN retail revenue, its drivers (traffic/ticket) and AWS revenue

• TSLA global orders

• NFLX subscribers/net adds across regions

• and so on…

With the rise of data sources and infrastructure, some fundamental hedge funds and investors have been developing techniques to correctly predict profitability, particularly Gross Profit. This is something that was certainly deemed impossible a few years ago. How are they doing it?

Before we get into it, a reminder that tomorrow is the last day you can join phoenixlearning.io at the original price. Learn more about what’s to come here: phoenixlearning.io/allen-info.

In this Substack, I try to write about perspectives and practices from the fundamental long/short world. Since most people are already off for the holidays, I will try to keep it brief and introductory.

Thanks for your support and wishing everybody happy holidays. A lot more to come in 2025.

Let’s get into it.