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Hi guys, here is my own DD about FiscalNote ($NOTE), been watching this company for a while now and I think it’s really undervalued since it’s on their all time lows.
As of now, it’s trading at $1.58 / per share and a $24M market cap. 36**%** is held by insiders.
Float is only of 6M and **33% shortt interest**
**About FiscalNote**
It’s a company that tracks laws, regulations and political decisions, and sells that information to businesses and governments. Big companies, investors and governments need to know:
\- New laws are coming
\- Regulations might affect their industry
\- Political risks exist in different countries
FiscalNote collects all that data, analyzes it (using their own software and AI), and delivers it in an user friendly platform, so clients can make decisions faster and avoid surprises. **It’s basically like a Bloomberg Terminal, but for laws and politics instead of stocks.**
Their clients play subscriptions, meaning recurring revenue, to:
\- Stay compliant
\- Manage regulatory risks
\- Plan strategy before laws change
**My Investment Thesis**
I think this is totally mispriced. It’s a real company that sells something boring but necessary. Information about laws, regulations and political decisions.
Big companies, governments, investors and institutions all have the same problem:
\- Laws change constantly
\- Regulations get more complex every year
\- Political decisions can seriously affect profits
Missing just **one** regulation can cost millions.
FiscalNote solves this by tracking laws and political activity worldwide, analyzing it, and selling that information through software subscriptions. Clients will keep paying to stay informed and avoid surprises. They support powerful organizations understand things that governments are about to do before it happens.
1. **The business is very compressed**
The stock is trading at a tiny market cap compared to its revenue, data assets and enterprise customer base.
Analysts still have price targets much higher than the current share price. That alone tells you the market pricing is disconnected from expectations.
2. **Good risk/reward worth playing**
At $1.60, it looks like the worst case scenario is already reflected. The upside is massive if sentiment improves even slightly.
3. **Enterprise tech and AI Data services is a growth sector**
FiscalNote’s AI analytics are a growing need for policy risk intelligence, a segment with huge pricing power as regulatory complexity keeps growing.
4. **AI Moat**
FiscalNote owns the world’s premier database of regulatory, legal and government information. On your own, you can’t scrape this data, they own the pipeline.
5. **Elite margins**
Their **adjusted gross margin is hovering around 87%.** This is elite for their business (think Adobe or Salesforce levels). High margins mean that as they scale revenue, profitability will also explode exponentially.
6. **Blue chip client base**
They serve over half of the Fortune 100, major government agencies and global non profits. Their revenue is sticky.
**Catalysts**
**1. Earnings**
Next earnings late February/begin of March could surprise on margins improvements or enterprise subscription growth if management reports unexpected strength or guidance upgrades.
2. **News from yesterday (**[**https://www.businesswire.com/news/home/20260114099770/en**](https://www.businesswire.com/news/home/20260114099770/en)**)**
They recently completed a major internal transformation that most people missed. They finished migrating all customers from their old platform to PolicyNote, their new all in one AI powered product. This matters because
* Tools were scattered
* User experience was clunky
* Growth was harder to scale
Now:
* **Everything is under one unified platform**
* **AI features are deeply integrated into daily workflows**
* **Customers are using the product far more often**
Results were:
**- 252% in weekly active users**
**- AI generated insights used in 34% of searches**
**- Advanced analytics usage nearly doubled**
**- Migration completed with minimal customer churn**
[FiscalNote](https://preview.redd.it/lrlias8lnidg1.png?width=485&format=png&auto=webp&s=751fcb94494ca812317d2fe135a30c5fb9b3e5cc)
3. **Expanded enterprise contract wins and multi year deals**
FiscalNote’s revenue comes from enterprise subcriptions. Long term deals that lock in recurring revenue. If they can demonstrate significant new contract wins, expansions or renewals, especially with larger organizations, this can move the stock.
Revenue visibility will improve, which makes analysts and institutions more comfortable assigning a higher valuation multiple.
**My valuations**
I compared $NOTE to its peers in the AI and SaaS sector on a simple spreadsheet.
[Valuation](https://preview.redd.it/8o968j7onidg1.png?width=567&format=png&auto=webp&s=c8c9f38cfcdca89e629b481c6fcf42399cde8aa3)
I find a huge disconnect here. FiscalNote has higher margins than Thomson Reuters and Palantir, yet it trades at a \~90% discount in terms of revenue multiples.
Also, I calculated based on revenue multiple expansion, and M&A potential (I’ll talk about that after this).
[Cases](https://preview.redd.it/rraorlxpnidg1.png?width=886&format=png&auto=webp&s=9bb7af84a7da4861b3937627f42f49934faadafc)
Why the multiples must expand?
Everyone can build an LLM in a weekend, but you can’t recreate 10 years of global regulatory data. $NOTE owns that. With 87**%** margins, every new dollar of revenue is almost pure profit. As they scale PolicyNote, the path to massive free cash flow is wide open.
**M&A scenarios. Who will buy it and why?**
We have to see FiscalNote as a strategic data asset, not just a software company.
**Scenario 1: Thomson Reuters or LexisNexis**
These giants own the legal research market. However, their tech is legacy. By acquiring FiscalNote, they instantly gain the most advanced AI policy platform and eliminate their fastest growing competitor.
Thomson trades at 11x revenue, a buyout of $NOTE at even a 6x revenue multiple would price the stock at **\~$9.50 / share.**
**Scenario 2: Bloomberg**
Bloomberg is the king of financial data, but policy and regulation are the new drivers of market volatility. Bloomberg Law is good, but FiscalNote is better at AI-driven predictive analytics. Bloomberg would buy $NOTE to lock out competitors and integrate "Policy Intelligence" directly into every Bloomberg Terminal in the world.
If a competitor wanted to build FiscalNote today, it wouldn’t be simple. First, it would take 10+ years to aggregate and clean the historical global data. Second, they would need to hire hundreds of legal experts and data scientists and third, it would cost upwards $500M-$800M in research and development alone.
I think analysts already take in count the possible M&A deals, their price target is $29.25, representing a **1,760% + upside.** Obviously, we shouldn’t really focus on analyst’s price targets on pennystocks, but even if they are 90**%** wrong, it would be a multibagger.