Hope you all had a good Xmas, should be a cracking year coming up for Crowd.
Saw this promotion on the weekend from our friends at Emerald, so looks like we will get continued exposure for the coming sessions and get some new investors joining the fold.
Key Highlights • All Horizon 1 goals met, highlighted by $2.8m financial turnaroundfor FY20; • Tech startup profile but generated $16.5m revenue in FY20; • Crowd Media now underlying EBITDA positive; • Beta version of Conversational Commerce launched 12 monthsahead of schedule; • Clear pathway established for Conversational Commerce tech in2022; • Critical strategic partners secured scalable Talking Head platform; • $1.67m debt cleared for healthy financial position as expensescontinue to decrease; • Fintech brand partnerships flagged for 2021 with rising demandfrom core audience; • Crowd Direct delivered $317k sales in Q1 FY21 from a standingstart; • Online retail booming as a result of COVID-19 and pandemiclockdowns; • AI Chatbot capabilities increasing every month, now handling65+% of queries; • Takeover Target: Low to Medium
The weekly chart is now showing clear signs of the breakout from the bottoming sideways pattern that lasted around 18 months, where the costs were brought under control and most recently the debt extinguished.
Debt overhang can be a concern to many investors, so it is good that this has been resolved.
In terms of our Revenue and MCap multiple, Crowd is trading at the low end of multiples, compared to a basket of profitable / near profitable companies, which I track, so there is plenty of price upside and so Crowd is still not overvalued.
The average multiple of this group of stocks is 5.5 and Crowd is trading at a multiple of less than 2.
Understanding this dynamic, then suggests that those posters claiming a near-term share price of 15 cents are not being excessively optimistic.
However, Crowd sits along with five other companies that also share a MCap multiple of less than 2.
Why is Crowd different and what do all the other companies have in common?
Well, in general, the other companies have revenues that depend upon the government Covid assistance package, they have sales that could be one-off because of Covid or they have a significant contract renewal pending.
When looking closely at these other businesses, it becomes clear that the existing revenues may not eventuate in the future. So there appears a reason for the market to discount their valuation.
In contrast, Crowd does not have this material uncertainty. Their revenues were not affected by Covid-19 and they did not receive any financial support (as far as I recall).
There seems to be no reason (other than mispricing) why Crowd is lumped together with these other stocks.
But is this investment without risk? Absolutely not.
Having cleared their debt, become profitable, and signed deals with AI partners, the biggest risk is in fact execution risk. Can they achieve what they set out to do?
I really don't know if they can achieve their goals. But what I do know, is that one of the key questions at an interview to ask a potential candidate is, "have you done it before"?
Both Steven Schapera and Robert Quandt have done it before, so there is no reason they can't do it again and if they make promises, then you should be able to count on them to deliver.
My personal conviction on this stock is pretty high and I have bought all the way from 1.8 cents to 5.0 cents and averaged up along the way and not sold one stock as the price has increased.
Does it mean I am right in my assessment?
Absolutely not, but I get it right more than I get it wrong and when I get it right I expect more than 10 bags and this is one of those stocks.
CM8 Price at posting:
4.9¢ Sentiment: Buy Disclosure: Held
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