Oversold, hmmm? Depends on the invidual's perspective.Personally...

Oversold, hmmm? Depends on the invidual's perspective.

Personally I think the selling is justified and current levels are just coming into what I believe is fair value. Let's take a look at some back of envelope numbers

Market Cap: 31.5m based on 450m outstanding at 7c

Last reported Revenue Run Rate: $20m based on 107,520 paying subscribers, approx $186 per subscriber. Using prior years' numbers my estimates show this figure has been coming down from $200. This figure will converge towards $180 but that is expected given the pricing of Streaming only at $15 per month.

For year end let's say sub numbers is 125,000 x $180 = 22.5m. Using Netflix experience of 10% hitting bottom line, that is 2.25m. An implied multiple of 14.

The question for the individual investor: Is 14 an attrative multiple?.

In the current environment where there are a number of small/microcaps with earnings history and reasonable growth trading on single-digit multiples, I personally don't think 14 is attrative.

Some may argue QFX growth potential and first mover advantage as a reason for higher multiples. That's a fair point. But I can also argue that QFX has a business model that doesn't have high barriers to entry and I forsee that pricing will tighten as competitors come in and new technology being developed. In summary, margins won't be maintained.