Originally Posted by
moosie_900
*Clinks glass with fork to get everyone's attention in room*
Well, I don't usually do this, but I guess I shall say a few words for all of us on the Boards here at Sharetrader. What a rollercoaster year all of us shareholders in Snakk have had. I'll briefly outline the highs and lows of our company for the calendar year 2013, then give you a brief, although foggy, glimpes into the future.
- Snakk listed on 6 March to much fanfare and trumpetting, not least of all done be me! We saw a 350%+ rise at the height of trading to 40 cents from a base start of 6 cents. I'm pretty sure only one ST member profited from it (and earned the well-deserved title, cajonius maximus!).
- On 11 March, the first Snakk Trustee SSH notice appeared. There were to be many more of these...
- On 25 March the company announced record-breaking revenues for the October to December 2012 quarter, with unaudited revenues increasing 210% year-on-year from $NZ686,000 to $NZ1.439 million. Revenue for the entire year to March 2012 was $NZ1.99m.
- An SPP is announced on 22 April. $2M is sought; $7.5M is given by investors, which is then scaled back to $6.5M.
- 22 May: Balance enters the fray with the ominous post: Slowly slowly and quietly quietly catchee monkey. Tickle the sp high enough over time and then, whamoo, you feed the quaking ducks. Sorenson continues to sell down as the SP nears 12 cents, the recent SPP price.
- Revenue growth continues to come in thick and fast as the company announces: revenues from March 2012 to March 2013 increasing 83% year-on-year from $1,992,958 to $3,654,346. Snakk also becomes a B-Team member, a select set of companies that have even more "Richard Branson Effect" the more morally incorruptible they become. Sorenson sells down further in disgust.
- In August, SeaDragon sells down a huge lot at and states that is looking to sell all shares for a "fair value". This appears to be 9 cents per share, followed by a tasty dish of salmon mousse. Another sell down for SeaDragon takes place on 1 November, leaving the company with 8,500,000 shares on the books. Moosie looks forward to the day this last lot is gone (which cannot be too far away). The share price begins to inexorably rise...
- On 26 August the company releases yet more good news: revenues from April-June of $1,202,464 representing a year on year increase of 116% over the corresponding quarter of last year. Trading continues to look strong for the next quarter.
- 7 November brings about a great day as Snakk Media is named the 6th fastest-growing business in New Zealand on the Deloitte Fast 50 index. Sorenson releases his final SSH 3 weeks later and is assumed to be fully out a few weeks into Decmeber.
- The company's last annoucement for the year is another stunner, reporting 147% year on year revenue growth, and
generating $3,020,596 in the first six months to 30 September 2013.
- As of 31 December 2013, I assume Snakk wil end at 12-12.5 cents. SPP long-term holders may be slightly miffed, but it is much better than holding the losses of the lowest trade at 6.7 cents earlier in the year. For traders, it has been a very good year indeed.
So, where to from here?
PROS
- Snakk is growing much faster than the sector average taken as a whole, with compund growth of 46% YoY for at least the next 5 years. 100%+ growth YoY is nothing to sneeze at, especially since revenue growth has continued at this pace at much higher revenue levels than a few years ago.
- The shareholder base is quite large and diverse for such a tiny company. 1200+ individuals signed up for the SPP alone in April. Sorenson's sell down has probably made this base much larger.
- The sector received a huge boost this year when Facebook announced massive revenue growth through mobile advertising. The ASX board exploded with the likes of MBE, MKB and MNW being taken from obscure, extremely micro-cap companies to massive valuations as the hot money piled in. These companies are still on big valuations (some rightfully so), but SNK has come nowhere close to seeing the big money chase the SP ever higher for the growth curve it is on. Will SNK be taken from the shadows or ignored again this year? This leads me onto;
- Big buyers. I saw a lot of buying at 7 cents with massive support for quite a long time. We also saw buyers willing to buy big lots of stock above 15 cents a few mere weeks ago. It appears a liking was taken to Snakk for a while with the SP being pushed to around the 8-10x PS ratio (about normal for high growth, startup tech company in the mobile ad sector).
- The possibility of Murders and Executions (I mean, Mergers and Acquisitions...). As with the dot com boom a mere 13 years ago and the birth of a new sector, smaller companies will be eaten by larger ones for very rhealthy valuations. I do not believe Snakk has enough cash in the bank to conduct a buy-out, but I do believe the company is very open to mergers. To add to this, Handley has sold companies before and knows the right price for one, so if a good offer did come from the likes of Millenial Media, Facebook, Google, or one of those previously mentioned Aussie companies, I believe he would jump on the chance.
- Expansion: the world is ripe for it. VML has expanded into the Netherlands and Indonesia. MKB is looking to takeover a large part of the US market and list on the Nasdaq. Snakk has made no secret of its idea to expand into Asia, and going upon the previous data released by them I believe India will be next for them. There is some stiff competition if they are to enter this market though, from the likes of InMobi. With a nice base of revenue and growth (I am forecasting $7M NZD FY14 for Snakk), I think we are safe at home and ready to expand outwards. Either way, we are going to have an announcement by March. As Handley likes to say, ONWARDS!
CONS
- Most specifically, our seller overhang. As stated before, SeaDragon still has a large amount of shares but, unlike Sorenson, is willing to sell off market and not destory the share price. Unfortunately, while Sorenson has disappeared, his place has been taken by HPF Investments. Although they appear to be unwilling to sell much below 12 cents, our buyers have again disappeared since they know the market will come to them. I suspect we will see a Mexican standoff at these prices until another good (or great) announcement comes through.
- The company is hard to understand if you don't know your tech speak. Many posters have tried to show how the company makes money, but few have understood. If us younger generation are finding it tough, how's it going to look for older investors that actually have the large amounts of capital?
- PR needs to improve sllightly. We want to know what companies are being signed on and how big a deal these signings are. Quarterly reports are great in that they show progress, but 3 months between announcements is too long to wait in a high-growth sector where everyone is expanding rapidly and is keen to show off the goods to bring in more investors!
- If we do have a merger or acquisition, who exactly are we bringing into our company? I am wary of this, as sharks could be lurking...
- Liabilities as a %age of revenue are growing. Around 55% at last count, up from the 40% range. Not good!
So, as all investing should be taken as, a mixed bag. I believe, however, that the pros outweigh the cons as we gear up for further growth in the future. The macro picture of world equities still favours risk-on stocks, and Snakk is definitely one of those. I feel if we can get that overhang done and dusted, expand into a massive new market, take on new opportunities with/from other companies and keep those costs done, we have a winning formula here. I hope Snakk gives XRO and PEB a run for its money this year in the SP growth stakes and that we shall never have screes of script to contend with on issues such as Sorenson ever again. I look forward to the year ahead with great pleasure, as I am sure many of you do.
Moose :)