Here’s a fun penny-stock story for you (about a company that may be about to shed its penny-stock status for good).
On December 23, the stock of Snap Interactive (STVI.OB) was trading at 18 cents a share. Then Bloomberg wrote a story about how its Facebook dating app is clobbering the likes of Match.com. Five days later, the stock is trading at $1.20.
Typical penny stock stupidity?
Actually, maybe not.
A year ago, Snap Interactive started charging subscription fees for its Facebook App, AreYouInterested.com. The app is now the largest dating app on Facebook, with more than 13 million users, and it’s adding 50,000 new users a day (mostly non-paying). Unlike traditional dating sites, the app takes advantage of the social graph and social networking.
The app’s startling growth is bringing in some nice cash for Snap Interactive. The company turned a profit in Q3, on $1.7 million of revenue, and it has more than $2 million of cash in the bank.
With the stock at $1.20, Snap’s market value is about $40 million (NOTE: This does not include options and warrants outstanding, which one reader says are considerable. Including these, the fully diluted market cap may be much higher.). The company’s revenue run-rate is likely now about $8 million (annualized), so this means the company is trading at about 5X revenue. That’s not the screamingly cheap valuation of 5 days ago, when the stock was trading at 1X revenue. But it’s also not unreasonable for a profitable company with this growth trajectory.
Snap Interactive’s stock also has another thing going for it: It represents the only pure-play publicly traded Facebook app that we know of. That alone will likely give the stock some scarcity value and cachet.
So hang on to your hat!
WARNING: This is not a stock recommendation. We have now spent a grand total of 10 minutes looking at this company. If you have spent more, please let us know what you found. (The first thing we’d like to know is whether the product is actually a good product or just social spam. If it’s the latter, STVI’s rocket ride will be very short-lived. Then we’d like to know the fully diluted share count.)
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