According to the Chinese Zodiac calendar, 2012 is the year of the Dragon. Of all years, it also happens to be considered the luckiest. But for investors in Elephant Talk Communications (ETAK), 2012 has not delivered the kind of return that has them feeling lucky.
In fact, the stock price has fallen 25% from its December highs, underperforming the S&P 500 index by a whopping 30%.
But Elephant Talk closed the year with some very promising developments. The company met all the requirements and moved onto the AMEX exchange.
ValidSoft, an Elephant Talk subsidiary, also secured a key partnership with Adeptra. Adeptra is the worldwide leader in banking services, with an impressive 7 out of the top 10 US banks and 30 of the top 50 banks across the globe as its clients. Adeptra's core business in the past largely focused on facilitating communication between banks and their customers. ValidSoft enhances and expands their fraud prevention product suites further, enabling Adeptra to offer ATM location and smartphone proximity services, as well as SIM swap detection and prevention. This partnership allows a major global player to quickly and easily deliver ValidSoft's solutions to its clients.
In late 2011, a joint press release stated that ValidSoft's solutions had been integrated into the Adeptra's Fraud Ecosystem, "…a range of solutions, best practices and technologies that cover the breadth of fraud prevention from detection and investigation through to recovery and analysis."
Due to these developments, and an indication from management that a deal with a top five global bank was coming in the near-term, investor euphoria was high. Unfortunately, the company never announced any such deal. As a consequence, investors have lost confidence and the stock price has suffered.
But nothing with the company has changed over this period. In fact, the company continues to reiterate that everything is on track. According to a recent piece by writer and analyst Josh Levine, a deal with a major global bank is likely completed. Indeed, banks rarely announce such deals until they go live.
Adeptra has recognized ValidSoft's superior solutions and knows that its clients will benefit. For example, SIM-Swapping is a new and quickly growing tool for fraudsters. But banks have no good method to stop the epidemic. ValidSoft saw the problem emerging long before others and filed a patent for SIM-Swap detection. ValidSoft has stated that they are the only known security solution provider that can tackle this problem with its proprietary solutions. The company has proven they are well positioned to capitalize on emerging security threats and can seamlessly deliver these solutions with its well-connected advocate and partner.
The company also announced that Phil D'Angio has come on board as Senior VP of Global Sales for ValidSoft. D'Angio has quite an impressive background, formerly holding director positions as Symantec and Verisign. This move by an industry veteran speaks greatly to the quality of ValidSoft's solutions.
So it is clear, good things continue to develop behind the scenes. It is the timing that has been a bit off. But savvy investors can take advantage of the discounted prices before these major developments unfold in the coming months. Securing billions of transactions from top global banks, with many more in the pipeline, could ramp up revenues dramatically.
To most, 2012 is known as the year of the Dragon. But when a deal with a leading global bank is announced, for Elephant Talk investors, 2012 may be better remembered as the year of the Elephant.
Disclosure: I am long ETAK.