Seeking Alpha

Edward Vranic, CFA's  Instablog

Edward Vranic, CFA
Send Message
I am a private investor based out of Toronto, Canada and I have been investing since 2003. After 8 years in Corporate Finance with a Canadian Telecom company I have decided to dedicate myself full-time to the capital markets. I write on Seeking Alpha to demonstrate my financial analysis and... More
My blog:
Stock Talk on Mobio Insider
  • Comments For "Is Mobio The Next Big Social Media Company?" 0 comments
    Jan 21, 2014 2:22 AM | about stocks: LXVTF, TWTR, FB

    A YouTube video was created by Josh Gate titled "Is Mobio the Next Big Social Media Company?" which included a feature on my previous blog post titled "Mobio INsider Could Be The Next Generation Of Twitter" along with other good content highlighting the advantages of the platform. There were many comments and questions in the videos comments section, which I would like to highlight here. Rather than answering on YouTube, I thought this was the easiest way to answer many concerns in a logical manner. Some of the comments repeat very similar ideas or concerns so I'm only going to post the ones that went the most in depth. I will continue to add more comments and rebuttals as I see good ones come up.

    I may be facetious, but one thing the company has an advantage over many others is having an engaged shareholder base. I don't get paid by the company but as a shareholder I have a great interest in seeing the stock price rise, so I'm really providing free investor relations type of services to the company just by creating this blog post.

    Comment #1 (generic composite): What is Mobio, and where does it trade?

    My answer: Mobio is a subsidiary of LX Ventures which trades on the TSX Venture Exchange under the symbol LXV. It usually trades over a million shares a day and is frequently one of the most active stocks on the exchange. It also trades much less frequently in the US under the symbol LXVTF and in Germany under the symbol MV8.F.

    Comment #2: TheMaloneys10 said:

    "You indicate that the Twitters of the world need this platform. All Mobio has "is an idea" to make the followers watch an advertisement before reading the influencers post and by doing this they can revenue share with celebrities. Twitter could start doing the same overnight if they chose to. This is more a question than anything else and I am not bashing anything here as I am current shareholder and I believe there is a risk/reward play here. I am simply asking a why this platform would be in demand by other social media companies. I believe the company becomes an acquisition target when it starts signing more and more A listers and they can show revenue growth.....I'm not sure the platform is worth much."

    My answer: Twitter (NYSE:TWTR) could do this overnight, just like McDonalds could price their hamburgers at 10 cents to take market share away from Wendy's or Burger King. The point is, will they want to do this? Of course not. Offering a revenue sharing model will severely cut into revenue projections which are supposedly supporting the extremely high $34 billion market cap right now. They would want to avoid having to do a revenue sharing model for as long as possible.

    A revenue sharing model on Twitter would come out of necessity to compete with Mobio and other future social media platforms which may choose the same business model. That drastic change would only come at a drastic event, like these platforms taking a significant amount of users and traffic away from Twitter. Mobio and LXV are built and valued assuming a revenue sharing model already exists so by the time such an event were to happen, I would assume the stock price would be much higher than today.

    Comment #3: ThePumpAnd DumpChannel said:

    "Josh, you might just be late to the trade, in the financials I see 11m warrants that can be exercised at 0.30 expiring in April 2014, plus more warrants thereafter coming into play, plus recent private placement of 7m+ at 0.15."

    My answer: This user brought up some valid concerns over several posts over LX Ventures recent financing to fund its acquisitions and early stage development. My simple answer to this is, didn't Twitter just do an IPO that was priced at $26 and now the stock price is over $60? LXV has cheap paper out there and so does TWTR and many other companies. Not every IPO or secondary is going to be met with people who are pining to dump shares at the first opportunity.

    Comment #4: ThePumpAnd DumpChannel said:

    "For me what it comes down to is that price is not the same as value. They have 38k in sales, 15k in revenue vs wages of 472k and overall net loss of 900k. Plus I discovered some more 950k more warrants for directors at 0.50. Come on Josh, the move is over, getting in now is gambling you should know that. Some getting in now might scalp a few pennies here and there but most will lose."

    My answer: The latest financials released end October 31, 2013 and the Mobio platform didn't go live until December 1, so it's a little unfair to compare LX Ventures paltry revenues and large(?) expenses during a time before Mobio went live and they were spending money in preparation to make it go live. Also, I don't think a loss of $900K for three months is exactly tearing through cash. How many biotech plays on the NASDAQ burn far more than that each quarter and have market caps well in excess of LXV?

    I completely agree that LXV is speculative. But Twitter also loses money and is not projected to make money this year so Twitter is also speculative. LXV has a market cap of $34 million (Canadian) while Twitter has a market cap 1,000 times that at $34 billion. Both lose money. Which one is more speculative? It's up to each individual investor to decide, but Mobio has a lot less to lose.

    Comment #5: chychy1 said:

    "I totally agree. the stock went from under 2 cents to .90 cents. Something caused the move. I like value, I buy value and hold. I'll try and check the tape tomorrow to see whats going on. As of now I'm probably not touching it. Their interface is not user friendly, plus the same celebs are still using twitter and IG"

    My answer: Mobio's launch date was on December 1. I believe they have gained a lot of traction. The site's Alexa ranking have moved to around 11K worldwide in a span of 7 weeks. The site is designed as an "add-on" to Twitter or Facebook social media interactions, although I believe with time that there will be some celebrities who use Mobio as their prime or exclusive social media outlet. There are a lot of "rising stars" if you want to call them that have signed up like Sharp Turn Ahead. A couple of teenage musicians. If they grow into star status and the Mobio platform was one of their first ways of building grassroots support, I think they would be loyal to that platform.

    As far as the interface not being too friendly, that is a matter of opinion. However, I happen to agree with that opinion. That is why in my previous blog post I assumed that the company will do financing in the future to support upgrades and future versions of the site as part of my target valuation. Facebook has gone through several redesigns since I signed up for it years ago. Mobio will do the same.

    Comment #6 (generic composite): Mobio has no celebrity exclusivity, they pay the celebrities so how do they make money, there are no A-listers.

    My answer: I take issue with some of these comments because a lot of them showed a lack of maturity in the way they were presented ("ewwwwww") and some showed criticism without a clue over how the business works and you can tell they didn't do an ounce of due diligence.

    Does Twitter have celebrity exclusivity? Doesn't seem to be impacting them too negatively. There's no payment of celebrities to post. It's a revenue sharing model no different than YouTube, blogger or the many content farms out there. This model has been proven to work for those companies that know how to implement it. My previous blog post went into great detail as to why I DON'T think they need A-list celebrities. It is much better to have 100 engaged celebrity users on the platform than one A-lister who signed up for a PR attempt and never uses it. Rising stars like Sharp Turn Ahead will use it to promote themselves and could probably use the income stream. Past stars will use it because it allows them to still feel important and if they spent their money unwisely, they will also need that income stream. Think of the old sports hero who does autograph sessions for money. Would they be interested in this? I think so. Would the Baby Boomers who are retiring and who have a lot more time on their hands be interested in following up on their sports or movie or music stars of their younger days? I think so too.

    Mobio is a perfect match to meet those basic needs of reliving the past as well as making money for these old-time stars. The beauty of it is the simplicity and ease to understand the business model.

    Disclosure: I am long LXVTF, .

    Stocks: LXVTF, TWTR, FB
Back To Edward Vranic, CFA's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.