Seeking Alpha

OTCShowcase's  Instablog

OTCShowcase
Send Message
I am a long and short term trader that has been involved with the stock market for many years. Primarily a technical analyst to trade, I enjoy diving into the microcap stock world looking for hidden gems. I am looking for companies that meet a select criteria of strong management, products... More
  • Social Media Companies Compared 0 comments
    May 24, 2012 5:46 AM | about stocks: FB, CRWG, ZNGA, LNKD, GLUU

    Social Media Companies Compared

    Facebook Inc. (NASDAQ: FB), LinkedIn Corporation (NASDAQ: LNKD), Zynga Inc. (NASDAQ: ZNGA), CrowdGather Inc. (OTCBB: CRWG) and other social media companies have a wide array of valuations in the public markets. In this article, we'll compare those valuations to determine the most underpriced and overpriced plays in the burgeoning industry.


    * Data from Google Finance and Yahoo! Finance; Revenue Growth % for CRWG represents increase in Q3 FY 2012 revenue compared to Q3 FY 2011.

    CrowdGather: The Most Undervalued Play

    CrowdGather Inc. (OTCBB: CRWG) appears to be the most undervalued play in the sector, with solid revenue growth and a low price-book ratio. Currently, investors can purchase the stock for slightly less than the value of its assets minus its liabilities, and benefit from strong revenue growth that could translate to profitability on the bottom line over the near-term.

    Aside from these statistics, the company has also seen a number of other qualitative factors that could make it a good buy. The firm's CEO, Sanjay Sabnani, has been a consistent buyer of the stock and has even retired a significant number of shares. In fact, the insider's cost basis for acquiring these shares is significantly higher than the current share price.

    From a growth prospective, CrowdGather also has a lot more blue-sky potential. It's far easier for a $16.88 million company to double its size and deliver outsized investor returns than it is for a $5.1 billion or $92.8 billion company to do the same. As a result, investors may find that this stock has greater upside potential than many other more popular players.


    Popular Forums Owned by CrowdGather Inc.

    High Multiples Could Benefit Smaller Stocks

    Many companies in the social media space trade with lofty price-earnings multiples, such as Facebook's (NADAQ: FB) 108.4x and LinkedIn's (NYSE: LNKD) 604.3x multiples. While these are higher than other tech companies, such as Google's (NASDAQ: GOOG) 18.44x or Apple's (NASDAQ: AAPL) 13.84x multiples, they are very positive signs for smaller companies that are approaching profitability.

    For instance, CrowdGather is rapidly narrowing its net loss, and with high price-earnings multiples throughout the industry, the company could see its share price significantly higher if it were valued along the lines of the other Internet company multiples once it achieves profitability. And this could mean outsized returns for shareholders.

    These multiples are largely driven by recent mergers and acquisitions in the space, such as Zynga's buyout of the private company OMGPOP at a lofty price or Facebook's purchase of Instagram for around $1 billion. Meanwhile, venture capital investments at similarly high multiples are also driving valuations higher throughout the sector.

    Investing in the Social Media Sector

    Many social media companies have experienced strong run-ups in valuation thanks to new IPOs, venture capital investments and M&A. However, some investors believe that these valuations may eventually prove too high to justify, especially in an industry that constantly changes. As a result, investors may be better of seeking undervalued plays with similar growth prospects.

    CrowdGather Inc. (OTCBB: CRWG) is an owner and operator of a network of online communities that generate hundreds of millions of page views each month. With a market capitalization of just over $16 million, investors can purchase this stock for less than the value of its net assets and still benefit from the growth in the social media space.

    For more information on the company, please see the following resources:

    1. Company Profile
    2. Company Facebook
    3. Recent SEC Filings

    ----------------------------------

    Disclaimer: Neither www.otcshowcase.com nor its officers, directors, partners, employees or anyone involved in the publication of the website or newsletters ("us" or "we") is a registered investment adviser or licensed broker-dealer in any jurisdiction whatsoever. Further, we are not qualified to provide any investment advice and we make no recommendation to purchase or sell any securities. The prior article is published as information only for our readers. otcshowcase.com is a third party publisher of news and research. Our site does not make recommendations, but offers information portals to research news, articles, stock lists and recent research. Nothing on our site should be construed as an offer or solicitation to buy or sell products or securities. This site is sometimes compensated by featured companies, news submissions and online advertising. Viper Enterprises, LLC (parent company of OTC Showcase) has been compensated two thousand dollars by an unaffiliated third party, Accelerize New Media, for its efforts in presenting the CrowdGather profile on its website and distributing it to its database of subscribers as well as other services. Please read and fully understand our entire disclaimer at http://www.otcshowcase.com/about-2/disclaimer.

Back To OTCShowcase'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

  • Momenta Pharmaceuticals (MNTA) & Sadoz (unit of NVS) - Judge Emmet Sullivan refuses injunction to stop generic of Sanofi-Aventis' Lovenox.
    Aug 26, 2010
  • Daytrade: GNVC. Long term: investing Cellceutix real heavy. I'm loving them as a long-term play from everything I see.
    Mar 30, 2010
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.