magicJack soars after Tilson pounds the table


In a report (unironically) titled "magicJack: My Next Netflix," Whitney Tilson praises magicJack's (CALL +14.2%) low valuation (5.6x trailing EPS), huge short interest (43% of the float), recent management shakeup, and large market opportunity (70M U.S. households with wireline phone service + international users looking to make cheap U.S. calls).

Tilson, whose firm recently disclosed a 164K-share magicJack position, also talks up the VoIP service provider's strong value proposition (its service costs $30/year, or $2.50/month), strong margins (66% gross margin over the first 9 months of 2013), and low cost per gross add (in the $4-$5 range).

He expects management's efforts to clean up magicJack's marketing efforts - the company's old marketing is compared to "cheesy late-night infomercials" - to pay off, and a new marketing push to yield "rapid subscriber growth."

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Comments (1)
  • DeepValueLover
    , contributor
    Comments (11094) | Send Message
     
    (CALL) JAN15 $17.50 put options suddenly seem rather cheap.

     

    Thanks, Mr. Contrarian Indicator.
    10 Feb 2014, 05:27 PM Reply Like
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