Entering text into the input field will update the search result below

Support.com: Buy Before It's Too Late

Darren Chan profile picture
Darren Chan


  • Net-net stock trading at 20% discount to Net cash per share.
  • Just achieved positive Net Income in the last quarter. Cost-efficient and aligned management. High insider ownership ~15%.
  • Market Cap is too small to be efficiently priced by market.
  • High volatility and low volume offers good buying opportunity.

Support.com (NASDAQ:SPRT) is a technology company primarily involved in the business of domestic technical support for its two main customers, Office Depot (NYSE: ODP) and Comcast (NASDAQ: CMCSA).

Like many of the tech stocks that IPO-ed and survived the dot-com bubble, Support.com has traded at a mere shadow of its former self. However, this small ~48M market cap stock has been gaining significant traction recently (a 30% appreciation), and this article aims to understand why.

I believe most of the market has overlooked this rare “net-net” stock due to its small size, and that the stock offers a decent return with almost no downside.

Activist History

In June 2016, VIEX Capital Advisors, a group of activist investors, fought for control over SPRT. What caught their attention was the negative enterprise value of Support.com. At the time of their involvement, SPRT had a market cap of 43.4M vs a net cash balance of 61M. The activists saw the incumbent management as incompetent and misaligned with the interests of their shareholders, reflected in the low insider ownership, high compensation plans and poor capital allocation. Ultimately, VIEX won and they removed the entire management of Support.com. You can see their activism investor presentation here.

Recent Developments – Net Income Positive

Since taking over the company, VIEX has replaced the management by bringing in Richard Bloom as CEO and President. The activists focused on shutting down funding for the Nexus/Cloud strategy that was implemented by the previous management. They saw the segment as taking too much R&D funding without the possibility of generating significant profits when launched. The termination of funding for the Cloud offering greatly helped operating margins as R&D spending decreased by nearly 50%. (Source: Q3 17 10-Q).

Another step taken by the new management to cut costs were to drive reductions

This article was written by

Darren Chan profile picture
A regular retail investor with trying to figure out the world of finance. The articles here are just my humble opinion. Would love to hear your thoughts!

Analyst’s Disclosure: I am/we are long SPRT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (7)

Kingdom Capital profile picture
Thoughts given the filing re: VZ contract and the huge haircut today?
Jeremy Blum profile picture
VZ is 3% of revenues. 20% down seems an over-reaction. Especially since it is now trading below cash.
GuthG520 profile picture
I still think they missed an opportunity.. should have announced a few months ago they were getting into cryptos and renamed the company “Blockchain Support.” The stock would have doubled or tripled.. haha
Houman Tamaddon profile picture
Profitable net-nets are rare indeed. We will see if the profitability will last. This is not a great business and as you know time is the enemy of a bad business and a friend of a great business. Thanks for the analysis.
Trek Investor profile picture
Good article, thanks for writing about it. Would note that they already lost Office Depot as a customer
Byron Clarke profile picture
I believe that was intentional. I think management got a better handle on what it costs to provide their services and decided they didn't want customers they were losing money on.

One reason cash flow had not turned positive as of 3Q was a sizable A/R due from Comcast. I think it was timing and that when 4Q financials come out, the A/R will have been collected and the positive cash flow will show up in the screeners.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.