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Vislink Is Trying To Turn Around Its Business But It Looks Overvalued


  • The company claims that it has managed to cut costs and achieve annual savings of around $5 million.
  • However, the revenues are dropping and the margins are deteriorating.
  • There are theories that the company’s valuation is rising due to strong retail investor interest or a short squeeze, but they don’t seem plausible.
  • I think the business isn't worth much in its current state and that Vislink is a sell.

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Investment thesis

Vislink (NASDAQ:VISL) is a wireless telecommunication equipment company that is trying to turn around its unprofitable business. It’s valued at $145.1 million as of the time of writing.

It appears that

This article was written by

Gold Panda profile picture

Gold Panda has been working as an M&A analyst for over 11 years. He's been investing since 2007. Preferring value to growth, he tends to take a relatively conservative approach in his investing. His focus is on small and micro-cap stocks, which he believes is the area which offers the greatest opportunity to exploit market mis-pricings.

Gold Panda is part of the team that runs the investing group Microcap Review. He provides a real-time portfolio to the group. Microcap Review focuses on three areas of opportunity in the micro-cap space: arbitrage and special situations, net-nets and undervalued stocks. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

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Comments (22)

bazooooka profile picture
Bounce could be near but this one seems like it will re-test previous lows.
Can you explain the 270m$ deficit?
bamboocha profile picture
@Fesposti also interested in this
Gold Panda profile picture
@bamboocha basically, this means they've lost a lot of money over the years
bamboocha profile picture
@Gold Panda thanks!
richard simonetti profile picture
Gold Panda,

Thanks for your interesting and provocative article.

It’s import to understand the weak point points as well as the strengths of a company.
For example, Gross margins were 39.4% of revenue for the year ended December 31, 2020, compared to 45.6% of revenue for the year ended December 31, 2019.

However, I’m not sure if you are totally discounting the following:

Improved Capital Base.
Subsequent to the end of the fiscal year, completed a $50 million capital raise.
Ended the fourth quarter 2020 with $5.2 million in cash, compared to $1.7 million at the end of the fourth quarter of 2019.

“Although we were negatively impacted by the global business downturn due to COVID-19, we started to see positive signs in the business by the end of the year,” said Carleton Miller, CEO of Vislink. “Our fourth quarter revenues were over 40% higher than the third quarter, rebounding to almost $7 million, which represented the strongest quarter of the year. Our SATCOM business sector showed particular strength in the fourth quarter, with revenue increasing over 13% and bookings up over 52% from the same period in 2019. We also maintained targeted investments in key product lines, which will allow us to hold and expand our leadership in providing innovative video solutions across diverse industries.”

And further, and here it gets gnarly, the company states, “A significant portion of the loss we reported for the year was the result of necessary rightsizing actions that were taken. For the year, $5.8 million of the negative EBITDA of $16 million was attributable to a one-time write-off of expenses related to reductions in headcount, facilities and product lines. These aggressive actions allowed us to underpin the Company with financial and operational stability. “

Still further, the company indicates that it entered 2021 with an improved balance sheet and access to capital and cash available for targeted investments in engineering and R&D, new product development, channel expansion and strategic acquisitions.

And finally, and it’s here that I become totally confused, the CEO indicates that With Phase 2 of our financial turnaround largely complete, we are now entering the next chapter in our story—Phase 3—in which we will focus on pursuing profitable growth through both an increase in organic business development as well as accretive strategic alternatives. The $50 million capital raise we closed on last month will greatly facilitate these efforts.”
Mr. Miller concluded, “We are beginning to see renewed quoting activity as live in-person sports and entertainment events start to come back online. As a result, we remain cautiously optimistic that, as worldwide business starts returning to pre-pandemic levels in 2021, we will be well-positioned to capitalize on growing opportunities across our Live Event Production, Military/Government, SATCOM and Services solution areas through 2021 and beyond.”

Are you recommending that I totally dismiss all the above and sell my position?
Gold Panda profile picture
@richard simonetti I'm not recommending anything, do your own DD. Btw even if you account for the rightsizing actions, the EBITDA is still pretty negative. The aim of a business should be to make money and not boost revenue, at least that's what I was taught in uni
@richard simonetti this reply is a much stronger argument than the article IMO. directly addresses the criticisms.
Gold Panda profile picture
@auroramonk Not in a compelling way. None of the arguments puts a dent into the bear case.
This is one of the strongest penny stocks I’ve come by in a while. Management has a clear turnaround plan and are executing flawlessly so far, revenues by quarter are the highest they’ve been all 2020, and now that debt is reduced all attention is being put on growing revenues and sales which I’m confident they will do with this management.

This article focused more on antagonizing Reddit traders for pumping and dumping rather than actual reasons for why this stock will go down. Y/Y revenue is 20 mil and at this valuation that’s only 7X revenue which isn’t even all that bad considering they’re working on some revolutionary tech in the space of live streaming.

Decreasing revenues and margins is your only point against the numerous reasons to be extremely bullish. In my honest opinion you should redact your recommendation to go short on this stock and do some more digging or it will significantly hurt your credibility.

Share price appreciation is inevitable with this company over time and there’s only reasons to be optimistic about their execution given the CEO Mickey Miller’s turnaround history like my guy literally specializes in turning around companies and he’s been doing a great job so far.

This article only reinforces why I’m proud to be a shareholder because it reminds me that the market has not seen this company’s true value yet and once they do I’ll be among the early ones!
Gold Panda profile picture
@Yunginvestor83 So much talk about revenue and no mention of profit.
smartplays profile picture
@Gold Panda They said this about every great tech stock ever.
Thanks for this, a couple things. You failed to mention the impact the pandemic had on this and countless other companies revenues last year. Also failed to mention the ceo saying third party debt has been eliminated and as sports begins to come back, so will revenue in that area. Failed to mention the DOD contract this year as well as bookings being up in Q1 compared to Q2,3,4 of 2020 combined according to the earnings call last week. Very biased article in my honest opinion
Gold Panda profile picture
@Brick29 I mentioned debt was minimal as well as the DOD contract. Those things don't matter, the main problem is the horrible margins. Again, negative EBITDA of $16 million.
@Gold Panda Youve done nothing to highlight the steps the executive team have made in order to execute their plan for growth. They had to flush out the crappy company the old management left them. But thanks for leaving out the impact the pandemic had. Nothin but a biased article
Gold Panda profile picture
@Brick29 You are free to write a bullish one
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

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