We are issuing an alert on CrowdGather, Inc (CRWG: OTCBB) - one of the leading networks of forum communities on the Internet. We believe that CRWG is flashing an extreme oversold signal, as the stock currently trades at more than 300% below its 200-day moving average (“MA” - the statistical average of the closing bid price of CRWG common stock over the last 200 days). On the basis of a purely technical analysis, the stock would have to make more than a 300% move just to get back to its MA. The MA for CRWG is $.818, but the stock closed Friday at $.23!! With the stock trading at more than three standard deviations from the average price of the last 200 days, we believe there is the possibility the stock will move closer to its MA – as is indicated below.
Here are a couple of near-term catalysts:
-- Senior management - including CEO Sanjay Sabnani and Director James Sacks - purchased stock last week, and they have been buying steadily over the last six months.
-- On July 28, 2011, CrowdGather reported that 4th quarter and year-end revenues were up 410%. On September 13, 2011, the Company reported its 1st quarter financial results for 2012 (although net losses came in weaker, increasing 41 percent year over year to a net loss $871,235). This compares to a net loss of $615,897 for the comparable quarter of fiscal 2011, and was primarily due to higher payroll expenses and other operating activities conducted by the Company in focusing on strategic objectives. Revenues were above analyst estimates, while gross margins were significantly higher than these forecasts. The Company is scheduled to report its 2nd quarter results on December 15, 2011.
-- CrowdGather reported that 1st quarter 2012 monthly page views across all properties increased roughly 79 percent year over year to approximately 150 to 155 million, while monthly unique visitors jumped from 4.5 million in July 2010 to 15 million. Similarly, as reported by the CrowdGather in their Q1 2012 results, the Company’s current network of forums is generating approximately 230 to 235 million monthly page views and 20 to 23 million monthly unique visitors based upon statistics from Google Analytics.
-- CrowdGather recently gave initial guidance of $1,900,000 in revenue for fiscal year 2012 (not inclusive of any potential new acquisitions and CrowdGather’s social media initiative with Human Pheromone Sciences to distribute the fragrance product, Erox). Revenue and gross margins are expected to continue rising with CrowdGather's deployment of its ad server platform that is expected to launch in January. The Company has also discontinued its low margin Adisn pay-per-action revenue, which accounted for a significant amount of the Company’s approximately $1,600,000 in revenues for FY 2011, and is replacing that business with much higher margin revenue from effectively delivering ads across its forum properties.
As of July 31, 2011, CrowdGather had $4,500,000 in cash on hand, which, according to analysts is enough to achieve profitability.
-- Singular Research and Zacks Investment Research both have buy ratings on CRWG with a price target for the stock, and are looking for $1.50+ in the next 12 to 18 months.