Is This The Market’s Most Undervalued Tech Stock?Rupert Hargreaves
Finding the market’s most undervalued stocks is not an easy process. It requires plenty of patience and devotion to the cause. Many investors are just not time rich enough to be able to do the detailed analysis required.
That’s why ValueWalk launched a quarterly value newsletter called Hidden Value Stocks.
Hidden Value Stocks is published four times a year, and each issue contains two interviews with value-focused investment managers from relatively unknown value firms. Each manager profiles two stocks which they believe are the most undervalued opportunities in today’s market. We let the managers choose what companies they want to profile with two requirements: they have to be cheap and fly under the radar.
So far, these hidden value stocks have produced an average return of 25% — this is not a backtest, these are real funds with real positions.
The next issue of Hidden Value Stocks is set to be published later this week, and one of the funds making an appearance is Old West Investment Management.
Old West uses a strategy that based on insider transactions, and they profile two companies that have recently attracted their attention in the interview. Here’s a sneak preview of the interview in which they discuss one of these stocks they like, which the team at Old West believes could be worth many multiples of its current price.
To find out which company is being discussed, sign up to Hidden Value Stocks today before the next issue is published and all is revealed at the end of this week!
What gives [redacted] an edge?
First and foremost, its large and engaged user base of over X00 million installs and [REDACTED] million monthly active users (MAU) is a huge edge. This represents meaningful traction that is extremely difficult to replicate. Few companies have demonstrated this ability and the ones that are now owned by Google, Facebook, Microsoft or Apple.
For starters, I think it’s important to reiterate that [redacted] is profitable and has no debt and that alone puts the company in a different class than most other app companies of its size.
[redacted] currently trades at just a small fraction of revenue, EBITDA, and valuation per MAU when compared to similar acquired mobile apps, which suggests that [redacted] should trade many multiples higher. For example, Microsoft bought LinkedIn in June 2016 at $60.51 per MAU, Facebook bought Instagram in 2012 at $33.33 per MAU, Google bought YouTube in 2006 for $33 per MAU, and Bytedance bought Musical.ly in November 2017 for an estimated $17 per MAU. [redacted] has a sizable and engaged user base that should continue to grow significantly, and the company currently trades at $0.X8 per MAU.
What’s your timeline for growth and bull target?
The full vision for [redacted] will take time to realize, but I do believe that we are at the beginning stages of seeing increased revenue growth and a more rapid increase in Monthly Active Users. [redacted] has spent the past years building its core user base and is just now unleashing greater monetization capabilities.
Given an increased MAU growth path and greater monetization capabilities, it would not surprise me to see [redacted] trade at many, many multiples of its current stock price.