The cannabis industry has begun attracting significant levels of institutional interest and stocks have been going hog wild!
CrowdGather operates a growing portfolio of special interest forums and scalable multi-platform games. In April, they announced the acquisition of digital assets including WeedTracker.com, DispensaryWeed.com, and WeedInHollywood.com as part of an effort to diversify its digital assets to capitalize on the growing cannabis industry.
While companies like GW Pharmaceuticals plc (NASDAQ:GWPH) and Cannabis Science Inc. (CBIS) are pursuing clinical trials, CRWG's business model enables them to immediately capitalize on the information component of the growing industry without relying on regulatory approvals to begin realizing revenue by providing web services to cannabis consumers and then generating revenue from advertising.
CRWG plan's on building out WeedTracker.com into a fully-featured on-line cannabis community, while turning WeedInHollywood.com into its first cannabis themed gaming title. Beyond these efforts, our management hopes to become a nexus for the entire digital cannabis movement by designing a crowdfunding platform focused on cannabis that it intends to launch on its root domain - CrowdGather.com - in early 2016.
The Business Model
CRWG's social gaming business generated nearly $700,000 in revenue at a 75% gross margin during the three-months ended January 31, 2015, creating a base upon which to grow its newly acquired cannabis-focused businesses. Management believes the addition of high-growth cannabis opportunities on top of its existing business creates an opportunity for institutional and retail investors to get involved in the potential upside.
According to YCharts, the company's stock is trading more than 40% below its historical valuation of $0.0872, and we believe, below our enterprise value, and with an attractive price-book ratio. These dynamics suggest that the stock may be undervalued based on its assets and historical valuations, despite the addition of its new gaming and cannabis-focused businesses that have the potential to create its opportunities.
The company's management has also been making changes to the cost structure aimed at improving profitability. In May of last year, the company sold off some of its legacy assets in order to shore up its balance sheet and raise cash.
Looking Ahead
I think CrowdGather offers an opportunity to capitalize on the rapidly growing cannabis industry without taking on any of the regulatory risk. In addition, the company has the added benefit of a rapidly growing gaming business and an equity that is trading at a compelling valuation. Investors in the cannabis industry, including those involved with companies like Surna Inc. (SRNA) and MaryJane Group Inc. (MJMJ), may want to take a closer look at our stock.
During its last fiscal year, the company reported revenue that increased 51% to $2.4 million and a net loss ($7.1 million) on a per share basis that was cut in half from ($0.13) to ($0.06) per share. The majority of these results were realized from its social gaming division, which accounted for about three-quarters of revenue, while forum revenue accounted for much of the remainder. Management's daily bookings and other metrics have also been increasing.
As a vote of confidence, CWRG CEO Sanjay Sabnani, has also been an active buyer of the stock in the open market, having purchased 50,000 shares in mid-June of this year at prices of $0.075 to $0.08 per share, according to Form 4 filings with the SEC. Read More
Additionally, Sabnani provided bridge financing to the company earlier this year of $270,000. These actions suggest that Sabnani remains confident in the company's future and believes that the current price of the stock may be undervalued.
To learn more, visit the company's website at www.crowdgather.com.
Meanwhile CWRG is my Hyper Growth ALERT!
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Hyper Growth ALERT: CrowdGather, Inc. (OTCQB: CRWG)
Last: 8 Cents
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Yours For Profitable Trading,
WallstreetsHottestStocks.com
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