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Close in many respects
The company acknowledged in a tweet that they have the largest B2B database (we knew this from September, but it was reiterated as confirmation). We also know that they have been working on a broad data platform that incorporates AI, Blockchain, IoT and other emerging technologies. This puts them in the conversation with both ZI (B2B marketing), $NOW (data management) and many others. We haven't heard whether CreditSafe closed, but they haven't denied it either. If that were to happen, it would represent a dramatic escalation in revenue based on what they told us. Specifically, they said that CreditSafe was generating $40mm in revenue and they could double that to $80mm within 12-18 months. Given current public market valuations, that revenue base easily translates to several hundred million to potentially billions of equity value particularly given the anticipated growth rate.
The fundamental basis for a high valuation is present given comparable public company valuations. The argument with the company is the splitting of the pie and the capital market impact of their actions. The actions they proposed in the filing (note I said proposed) strongly work against achieving a full valuation. The float would be too small and the RS alienates both current (as evidenced on Friday) and potential shareholders all else equal. They seem not to grasp this though they claim to have a wonderful explanation. Even if that's true, the explanation should have been put out simultaneous with the filings. The fact that it wasn't shows they don't understand the capital markets (despite their claims) either internally or through their advisors.
My guess is some banker told them to get the stock price well into the double digits to make it more attractive for institutional investors for the uplist. It's what they always do. Unfortunately, the bankers don't seem to understand the first order impact- existing shareholders sell for obvious reasons and the RS becomes self-defeating. What the company should have done is released all the information, let the share price rise to reflect the information and then decide on the share structure for uplist. Too often I see companies make grave mistakes in their zeal to uplist. There's a sequence of events that should be followed.
I have attempted to explain this to them. I hope common and financial sense prevails over arrogance. I guess we'll start to find out this week.
It was really one poster
That went overboard with a threat directed at the business. I understand the frustration, but need to maintain a boundary.
Looks like the social media Army arrived
Like I said before, I'd strongly suggest walking the fine line when exerting pressure. They do have a PR nightmare on their hands now. As a marketing company, they can't be too happy about that.
I reject the notion that the RS is set in stone. It can easily be stopped by management, but it's in their hands since there is no shareholder vote.
Keep voicing your displeasure
Blocking people doesn't work. Having a constructive dialogue with shareholders will work. Hopefully they listen sooner rather than later.
FINRA won't stop it
"FINRA does not approve reverse splits, but it does process reverse stock splits as part of its functions related to company corporate actions in the OTC market. OTC companies must submit notice to FINRA 10 days prior to the record/effective date of the corporate action. Once a corporate action submission is successfully processed (which may take longer than 10 days), it will be posted to the OTC Daily List. The Daily List is a place investors can learn about reverse stock splits and other company corporate actions, such as a merger or acquisition, payment of dividends or a company dissolution or liquidation."
There is also an issue of whether the company (TDS) needs to do additional filings based on state law (DE) and the company's articles of incorporation. If someone has insight into that, please share. Sometimes shareholder approval is required, but that's unfortunately a moot point here given Stephenson has control.
In my experience
CEOs don't like seeing their stock prices go down that much, even more so in a single day. Based on communications I've seen from Stephenson, he pays close attention to the stock price. Moreover, employees pay attention to the stock price and I bet were asking questions on Friday. This is all a drag on productivity that should be avoided, but wasn't.
Putting pressure on social media is the best avenue, IMO, to see change. We may not get the RS retracted, but perhaps the ratio will be reduced.
What I expected
I think 10% of the company pre-acquisitions was a fair SS given the efforts to get current in DE and the NOLs ($120mm gross, ~$25mm net at the Federal corporate rate). I fully expected to get diluted from the B2B database deal and CreditSafe (if it happened). I was fine with that as the pie would be growing much more than the loss of share from dilution. That's part of building a company in high growth markets.
I think a 2-1 reverse would have been palatable (though still totally unnecessary). That would have left us with ~10% of the company and a reasonable float.
My guess is they came up with their ratio to get the stock price into the double digits to comfortably uplist. Unfortunately, their advisors probably assumed a static stock price (I was a banker so I have some insight) instead of one that would have organically risen as catalysts played out. What they should have done is waited until all the information was released. Let the pie grow first instead of fighting over crumbs in a smaller pie.
They've indicated that all of this is being done for our benefit (LOL). We shall see, but at least they now know they will be heavily scrutinized.
I agree with your points
Well said. Lawsuits will do more damage and not result in any gain. Best to exert pressure on social media and dent (temporary) their coveted image. We all know they are HIGHLY sensitive to that.
In my view, they were caught off guard by the shareholder reaction and tried to hastily do damage control with Stephenson's post. That was a flop and only served to heighten frustration (mine included obviously). They'll need to hit the markets with a PR Monday, preferably in the morning. That will hopefully get us on the path to the price range you mentioned. Could have been multiples of that, but their genius advisors steered them down the wrong path.
Companies seemingly always focus on how to divide the pie more than how to grow it. They would have generated a much better "return" on their action by not doing the RS. I still have hope that they see the error of their ways.
Still plenty of time to course correct, but Stephenson needs to see the error of his ways.
Some additional thoughts
1. The reverse split isn't set in stone as some and the company suggest. To the best of my knowledge, FINRA hasn't approved it yet. There is plenty of time to retract and let the price organically rise higher.
2. If the PR and upcoming announcements are as great as we all expected (prior to the filings), the share price would have risen well above the minimum threshold for uplisting. I would post similar comments on social media to drive the point home. Hopefully the stock price will do the work for us and they'll see the idiocy of the proposal.
3. I think social media is the best way to exert pressure on this company, but they are sensitive to tone. We all have to walk a fine line with these guys as they are Brits and probably can't handle American-style pressure.
4. On the optimistic side, the fundamentals haven't changed and they have indicated the long awaited information dump is about to start. That will help even if the prospect of the RS curtails some of the upside.
It was odd
It was as though he lacked confidence in his explanation, which is justified since it lacked merit (based on what was said so far). If he had a valid response, put it out during trading hours to at least limit the stock price damage.
The better approach would have been to put out the PR this morning prior to market open with whatever explanation they have.
I have a feeling, perhaps it's just wishful thinking, that they are figuring out how to undo the damage. I don't think they know yet, so they tried to buy time.
It was condescending
Instead of assuming that shareholders are stupid, which is what they did in that letter IMO, they should have educated us as to why they thought this made sense. The twitter exchange afterwards was probably worse as they turned defensive and confrontational instead of conciliatory, particularly given shareholders took a beating.
One can only hope they do some 'soul searching' this weekend and consider a different approach. Whatever PR they issue will probably help some.
Well said
And thank you for your perspective aided by your background in the industry.
Ben Berry didn't know about it either apparently
At least based on his reaction as seen in the communication with the other poster.
My experience re CEOs
Most hate to admit they're wrong. It makes them look bad to their employees and other stakeholders. That said, the best ones recognize obvious errors, like this one, and course correct quickly.
Hope Stephenson steps up to the plate on Monday because he had an awful showing today.
Stephenson let shareholders down
I don't really blame people today. He had all day to take action and did nothing.
You hit the right points
I'm perplexed by their actions. I'd like to know who the financial adviser is in this case.
We know Mr. Stephenson will have at least read Ben Berry's email and comments. Best we can do is hope that along with the social media backlash are sufficient to stop the idiocy.
And with the float so small to begin with
Reverse splitting does very little in the grand scheme of things to the overall share count.
Management obviously had little common sense in this regard. All we can do is press them to see the error of their ways.
No response yet
Which seems to be the company's approach given the lack of Tweets after the blistering volume of tweets the past few days. My guess is they are shocked at the stock price movement because their adviser told them something different. They're probably trying to figure out how to do damage control.
They're getting crushed on social media and we know they pay close attention to those channels.
Nor do they have an understanding of basic arithmetic
I see it frequently with smaller companies. They think a RS is a magic cure for the stock price, but they fail to consider the consequences. A story like this didn't need one particularly given the already low share count. We could easily reach a double digit stock price without the RS shenanigans.
The adviser should be fired and replaced. In the interim, Stephenson needs to clarify that the RS won't happen. Best to admit the mistake now and correct it.
Bad advice is an understatement
It's moronic is the best way I can describe it. I would also dispute Mr. Berry's suggestion that it's necessary for a higher stock price. Reverse splitting the CLHI shares in isolation accomplishes very little with respect to the stock price. As we are seeing today, it does the opposite.
I've communicated with Mr. Stephenson through various means as well. Let's hope he sees the error of his ways soon. This can be easily stopped but it's up to him.
I fixed it
Juggling a bunch of emails and posts simultaneously. My error.
If you notice on other boards, like IL-U$, they only discuss the freely traded float when setting price targets (unlike Lord Voldemort here). If we applied the same logic here, the upside is almost unfathomable.
If we use T$-NP as a comp
Your price target should be easily achievable. Amazing.
Intraday trading
Doesn't bother me much. I use the flash crashes as opportunities to trade around my core position. I'm more annoyed at the process, but that will resolve itself.
The power of the PR on the OTC
Check out IL-U$. If only TDS could push through the DE SOS paperwork.
The time for a significant re-rating will come.
Interesting partner
The data they can collect obviously has enormous value, but having the right procedures in place regarding retention and privacy are critical. I would assume TDS is providing that expertise so Muhdo can scale further. This would also seem like it could scale globally, which is very exciting.
Would have been nice if they could have PRd this partnership as a public company. I hope the DE SOS and company lawyers get their job done soon.
If they're developing expertise in personalized medicine
AI, data storage and blockchain, that could be a huge value driver.
Looks like the company is in AI and Health now too
The opportunity set keeps on expanding. Just need the DE SOS to get its act together.
We are delighted to have teamed up and partnered with @Muhdohealth
AI, Analytics, Digital Marketing, Data Storage and much more. Also please click the link to find out more from 60 minutes
Let's hope your price targets come to fruition too
I think we'd all be very pleased.
Hoping the DE SOS domino falls today so we can get more information released and focus on more interesting aspects of the investment.
You were right
Let's hope the key domino falls on Monday.
Looks like a massive data release is on tap for next week
The Data Source
@thedatasourceuk
Replying to
@nipomo357
Yes a number of new website for all our brands & one brand new spanking one for TDS Globally.
Great sign
The bear raid or whatever that was this morning got overwhelmed, again, by buyers. Just need the formalities to get taken care of.
And very healthy volume on a $ basis
To allow certain groups or individuals to accumulate.
Interesting retweets by the company
Demonstrating more public awareness about the stock price now, which is a good sign IMO. Close to the "unveiling".
Good example of a concurrent/forward indicator...
For the business as opposed to the financial statements, which are backward looking (or trailing) indicators. The ultimate valuation will be decided, in part, by forward looking metrics. Just thought I'd make that point, again, given the remarks made ad nauseam by some here and elsewhere.
Presumably this also excludes the impact of CreditSafe. Management indicated yesterday that shareholders will learn more about it (and the completed B2B database acquisition) in "due time".
Looks like the dissolution issue is taken care of?
Judging by recent tweets and information provided by one poster (thank you if you're on this board), we're all set now? I'll leave it up to the experts on this topic like dshade, Pro and others to confirm.
Good to hear
Let's get the paperwork done and start the re-rating process!
Thanks for clarifying that
Guess it's still a matter of any day now. The tweet they sent out was a little puzzling. Not sure what they expected the community to do. Perhaps it was just a sign of frustration on their side too.
On the positive side
Great volume and accumulation the past few days. It also appears that everything is set for a blitz of information once the DE process is formalized. I don't pretend to understand why it's taking this long, but perhaps an expert like Pro-life might understand better.
I'm increasingly convinced the valuation will be several fold higher. Just have to wait for the formalities to be resolved.
Additional patience required
The company is new to the public company process and it's further complicated by Covid, so we just have to be a little more patient. It is frustrating, but it ultimately won't matter in terms of the valuation.
On the positive side, the information video was very well done. I believe the company's capabilities go even beyond what I thought based on the slides from their investor deck and other tidbits of information released to this point.
Hope we all see at least one domino fall soon.
Reminded me of a flash crash
Except I saw many signs that this was orchestrated for certain parties to accumulate at cheaper prices. Unfortunately, this happens often in the OTC. It actually happens on the Nazz too, but much less frequently.
I hope if you were on the sidelines or wanted to buy more that you were able to take advantage.