What makes a Powerhouse Logistics Company?
I am rewriting this post to hopefully explain that Logistics is a complex business and not many people really understand it and the possible role SPRV has in it. Please note that this is my opinion and has come from my own research.
First the simple view of logistics that everyone is familiar with is FedEx, UPS, or USPS (United States Postal Service). They pick up a package at your home or at an office and deliver it to the location/person you specified. Its not glamorous, but with ebay, amazon, and other online services taking off they need the services of a logistics company to handle the transport of goods to customers.
Yet, the question is why would these huge companies need a logistics company to handle their sales instead of just building one up?
The main reason is that until you have the infrastructure created, logistics is a costly division to start and even build with narrow operating margins (if a company is operating at 8% during a shipping bubble it will operate at 3% during a bad year.) UPS runs an average of 10.16% operating margin, FedEx is 7.74%, industry standard is around 6.64%. So at this point everyone will get on Web to Door website and say that it is “reporting” a 8% operating margin or dig up the press release on 24 July 2018 as point to it to say that SPRV is better than some of the big companies. Within the same press release it states that SPRV has no independent audited financials. Operating margins do not take into account taxes which Web to Door is based in California operating at a higher tax rate then most of the country. Even if one accepts the reporting as the absolute truth, then the profit made by SPRV last year was at most $1.2 million. Taxes likely brought it down to under a million.
Looking at the company website, my best guess, is that the majority company’s “assets” warehouses, vans, forklifts and so on, are all leased. Each warehouse site they have listed is an Amazon Flex Warehouse, meaning that the partnership with Amazon is that they are a subcontractor for Amazon for the Last Mile deliveries. Which if they are choosing to expand on the back of Amazon, then they are betting on their entire future that Amazon doesn’t change pricing or require specific costly requirements to keep their subcontracts. If SPRV doesn’t have mechanics, logistics software, or starts to require other services from Amazon that operating margin goes away.
So Amazon will just buy them out one day? Yes its possible, but its also possible for a Dallas cheerleader to fall in love with me and decide to hang up the pompoms. In either case, my opinion, is without divine intervention it’s not going to happen. Why? Because Amazon, or any company, would look at their assets and say that they have no property, no assets that Amazon didn’t already own and lease to them, and no outside contracts besides small local business. That would be like buying a golf cart to deliver all the pizza’s in the city.
Lastly, as I write this message the current stock price is 0.0002 with a market cap of 1.1 million. There are a lot of ways to value a stock (P/E ratio, EPS, Book Value, etc.) but until you actually see independently audited financials then the only value that SPRV has is their service contract with Amazon and that can go away tomorrow. This is an insane gamble for anyone.
If you are choosing to gamble on the CEO, then I can understand putting your faith in someone; but Logistics profits balance on things like the price of gas, price of parts (which depends on the price of steel), driver efficiency, and many other factors that can’t be controlled by one person. I would simply ask before investing do your homework.
