SurgePays Inc (SURG)

[traderdogzz]

How Does Surge Make Money By Offering A Free Plan?

Is this a profitable venture? Let’s look at one hypothetical scenario.

Charities give out 1 million donated used smartphones to underprivileged teenagers and families across America

These phones are pre-loaded with a ‘forever free’ monthly smartphone plan
According to this Surge news release, $10 in revenue is generated off every subscriber
Assume a gross margin of 35–40% or $3.50-$4.00 in gross profit per sub every month
$42-$48 million in gross profit per year

The gross profit potential on just 1 million customers is ever greater than that. The Mulaah app continues to drive ads and revenue via the unlimited texting plan even after the 1 GB is used up.

If Surge Holdings can get 1 million free subscribers – what would this be worth in market cap?

Consider that the KBW Nasdaq Financial Technology Index has a median price-to-gross profit ratio 9.55

Assume Surge could retain $42 million in gross profit annually
$42 million x 9.55 = $401.1 million market cap
Current market cap is less than $50 million

What are the risks?

I downloaded the Mulaah app on my Xiaomi (XI) Mi A1 smartphone. The app changes the appearance of your home screen. Ads randomly pop up which are very small in the bottom of the screen and there are surveys you can take for extra points. Would I use this service? For a free cellular plan - absolutely! To knock $10 off my plan? I am not so sure.

Will consumers embrace this ad-supported network or will they gravitate toward another low-cost option?

Will the ad-supported cellular service be copied by a larger company with an existing customer base?

Will advertisers restrict where their ads are shown? There might be little conversion in advertising a new Tesla (NASDAQ:TSLA) car to someone using the free cellular plan. Of course, this also allows advertisers to target this specific demographic. Think Walmart (WMT) and McDonald's (MCD) vouchers?
https://seekingalpha.com/article/4238650-surge-holdings-unknown-story-high-potential-growth