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.
