Replies to post #4917 on NightCulture Inc (fka NGHTD)

[General_Sevier]

4 cent shares went into my pocket today as well.

[Seekingalphacontributor]

I agree UKfan. I would like to see the breakdown of the promotion costs. If they are using social media which according to the 10-k:

We have broad experience, and have experienced favorable responses, through our promotional and advertising program focused on the use of social media. We have used a targeted marketing approach to become a destination of choice for EDM fans. Those fans access our web site to find EDM event and artist information and sign up at our web site and at events to receive notices of upcoming events via email, text messaging and social media. As a result, we have a growing base of fans that we can provide targeted event promotional materials to at a low cost using text messages, emails, postings on Facebook, Myspace, YouTube, our web site and other internet outlets. We supplement those efforts with select flier distribution, poster placement, word of mouth and direct mail. Because of our ability to target promotional materials to a very specific market, we believe we are able to achieve a very high return on dollars invested in promotional and advertising campaigns as measured by tickets purchased relative to promotional dollars invested. We believe that our promotional and advertising model is fully adaptable to entry into new geographic markets and other music genre.

In one quarter they spent 283,000 on promotion. That does seem like a lot, especially when they spent 30,000 last quarter and netted only 20% more this quarter. That 844% increase in advertising costs does not seem like it was effective. Unless of course, these costs are related to the company moving into new markets: San Antonio, Dallas, Austin, Oklahoma City. Right now they have a strong presence in Houston and they are branching out.

As far as the valuation comparisons go, the company that has the most similar market cap and business is GMEC and their price/sales ratio is 6.67. When I first covered the company it was 8. My argument was that NGHT should have a similar valuation, especially because NGHT was profitable while GMEC wasn't. Instead NGHT trades at a .47 price/sales ratio.