It’s probably true in most cases that when revenues start hitting a small company, valuation starts to be based on those numbers, and the wonderful expectations go out the window. In this case, however, there is another active valuation method, as we all know, number of registered users. I believe that progress on monetization would support a valuation based on user numbers, and may in fact be needed to support that valuation.
The valuation and revenue picture is complex, I think. We don’t know at this point how much of the valuation is based on people believing that the $7 million in DSM revenue from Ancira is “real.” We've certainly heard often enough how the company is cash flow positive based on these contributions. I mentioned this to IR and was told that some institutional investors were also troubled by this, but, like me, invested anyway.
So going forward, I think they need to start delivering revenue, even if at a slow pace. If millions play SnapMeUp but don’t spend real money or if DSM does not attract advertisers fairly quickly, then the valuation could indeed suffer. That’s why I was somewhat concerned that in the last PR there was no mention of how SnapMeUp is doing. And that is another reason (which I just thought of this moment) why their misleading statements about the $7 million Ancira DSM contracts may have been especially unwise: now when real DSM revenue shows up, it may pale in comparison. Hmmmm, that's an unsettling thought.
I have to think more about the game focus, but theoretically I don’t mind that they would be actively involved in one of the main methods of making money on the site. In fact they already developed a successful application, Papacito, so it may be something they can handle.
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