Social Media Companies Compared

Atlanta, GA 5/24/12 (StreetBeat) -- Facebook Inc. (NASDAQ: FB), LinkedIn Corporation (NYSE: LNKD), Zynga Inc. (NASDAQ: ZNGA), CrowdGather Inc. (OTCBB: CRWG) and other social media companies have a wide array of valuations in the public markets. In this article, we’ll compare those valuations to determine the most underpriced and overpriced plays in the burgeoning industry.


* Data from Google Finance and Yahoo! Finance; Revenue Growth % for CRWG represents increase in Q3 FY 2012 revenue compared to Q3 FY 2011.

CrowdGather: The Most Undervalued Play

CrowdGather Inc. (OTCBB: CRWG) appears to be the most undervalued play in the sector, with solid revenue growth and a low price-book ratio. Currently, investors can purchase the stock for slightly less than the value of its assets minus its liabilities, and benefit from strong revenue growth that could translate to profitability on the bottom line over the near-term.

Aside from these statistics, the company has also seen a number of other qualitative factors that could make it a good buy. The firm’s CEO, Sanjay Sabnani, has been a consistent buyer of the stock and has even retired a significant number of shares. In fact, the insider’s cost basis for acquiring these shares is significantly higher than the current share price.

From a growth prospective, CrowdGather also has a lot more blue-sky potential. It’s far easier for a $16.88 million company to double its size and deliver outsized investor returns than it is for a $5.1 billion or $92.8 billion company to do the same. As a result, investors may find that this stock has greater upside potential than many other more popular players.


Popular Forums Owned by CrowdGather Inc.

High Multiples Could Benefit Smaller Stocks

Many companies in the social media space trade with lofty price-earnings multiples, such as Facebook’s (NASDAQ: FB) 108.4x and LinkedIn’s (NYSE: LNKD) 604.3x multiples. While these are higher than other tech companies, such as Google’s (NASDAQ: GOOG) 18.44x or Apple’s (NASDAQ: AAPL) 13.84x multiples, they are very positive signs for smaller companies that are approaching profitability.

For instance, CrowdGather is rapidly narrowing its net loss, and with high price-earnings multiples throughout the industry, the company could see its share price significantly higher if it were valued along the lines of the other Internet company multiples once it achieves profitability. And this could mean outsized returns for shareholders.

These multiples are largely driven by recent mergers and acquisitions in the space, such as Zynga’s buyout of the private company OMGPOP at a lofty price or Facebook’s purchase of Instagram for around $1 billion. Meanwhile, venture capital investments at similarly high multiples are also driving valuations higher throughout the sector.

Investing in the Social Media Sector

Many social media companies have experienced strong run-ups in valuation thanks to new IPOs, venture capital investments and M&A. However, some investors believe that these valuations may eventually prove too high to justify, especially in an industry that constantly changes. As a result, investors may be better of seeking undervalued plays with similar growth prospects.

CrowdGather Inc. (OTCBB: CRWG) is an owner and operator of a network of online communities that generate hundreds of millions of page views each month. With a market capitalization of just over $16 million, investors can purchase this stock for less than the value of its net assets and still benefit from the growth in the social media space.

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Overhyped Social Media Stocks Highlight Value in CrowdGather (OTCBB: CRWG)

Palm Beach, FL 5/17/12 (StreetBeat) – There is a lot of activity surrounding social media stocks with the Initial Public Offering of Facebook (NASDAQ: FB) coming on Friday. The new listing, which could see the company valued at as much as $100 billion, has investors and analysts already concerned that the world’s largest social network could be overvalued from the get-go. Rather than try to ride that wave, savvy investors are looking to other social media and networking-related stocks that may offer a larger upside potential. An assessment of book value to price and shareholder equity/deficit of companies such as LinkedIn Corporation (NASDAQ: LNKD); IZEA, Inc. (OTCQB: IZEA); and CrowdGather Inc. (OTCBB: CRWG) reveals some stark differences and showcases where true value propositions may be found.

LinkedIn has become a household name and posted overall gains since its IPO in May of 2011. As the world’s largest professional network, revenues more than doubled in the first quarter; jumping net income to $5 million from $2.1 million in the year prior. The challenge is that LNKD already holds a huge market capitalization of $11.6 billion and is at the top-end of its price range since it IPO’d. Even though it has raised guidance and boosted revenue, many analysts still feel that the market cap is heavily weighted on where the company can be in 5 years or more, which has mushroomed the market cap to a position that the company may not be able to meet expectations for growth. The company has built a balance sheet that is nothing shy of impressive, though, with $873 million in assets and only $248 million in liabilities; giving them a book value of $624 million and a book value per share of $6.05. Total stockholder equity rings-in at $951 million. Shares of LinkedIn are trading at $111.95 each.

IZEA has certainly been making waves across the web as well recently. The company is focused on social media sponsorships (SMS), a growing segment within social media, where a company compensates a social media publisher to share sponsored content within their social network. It’s a broadening space, but the company seems undercapitalized at present. IZEA has amassed a net deficit of $18.1 million since inception and only has $225,000 in cash after a nearly $4 million loss in 2011. Book value per share is (-0.047), yet shares are trading at $0.37 giving IZEA a market cap of $14.31 million. IZEA has experienced momentum in its share price based upon provided guidance for significant growth in revenues for this coming fiscal year, but it does not have an appealing balance sheet.

CrowdGather Inc., a leading network of forum communities on the Internet and developer of innovative advertising technologies to monetize them, has been unnoticed by investors and may offer substantial upside, as justified by their finances and business model. The structure of being focused on forums may give CrowdGather a competitive position amongst Internet companies that are engaged in monetizing traffic from advertisements placed alongside user generated content like Twitter, Yelp, or Facebook. Forums, one of the original social media platforms, attract a different type of crowd that somewhat eschews places like those where posts are extremely short or social in nature. Forum users are focused on long form, in-depth discussions that serve as a valuable resource for people seeking knowledge about specific topics. While not as widely publicized, the industry is thriving with users. CrowdGather not only owns highly trafficked forums, but it also provides several easy-to-use platforms for members to build their own forum for their topic of choice. As per Google Analytics, during the third quarter ended January 31, 2012, CrowdGather’s traffic averaged 231 million monthly page views and 16.8 million monthly unique visitors across all properties.

While other Internet microcaps are burning through money like it is free, CrowdGather has a very high gross margin business that should make it easier for them to deliver bottom line results when revenues exceed expenses. In the most recent quarter, the company realized revenues of $549,750 for the three months ended January 31, 2012, as compared to revenues of $380,212 for the three months ended January 31, 2011. The absolutely stunning part: cost of revenue for the three months ended January 31, 2012 was $4,793, as compared to cost of revenue of $44,186 for the three months ended January 31, 2011. CrowdGather delivered a gross profit margin of almost 99% in their last quarterly results filing. If the company is able to maintain margins anywhere close to this as they scale, shareholders could see significant net income and EPS from the company in the future.

Insiders are not missing the big picture with CrowdGather as evident in the buying activity last year at higher prices than current levels. While other Internet micro caps are diluting to raise funds, CrowdGather is sitting on cash. Further, beta testing for its ad server is nearly complete with a launch planned for this fall, which could increase revenue momentum over the long term as the company will be able to more effectively target all of their hosted forums for advertisers seeking a specific vertical or demographic.

At the end of the latest quarter, CrowdGather had roughly $2.7 million in cash and $16.8 million in net shareholder equity. There are very, very few companies that post positive shareholder equity in the Over The Counter markets. Total liabilities only equal $83,000; giving CrowdGather a book value of 29 cents per share. Shares closed on Tuesday, May 15, 2012 at 28 cents each which equals a market cap of $16.3 million.

Breaking it down:

Taking the facts and ignoring the hype often results in a clearer picture of value. Pitting CrowdGather toe-to-toe with any of its micro cap Internet or Social Media peers shows a small, but sound business strategy with solid margins and wise financial sense. It also shows that the company is only trading at the value of its cash and assets without any real regard for its growth prospects. The numbers don’t lie.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

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Crowdgather (CRWG) Stock Chart Analysis Video

The CRWG chart moved through resistance at 12.5 cents yesterday. Volume was below average, but the MACD and RSI are showing strength to trend and momentum in the chart. Importantly, there is a strong positive divergence between the MACD and price per share which will have technical traders watching for a volume surge and a break of the zero line for the MACD.

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CrowdGather (OTC:CRWG) Raises $7.85M from PIPE

One of the networks of forum communities on the Internet, CrowdGather (OTC:CRWG), yesterday announced that it has closed a private placement transaction previously announced on February 28, 2011. Under the terms of the transaction CrowdGather has sold an aggregate of approximately 7,136,364 million shares of its common stock at $1.10 per share and warrants to purchase up to approximately 5,352,273 million additional shares of its common stock for total proceeds of $7.85 million. As I write, shares of CrowdGather are down slightly at $1.40 per share on moderate volume of just over 80,000 shares. The company has a market cap of $65 million and a 52-week range between $0.80 and $1.90 per share.

The warrants to purchase additional shares will be exercisable at an exercise price of $1.50 per share and are exercisable for 5 years commencing six months and one day following their issue date. CrowdGather has agreed to file a registration statement with the Securities and Exchange Commission to permit the resale of the shares and warrant shares.

Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc. (NASDAQ:RODM) acted as the exclusive placement agent for the transaction.

CrowdGather provides an interactive and informational social network for members, a management and revenue-sharing resource for third-party forum owners, and a largely untapped advertising network for marketers worldwide.

For more information, please visit: www.crowdgather.com.

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CrowdGather (OTC:CRWG) Gaining Recognition

One of the leading networks of forum communities on the Internet, CrowdGather (OTC:CRWG) announced that it has recently been added to the Internet Stock Review “Watch List” for 2011. Shares of CrowdGather closed up 1 cents at $1.49 per share on volume of more than 171,000 shares.

"We are pleased to have been recognized as one of the Internet Stock Review's 'Top Internet Stocks to Watch' for Year 2011," said Sanjay Sabnani, CrowdGather’s CEO.

"We're keeping CrowdGather on our Watch List as it continues to gather steam and move further along with its goal of partnering, aggregating and consolidating independently owned Internet Forum and Internet Message Board websites from across the Internet, to its current base of over 65,000 owned and hosted forum communities. Last month CrowdGather's network served up approximately 90 million page views, just two short years after going public in 2008," stated Roland Rick Perry, editor of the Internet Stock Review.

With its growing portfolio of special interest forums and enthusiast message board communities, CrowdGather (www.crowdgather.com) has created a centralized network to benefit forum members, forum owners and forum advertisers. CrowdGather provides a highly interactive and informational social network for members, a management and revenue-sharing resource for third-party forum owners, and a largely untapped advertising network for marketers worldwide.

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CrowdGather (OTC:CRWG) is the Google of Forums

Shares of CrowdGather (OTC:CRWG) are very active today already more than doubling its average daily volume with a nice 5 percent gain. In early trading, shares of CrowdGather were up 5 cents at $1.05 per share on volume of more than 235,000 shares compared to its average daily volume of only 101,000 shares. CrowdGather has a market cap of $48 million and a 52-week range between $0.80 and $2.33 per share.

CrowdGather is one of the leading networks of community forums, reaching millions of passionate users each month. The heart of CrowdGather is the richness of content created by our highly engaged audience of technology, gaming and lifestyle enthusiasts.

The CrowdGather Network comprises thousands of online communities, now serving over 80 million page views per month and 4.5 million unique monthly visitors. The Company provides a highly interactive and informational social network for members, a management and revenue-sharing resource for third-party forum owners, and a largely untapped advertising network for marketers worldwide.

Since 2008, CrowdGather has grown from 9 million page views a month to over 80 million. The CrowdGather Network is made up of thousands of online communities for technology professionals, gamers, and lifestyle enthusiasts.

For more information visit the Company’s Web site: http://www.crowdgather.com/

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