LiNiu Technology Group (NASDAQ:LINU): A First Look

Here's a new one. LiNiu Technology Group (NASDAQ:LINU) just entered our radar with a more than 300% run this week alone. The company currently trades for $0.72 a piece and a market capitalization just shy of $90 million. It's a Chinese technology stock that's running on a recent market update.We know these sorts of runners are the ones our readers love. We know they come to us to get our take on what's likely to happen next. With this one, however, there's practically nothing to go on as far as forming a forward thesis is concerned. Practically nothing, but not nothing at all. Before anyone else sits up and takes notice, we've gathered all of the information available and taped it together in an attempt to try and figure out whether this one's likely to advance further near term.Here's our take.The story here is that this one used to be a gaming company in Macau and Australia. LiNiu owned a raft of subsidiaries and controlled VIP gaming rooms in casinos in the just-mentioned countries – two in Australia and five in Macau. These rooms were centered around baccarat and structured to allow LiNiu to receive a commission type payment from the casinos in which they were located, with said commission based on what's called Rolling Chip Turnover (a metric used by casinos to measure the aggregate amount of players’ bets and overall volume of VIP gaming room business transacted).This isn’t overly relevant anymore, as the company now only has one of these rooms still open and that's bringing in around $10K quarterly revenues. So why are we discussing it? Well, Rolling Chip Turnover across the portfolio of rooms, which is the key metric in this sort of operation, came in at $6.4 billion for 2015. During 2016, this fell to $2.4 billion.This degree of reduction, and we'll use the company's quote here, "did not warrant the operation of any VIP gaming rooms".Basically, revenues dried up (there was also a spate of legal issues but for all intents and purposes these are resolved, at least from a forward impact perspective) and the company decided to pivot.So it's now completed the pivot through a 51% acquisition of a tech company called Jia-Heng Industrial Ltd., which is the holding company of Guangzhou LiNiu Network Technology. For reference, before this acquisition, the company was called Iao Kun Group. The name change reflects the pivot.Basically, then, we've got a reverse merger as a way to pick up a NASDAQ listing.So the forward value is based on LiNiu's technology and right now that's a website designed as a commerce platform for the Chinese agricultural market. We're not talking futures here, these are farmers and businesses/individuals buying apples, bushels of corn, seeds, and even livestock, from one another across an Amazon type marketplace. LiNiu takes a commission on sales, again, just as does Amazon.com, Inc. (NASDAQ:AMZN), and that's how it generates revenues from the platform.We encourage readers to take a look at the site here. The translate function in Chrome comes in handy for non-Cantonese speakers.So the question now becomes, what's the transaction volume like through the platform?The answer, not too bad. It launched in April, so it's been live for 30 days or a little more. Since its launch, the site has seen traffic of over 50,000 visitors on a daily basis, with more than 130,000 users, more than 20,000 suppliers registered and over 80,000 products currently sold through the platform.That's a pretty incredible launch. These numbers are unaudited, so it's tough to say with any certainty whether they are valid (not that we're accusing management of anything untoward here, but in this space skepticism pays) and there's no financial data to back up the traffic count (the recent financials covered to end March, pre-launch).With that said, if the numbers are valid, there's a good chance this company is bringing in some decent revenue on its platform operations. Assuming this, and taking it against a backdrop of the last month's user expansion figures, there's also a good chance that by the time the next financials hit press, decent revenues will have expanded to very good revenues.If this is the case, then this one's got plenty more run room in it as the pivot completes and the new strategy takes form.Again, view it with a healthy dose of skepticism right now. We're basing our assumptions on company statements and unaudited figures from a Chinese pivot/reverse merger type stock. Skepticism doesn’t always need to prohibit an exposure, however, and as a punt play, this one's well worth a look.We will be updating our subscribers as soon as we know more. For the latest updates on LINU, sign up below!Disclosure: We have no position in LINU and have not been compensated for this article.