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Ominto Inc (NASDAQ:OMNT) Is A Small Cap Runner

Ominto Inc (NASDAQ:OMNT) Is A Small Cap Runner
Written by
Jarrod Wesson
Published on
October 1, 2017
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Did you see what happened with Ominto Inc (NASDAQ:OMNT)?In less than 15 days, the share price went from $3.0 to touch the level of $6.0 delivering 100% returns.But, that's not all. The volume, which is one of the most clear indicators of the market interest, increased astonishingly as well. More than 0.5 million shares were exchanged some days. Have a look at it: 1 month chart for OMNT 1 month chart for OMNTIf you remember well, we noted in our previous article that the company commenced to be assessed in Wall Street after the CEO acquired 185,000 shares in August. Additionally, the company reacted by changing its auditor after releasing that it was unable to deliver its next quarterly release.We believe that this news was good for the stock price. The upward trend in the share price could be justified. Let's revisit the company's business model for those who are getting to know the company now.Ominto has its main office in Boca Raton, Florida. The main business is the website DubLi.com, which provides Cashback to customers on purchases made through the site. We found that the best way to show how the website's business model is noting the following video:[embed]https://s3.amazonaws.com/assets.ominto.com/videos-how-it-works/DubLi-CB-EN.mp4[/embed]SourceAdditionally, we could see more details about the way customers can save more money: Deals offered by dubli.comThe options highlighted on the company's website include coupons, product deals, free shipping, and cash back. Furthermore, the company offers different plans, from basic, in which you get cash backs, to VIP, in which you pay $99 a year to receive "an unlimited, extra 2% cash back, plus get exclusive deals as well as faster payout (45 days)." In our opinion, the business model looks to be a win-win for all partiesLet's go now to the most interesting thing - what is causing the share price movements?The following events could have caused the stock price to jump. We have seen some of them in the past and the share price reacted in a similar way:

  • There are insiders buying: We have seen insiders purchasing large stakes in the past, thus the same could be happening now. The most remarkable was the share purchases of the CEO, which were disclosed on August 18, 2017. That trade excited the market. But, other directors also bought stock in the past, like this one disclosed on June 20, 2017, or this other transaction.
  • Social media is moving the market: Sometimes, it happens that the activity in chats, forums and websites increases the market activity in a particular stock. It could be the case here as well, as the article is being heavily discussed in Seeking Alpha, and the iHub forum.

On top of it, the company's float is limited. The following is the information given by the OTC Markets about the share structure. Have a look at it, since the amount of shares outstanding is always key in the small cap universe:Market Value$104,997,404a/o Sep 28, 2017Authorized Shares700,000,000a/o Mar 31, 2016Outstanding Shares18,040,791a/o May 12, 2017-RestrictedNot Available-UnrestrictedNot AvailableHeld at DTCNot AvailableFloatNot AvailablePar Value0.001SourceThe float was not given be the website, but we checked the company materials and found that there are large stakes owned by insiders and some other market participants.What does it mean?It means that the float, the amount of shares outstanding owned by the public, is reduced. This explains the large share price swings that happened on September 28, and 29, 2017. Conclusion Currently trading with a market cap of $75 million, OMNT is an exciting story among small caps. With a book value per share of $0.32 and $0.64 in cash per share, we believe that the market is discounting large revenue growth.We agree with this vision, given that the last quarterly revenue growth shown by the company (year-on-year) is 96.70%. Hence, we will need to be ready to assess the next quarterly reports, which could make the share price increase even more if the positive growth continues. To sum up, follow this name closely!Be sure to check out our coverage on OMNT!We will be updating our subscribers as soon as we know more. For the latest updates on OMNT, sign up below!Image courtesy of Janne Moren via FlickrDisclosure: We have no position in OMNT and have not been compensated for this article.

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