We got it right all along in the case of Social Reality Inc (NASDAQ:SRAX).
Back in October, when we first reviewed the company, its shares were trading at $2.49 which, by then, was quite a significant leap given that they had just come from $1.20 barely a month before then.
That doesn’t seem to have been the end of the rally.
The company has gone further upwards in prices and has closed the past week at $7.69 with the price expected to jump past the $8 mark in no time. This, coupled with the surge in traded volumes, which has seen them constantly be in excess of five million during this period has sent all the right signals to the market.
The latter and former can be seen in the chart below:
All the above postulate value creation within the company which is realized through a share price increase.
We therefore have decided that we will dive deeper into the company’s operations and fundamentals and review what the value drivers are and how recent events have been driving this value upwards.
A Look Into SRAX
Social Reality Inc was founded in March 2010 with their headquarters in Los Angeles, California.
They have since then branded themselves as an internet advertising company that provides digital media campaigns to agencies and companies. Moreover, they develop platforms that automate the digital advertising market. Through their machine-learning technologies, they have been able to ensure that their targeted marketing is effective, efficient and in line with their customers’ preferences.
They have also built and leveraged technologies that service the social media and real-time bidding, or RTB, markets and their revenue generation comes from a number of sources such as Steel Media, SRAX, GroupAd, SRAX DI, SRAX MD and SRAX Delta platforms.
The company launched its most recent value-addition product is SRAXfan.
The product which followed from the success of their healthcare vertical: SRAXmd is a marketing tool that targets sports fans. The tools enable brands and agencies to connect with sports fans at home, the stadium or out-of-home at gathering locations, such as bars, restaurants, and universities, during live sporting events.
This will be done through different avenues that include:
- StadiumTRAX that will deliver location-targeted ads to fans in stadiums and other sporting venues through their mobile devices.
- FanTRAX that will use behavior to establish the fan’s sport fantasies.
- SportsViewTRAX which reaches out-of-home sports viewers when they gather.
With the above, SRAX believes that they will have grown vertically through venturing into diverse fields. Furthermore, courtesy of the already successful venture into the medical field, the firm believes they have adequate understanding of the means with which to operate in a new field and the moves needed to maneuver through it to ensure you establish your space within it.
This was alluded to by their Chariman and CEO, Christopher Miglino who said:
“SRAXfan is all about highly-targeted advertising to the right fan, at the right time when emotions are high… Our efforts with SRAXmd have delivered a prescription for success that we are excited to bring to digital marketers interested in targeting sports fans.”
In line with the above success, the period also saw the company succeed in other fronts.
First, they announced that they had entered into a private placement deal that would enable them to raise over $5.18 million. The amount was meant to ensure that they paid off an obligation (warrant issue) they had made in October 2014 that was to be written off once settled. The remainder of the funds would be used for general corporate purposes.
Second, SRAX was ranked 123rd, top 25%, in Deloitte’s 500 Fastest Growing companies ranking courtesy of their 948% growth between 2013 and 2016. This speaks to the fact that the company has kept to their goal of delivering high returns to their shareholders.
Finally, their ICO product BIGtoken is currently trading up 131%. The product, which the company has been banking on since the launch, has ensured that the company’s share price has been on the rise until now. With such a number as stated above being in play, a lot of value creation seems to be taking place in SRAX.
With the above in mind, it would be safe to conclude that SRAX is on the rise and not about to stop short on this trajectory.
Despite a dip, the company seems to have sustained their revenue position with revenues of $5.5 million as compared to $5.9 million in 3Q2017 and 2Q2017 respectively. This is also a dip when compared to the $9.5 million which they made in the same quarter last year. However, the latter was courtesy of a large purchase from a non-recurring customer.
The situation was further aggravated by the loss of over $4 million made in the third quarter as compared to $737,000 made in the previous quarter as well as the over $11 million working capital deficit in the third quarter.
The above all seems to paint gloom for SRAX, however, there is some good news.
They made positive operating cash flows of about $86,000, the first time they have done this. This, coming from a period when their operating cash outflows stood at over $1.7 million is quite a leap for them and a good signal to the market.
We conclude by pointing out that SRAX has made a lot of moves to ensure that they remain at top of their game. With the share price trend as is coupled with the value creating activities they are engaged in, we expect that they will continue to move upwards going forward.
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Disclosure: We have no position in SRAX and have not been compensated for this article.