CrowdGather (CRWG) is an Internet company that specializes in the development and hosting of forum-based websites. The firm endeavors to monetize a network of online forums and message boards. Forums remain a much undervalued part of the Internet pie with $4.8 billion, and CrowdGather is the only public company dedicated to monetizing this area.
More page results equate to more revenue, as page views have jumped from 12 million to 80 million through several mergers. CRWG is now in acquisition mode. We see value in the shares and initiate our Outperform rating on CRWG.
Forums are Unique
People are there precisely to discuss products or services, even specific brands. They pose questions to the community, ask for guidance or simply look to connect with people who share their passions. The audience is primed and ready for — even actively seeking — product-specific messages.
Forums remain a much undervalued piece of the Internet advertising sales puzzle partly because advertisers in the past have been fearful of hate speech or other noise emanating from a few negative posts. CrowdGather reduces this risk by bringing enthusiasts together in narrowed-down niche markets in the Gaming and Entertainment, Technology, and Leisure and Lifestyle areas.
For instance, members of Ironmass.com, a body building forum, are more likely to talk about training, nutrition and equipment than engage in hate speech or other noise. CrowdGather then uses Google Ad Sense to sell advertising to members of the forum.
With the acquisition of Adisn and Lefora the firm essentially leveraged $6.5 million in equity in exchange for an increase in revenues and page views. That stake will not be dilutive given the cancellation of 5 million shares of CEO Sanjay Sabnani’s beneficial holdings in CrowdGather.
Investors who buy the stock today are essentially getting a firm that is debt-free, growing page views at 750% (12 million to 90 million), revenues at over 400%, and has not suffered dilution.
Forum discussion topics reveal that consumers are in the middle of the research process and are seeking more information to help them make purchase decisions, and CrowdGather remains the only public company dedicated to monetizing this area. Forum contributors are simply more active on and off-line. We see value in the shares and set our price target at $2.00.