By Tom Winnifrith | Friday 8 April 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Since March 3 in 25 working days, my old pal Jim Mellon's AIM casino listed FastForward Innovations (FFWD) has released 9 ramptastic good news RNS statements - one every three days. Since 31 March it has released 6 statements - that is to say almost one a day. It is almost as if Jim has been taking lessons from the master, Mr David Lenigas, on the art of the blizzard of ramptastic releases. Yet another placing with your tea vicar? It is also the nature of the releases that concerns me.
We have had two on investee company Schoold which we are told in one release "has successfully launched its mobile app and has achieved 500,000 downloads in its first month since launch."
Frigging hell that sounds great think of all the revenues from that. So if one reads down we then discover "Schoold has been funded by FastForward and other strategic investors to ensure the rapid adoption that Schoold's app is experiencing ...since the release of its mobile app just 30 days ago, college-bound students and parents have downloaded its namesake app more than 500,000 times ... Launched in late February in the Google Play Store, Schoold vaulted to the number one top free college search app. The following week, Schoold released its iOS app, which also climbed quickly to hover as a top-15 free app in the App Store. The Schoold app has an average rating of more than 4.5 stars and is available for free download in the App Store and Google Play."
Aha... so revenues per download wiould be nil then. So working through the business model revenues are nil and costs are funded by investors. Fucking excellent. Model out the free cashflow on that one. This sort of jeux san revenues business model seems to be favoured by FastForward in its investment portfolio.
Of course this is new media so the mantra is land grab, get the apps downloaded as much as possible and in due course revenues from adverts etc will follow. For app downloads in 2016 read "eyeballs" in 2000 in the dotcom bubble. It is the same thought process.
The fresh faced young men and women tell us that it will be different this time. Having lived and worked through dotcom boom and bust at the centre of the madness in Glasshouse Street, I am rather more sceptical that the younger generation.
Eventually funding for companies like Schoold runs out (indeed there are signs of ennui already for loss making app plays) at which point companies can protest as much as they want that the jam really will arrive tomorrow, it makes no odds. Investors just fail to stump up for another funding round and at that point having no revenues is a problem. That I saw first hand bacjk in 2001-2.
One can only speculate as to why FastForard is so aggressively on the ramp. It could have just bundled all its silly announcements into one.
But at 16.25p the shares trade at a big premium to NAV and I don't believe that that its NAV will do anything other than crash when the new media bubble goes pop.
The shares are a sell.
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