By Cynical Bear | Sunday 1 January 2017
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.
With CES in Las Vegas starting next week, there must be a strong feeling of déjà vu for CloudTag (CTAG) shareholders; however, with the company valuation shooting through the roof during the year, it felt appropriate to assess progress from the 2016 CES show through to the 2017 event to ascertain whether such a valuation was warranted.
First, it is worth refreshing one’s memory about exactly where CloudTag was this time last year. On 6 January 2016, it announced its “First Product Launch” and it is worth a re-read:
“CloudTag, the company that brings personal monitoring to the health, wellbeing and fitness markets, is pleased to announce the launch of its new wearable fitness tracker, the CloudTag Track, today at the Consumer Electronics Show (CES) in Las Vegas. The product, founded on ten years of medical research, targets consumers who want a cost effective and efficient way of being in control of achieving their own weight loss and fitness goals, whilst also receiving guidance to help keep them on track to do so.
Key selling points of the Cloudtag Track include:
- Personalisation - a bespoke, personalised fitness and nutritional system - the user sets a weight loss and fitness goal and the CloudTag system personalises recommendations and guidance to that individual by continuously adapting as the user progresses, accurately matching their fitness needs and weight loss goals;
- Accuracy - Cloudtag Track uses proprietary advanced sensing technology to obtain clinical-grade ECG, which offers a highly accurate assessment of heart rate and energy expenditure. The directors believe it will be the most accurate energy expenditure model on the market;
- Dual mode - the device can be worn on your wrist for daily tracking and on the chest in the beatSMART clip during exercise for advanced monitoring; and
- 24 Hour device - wearing the device in the beatSMART clip for one hour gives a full charge for three to five days on the wrist, a truly 24/7 device.
While the product is being launched at CES and commercial discussions with retailers, distributors and brand partners are being finalised, the Company is ramping up production of the Cloudtag Track to deliver commercial quantities of the device in Q2 2016, subject to raising additional funding in due course.”
Interesting to note that it was ramping up production to deliver commercial quantities in Q2 2016 – hmmm, right!
Its share price was 2.13p and with 210 million shares in issue at that time that valued the business at around £4.5 million. Doesn’t sound too crazy for a business about to launch a product into a competitive space.
On the plus side, it had just signed up a Global Brand Ambassador, Jessie Pavelka, and had an app of sorts although with hindsight, there was no evidence that it actually connected to the product.
So to the present day, let’s try and work out what has actually changed from that RNS above. The sad reality is that it could release almost the exact same RNS next week. There are a couple of changes though.
The name of the product has changed and is now Onitor Track – brilliant, that must add a few million to the valuation!
The product itself looks like it has exactly the same features as it did a year ago other than the fact that there is no app available at the moment.
Quality! What has it been spending its money on? Is CloudTag really exhibiting at CES with no app??
Also, it appears that the Jessie Pavelka deal was just a one-year deal as I can’t see any sign of him on the new website – so no Global Brand Ambassador either.
And, most importantly, it has spent a year trying to find someone, anyone, just one goddamn person from anywhere in the globe to buy its product….and it failed, despite having distributors trying to find that one slightly insane individual in either the UK and the US.
On the face of it then, one would think that it would have a lower valuation than a year ago but with an incredible end-year closing share price of 9.25p and the fully diluted number of shares in issue approaching 500 million the fully diluted market capitalisation is approximately £45 million – a tenfold increase in valuation following a year of utter and absolute failure.
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