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EVR Holdings – Take a bow, Anthony Matchett, the almost perfect podcast ramp

By Cynical Bear | Friday 6 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.


I’m struggling to take my eyes off the ‘flavour of the month’ stock, EVR Holdings (EVRH), at the moment as it continues its irresistible rise upwards and I have to tip my hat to a great performance by the CEO, Anthony Matchett, on a podcast on Wednesday and all CEO’s in the ramp phase should take note.

My most recent piece on EVR is HERE summarising the situation but the share price has jumped significantly since then - and closed yesterday at 8.35p valuing the business on a fully diluted enterprise value of around £90 million.

The recent rise was driven by an almost faultless display by the CEO on Justin Waite’s podcast. Justin was asking questions from investors and I wanted to touch on those that I thought were most instructive.

The Melody VR app launched in beta immediately before Christmas so naturally one of the obvious questions was when the full launch would take place.

Anthony evaded this brilliantly commenting on the fact that it would only make sense to launch once there was sufficient coverage of VR headset usage.

Genius.

As I’ve mentioned before, the one issue with these hope/hype type stocks is that it is almost always better to travel in hope than to arrive as sentiment can drive the share price ever upwards but the reality of the business rarely lives up to expectations. What better excuse to never actually launch the bleeding thing than the market not being ready for it. It can’t fail if it never launches can it?

Secondly, he was asked if the share price was looking a bit over-valued as it had gone from sub-1p to 6.5p in short order.

Anthony’s response was very clear and definitive. No, he thought it was undervalued and quickly threw out the $1 billion valued US comparator, NextVR.

Absolute catnip for the private investor; this could be a billion dollars – amazing!

Let’s ignore for one moment that NextVR is fully funded having raised $80 million recently and is actually showing NBA and NFL games on virtual reality headsets in the US. For some reason, NextVR didn’t feel the need to hold back the launch pending full take-up by consumers of VR headsets. I note it also dabbles in the music space.

The one slight glitch was in the one area where CEO’s often come a bit unstuck on these unregulated interviews - and it relates to funding. He was asked about cash burn and whereas a West Coast VC-backed firm would talk about investing for the future; it being a land-grab and raising money being a sign of strength, it is difficult for an AIM CEO to use the same language as placings are seen so negatively.

Anthony talked about having sufficient cash for 12-18 months on current cash burn but this ignores marketing and further investment and he seemed overly cautious to me. Personally, as an investor, I wouldn’t want to see MelodyVR eking out its cash over the next 12 months or so and would have preferred to hear a bit more of the West Coast language, talking about the excitement of the space, its ambitious plans and being happy to raise money as and when needed to become the market leader in the space.

Nevertheless, the almost faultless podcast performance did the trick, the share price closed above 7p on Wednesday and then rose a further 17% yesterday closing at 8.35p.  

For the avoidance of doubt, I’m not calling the top…….yet. Just keep on moving that stop loss up and enjoy the ride!


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