By Tom Winnifrith, The Sheriff of AIM | Tuesday 4 July 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 am grateful to the great Waseem Shakoor who has made me realise just how much of a darling of the Bulletin Boards MySquar (MYSQ) has become. The posts are legion, the idiotic hatred of myself ( he always gets it wrong) of Waseem, the casual homophobia is all there. That makes me more convinced that ever that with its crackers valuation and misleading statements this is set to crater. Earlier I addressed that matter of insane valuations and casual use of language to hide the truth but there is a secondary, and more devastating issue.
Read today's RNS carefully:
MySQUAR, the Myanmar-language social media, entertainment and payments platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, is excited to announce that the business has reached a very significant milestone of achieving run rate operating breakeven.
The Company continues to make significant progress in achieving its monetisation targets. During the last few days of June 2017, the average daily revenue reached approximately USD 8,500, an increase of 21.4% from an average of USD 7,000 in early June 2017 and an increase of 54.5% from an average of c. USD 5,500 for the whole of May 2017 (the average daily revenue for all of June was c. USD 7,200, a 30.9% increase on May 2017).
The majority of current daily revenue continues to be generated from gaming and mobile payment application development services. The growth in average daily revenue exhibited between May and June was principally as a result of growth in gaming revenue and in app premium content.
The underline is mine. The clear import is that of that $8500 a day number which achieves some sort of breakeven, only a minority portion comes from gaming revenue and app content. You would have to guess that perhaps as little as $2,500 - maybe five hundred bucks more maybe 500 bucks less comes from real independent 3rd party sales. The rest comes from software development services and to date all, yes 100%, of these booked revenues have been from parties related in one way or another to Rising Dragon Singapore Pte Ltd whose Chairman and CEO, Erik Shaer is also CEO of MySquar.
The Bulletin Board Morons insist that this is not relevant or an issue. And they may just be right. Sometimes such arrangements are legit and are not a sign of anything untoward. But, almost 27 years market experience (my anniversary is in less than two months time) tells me that almost invariably this sort of thing is the most almighty red flag.
Quite clearly, without these related party deals in a non core business MySquar would be nowhere near breakeven however it wishes to define it. Loose language, cash burn, a crackers valuation and this most almighty red flag must suggest to any sane individual that the downside risk massively outweighs the upside potential. And that is why the shares are a sell.
But of course, I always get it wrong and the Bulletin Board Morons always know better than myself or that plonker Waseem don't they?
After all the Nomad has signed off on everything and Nomad's would never sign off on anything that was not gospel here on the AIM casino would they?
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