Well, here's an interesting stock that I've followed for years, but still can't claim to understand very well. If anyone has any opinions on it, I'd love to read them.
GRVY - Korean company which makes online games, trades as an ADR on Nasdaq. It releases very little information other than SEC filings and quarterly financial announcements.
I started paying attention to them about 8 years ago. At that time the appeal was that it has $4.50 cash per share with no debt, and the share price was about $3.50. They had made all that case in earlier years creating and running successful multi-player online game named Ragnarok. The business had fallen off to where they were losing 1 or 2 million per year, and sales were (I think) about $10m per quarter.
Then in one of the quarterly releases, sales jumped 80% sequentially because......people started playing the newer version of their game again. The share price jumped from $4 to $11 in a day or two, and GRVY was no longer a cash play, it was a ..... I don't know, maybe a return to growth play? They still had $4 cash per share, and the net profits on the new revenue level were about $6m per year, so at $11 I think the PS was maybe 2x or 3x per year.
Then about a year later in one of the quarters revenues rocketed up again (can't remember the % amount) and GRVY ran up to $30 or so. That was with revenues around $20m and net income $3m per quarter.
Then the shares (with quarterly reports around that level, $20m sales, $2.5m net income) rocketed up to $90, and now back down to $70.
They just released the preliminary Q4 2017 numbers, and revenues have jumped sequentially by 185% to $57m! Net profit is stuck at $3m per quarter, with no explanation as to how revenues could go from $21m to $57m and profit flat (it actually declined a bit from Q3).
So....if Q4 2017 revenues are sustainable (who knows?0 GRVY is on track to have $250m in revenues, and who knows what in net income over four quarters. Cash is about $45m total, no debt, and the market cap is $245m, so 1x sales, less than 1x sales if you deduct cash from the share price.
They don't announce much, but they do announce future product release plans each quarter. I don't have any way to evaluate whether their product roadmap is strong or weak, but the recent trends of the past few years (revenues from $10m per Q up to $57m per Q) are amazing. Will it continue? Who knows?
GRVY is 57% owned by a Japanese gaming conglomerate (GUO I think is their name).
Whattaya think? It's hard to get much info on them and they don't seem to market to the investment community. If anyone has any thoughts on this stock I'd like to hear.
It's especially interesting because they just announced the phenomenal revenue jump of $21m to $57 from Q3 to Q4 last year yesterday before the open. On that good news, the share price ...... declined?
Maybe it's time to buy some more? |
