CrowdGather Inc. (OTCBB: CRWG), a leading developer and operator of online forum based communities that combine social media and content to compete alongside companies ranging from LinkedIn Corporation (NASDAQ: LNKD) to Jive Software (NASDAQ: JIVE), could see increased investor recognition and demand after Facebook’s much anticipated initial public offering.
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In fact, Facebook’s anticipated valuation of more than $100 billion could prove to be a very positive development for the Internet sector’s valuations on traffic and unique visitors. With revenues of just $3.7 billion and net income of $1 billion, this equates to a lofty price-earnings multiple of around 100x, if the company IPO’s as expected over the coming quarters.
Investors’ Strong Appetite for Facebook
Most estimates of Facebook’s valuation are drawn from private securities markets, such as SharesPost. In a recent auction, the company’s stock was valued at about $94 billion ahead of its IPO in the public markets, according to Bloomberg <http://www.bloomberg.com/news/2012-02-03/facebook-is-valued-at-94-billion-in-auction-of-shares-on-private-market.html> . And with plans to raise $5 billion in capital, Facebook’s IPO will become the largest ever for an Internet company.
The $94 to $100 billion valuation would put it ahead of other Internet companies like Google Inc. when it went public and well ahead of many smaller companies in the space, like CrowdGather Inc. However, some analysts believe that the higher valuation could actually help improve the valuation of other Internet stocks on a relative basis.
Looking at Smaller Undervalued Players
Investors looking for an opportunity to ride the Facebook “effect” may want to consider some of the industry’s smaller, lesser known players. After all, a quick glance at other recent IPOs over the past year have shown some lackluster performance. For instance, Pandora is trading down more than 20% from its IPO price, while LinkedIn is trading down some 15% from its IPO price.
CrowdGather is one such “under the radar” microcap stock trading just above book value with insider buying close to and higher than current prices. With a market capitalization of just $23.2 million, the company is relatively unknown to many larger investors, but may offer small investors a great opportunity. And recently, the stock quietly doubled from 20 to 40 cents per share on higher-than-average volume.
A Solid Investment Opportunity
CrowdGather’s network generates between 220 and 225 million monthly pageviews and 16 to 18 million monthly unique visitors, according to recent 10-Q filings. Meanwhile, its 81 properties and 599 domain names cover a wide variety of market verticals, which makes it a perfect tool for marketers looking to reach targeted audiences.
Online forums are also a unique place where people discuss specific products, services oreven brands. For instance, the company’s ZuneBoards.com focuses on Microsoft’s Zune MP3 player and related accessories. As a result, this audience is widely seen to be far more likely to make recommendations and post reviews in addition to simply purchasing products.
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