Ecoya have just released a news item, saying, unsurprisingly for a marketing company, just how fantastically they are doing. Or, since they’re a startup, how fantastically they’re losing money.
They’re predicting a loss of around 4 million, and, as predicted, have needed to raise more money. They state
“Taking into account current banking facilities, the company does not expect to have a requirement for further capital raising based on current forecasts.”
Which means that they had to go cap-in-hand to the bank and ask for money to pay the bills. But, they didn’t have to go out to the market to ask for more money to pay the bills. Yay. Smelly bankers instead of the unwashed masses like me. So no surprises there. The rest of the announcement is typical marketing/startup positivity, which is summarised as: “yay, we’re fabulous, blah, we *should* get more fabulous and wealthy if the planets align, yay us, ps, did I mention we’re awesome? pps., we’re kicking that Xero’s butt”
(actually that last PPS was mine… just kidding!).
The question then is, of course, should I buy shares? They’re predicting breakeven or profit in the next financial year, and revenues exceeding $20million, which would be an excellent result.
If thats true, Ecoya is a good speculative bet. See what I did there? I said “good”, which means “good”. And then “speculative” which means “good chance of losing all your money”. So Ecoya is a “good” “good chance of losing all your money”!
Hahahaha. Hilarious. I love this stock trading speak!
But the main thing is, Ecoya is a marketing company. They’re making SOS (same ol’ $#!t), but they seem to be marketing really well. And if you can market Vodka like the 42 below guys (which is essentially a pretty boring tasteless form of alcohol), they’re going to be like pigs in … er.. gooey smelly stuff marketing gooey smelly stuff.
So since I’m not a stock advisor, I have to make a call. And my call is, I think Ecoya will do well, assuming they still have facility to cover their expenses. They’re not super-expensive right now, you could buy the whole company for 30-40million.
But remember, you have a reasonable chance of losing the investment. Or doubling/tripling the investment. How much do you believe in their ability to market crap that everyone else is already making?