Can Justin Bieber hit his numbers? Who doubts that out of forty million plus avid followers Justin Bieber won't influence 0.5% (200,000) of them to subscribe to a BMPI spend smart card? At $42/year it costs less for a spend smart card than to fill up a tank of gas. Add in the ability to monitor your kids spending, shut off the card at any time and teach them how to use a bank card with a limited balance, the spend smart card may become a must have item for both teens and parents.
Now, assuming the Bieb's can attract 200,000 new subscribers, (0.5% of his twitter fan base) that's going to equate to more than roughly $15MIL in revenues for BMPI (including the addn'l fees for loading). 200,000 is a very conservative # for Bieber. Consider that marketing professionals boast of a 1% success rate in direct mailer campaigns (junk mail). Justin Bieber, through the use of BMPI specific music videos and twitter/facebook campaigns, must accomplish half the success of a direct junk mailer campaign to produce $15MIL in revenue for BMPI. If BMPI keeps operating costs to $3MIL/yr, that's $12MIL in earnings. Assuming now a very conservative PE ratio of 10, BMPI is left with a $120MIL mkt cap and a pps just North of $1.05. Much higher valuations come into play when trendsetting kicks in and "friends of loyal Bieber fans" also must have a "spend smart card" in order to keep up with the middle school/high school status quo.
With the likes of Isaac Blech and Sol Barer (each founders and financiers of companies now valued between $28-35 BILLION) leading the board of directors and advisory councils for BillMyParents, one can't help be somewhat optimistic about the prospects for this penny stock. Sure, the income statement and balance sheet aren't exactly appealing to the eye. Name one penny stock that does. Companies like this start with a conception of an unfulfilled niche in the marketplace. The companies that fail lack a compelling business model and sufficient capital to get the word on the street. BMPI has ironed out the business model, established the infrastructure, and signed a MEGA POP STAR appealing directly to the target audience to get the word on the street.
As far as timing goes, we sit at a point where the stock has bottomed. Non-believers looking at nothing more than the financial statements have no clue what the executives involved with this company have been able to accomplish in the past. These directors have pockets deep enough to finance a company as small as BMPI for a perpetuity, all they need is a little proof that Bieber will bring in the subscribers. Believe me these old wealthy magnates probably couldn't name one Bieber song, but they do know how numbers work, and they know how to produce a successful multi-billion dollar company from the ground up. If Bieber's music videos promoting the card don't make an impact, I'm sure they'll chalk this one off as a loss and move on to the next. However, if Bieber can deliver more than half the success of a randomized junk mailer campaign, I believe that any current BMPI shareholder can look to do very well with this investment.
Sentiment: Strong Buy
Moose, you are right, writing that post in haste I misstated the total operating costs. I looked only at estimated annual processing expenses for 2013 and left out selling expenses, personnel expenses and general expenses. My screw up, good thing this is only a message board and not SA!!
Something to consider when looking at their overall personnel expenses, they incurred over $5mil in stock based compensation costs this year due to option and warrant grants made previously to execs...this should not be considered an ongoing expense. In my brief, simple valuation I also left out the current revenues of approx $1MIL and used a very low PE for a penny stock (assuming they become profitable). The pps valuation is still conservative if you can buy the story that directors and execs in place will have the ability to capitalize on Biebers influence over their target market. If you're looking to dump this stock, I'm sure there will be another good sell opportunity when a report comes out later this year showing a big spike in new subscriptions as a direct result of Bieber's promotions.
Bieber gets a % for each new customer per year or is it every year continuing, of course we don't know the number but is there any way to make a reasonable estimate? .50 $1 $1.5?. thoughts? the stock options he has arent small, w the warrants hopefully the per new subscriber cut in lower than .50... hopefully.
how did you get $15M? 200K*47.4 (from 3.95*12)= $9.48M A parent that uses ACH to fund the card is charged nothing. I could for instance use my TDAM account to send money for free to a SpendSmart card without incurring a fee.