March 4, 2014 / There's little question that mobile has been growing in popularity around the world. Between 2012 and 2017, the mobile share of internet users around the world is expected to rise from 66.8% to 90.1%, according to eMarketer. Total mobile internet usage is highest in emerging markets, like Asia and Africa, although North American has the highest mobile web penetration as a percentage of total mobile users.
Investor interest in mobile has also been growing. Facebook Inc.'s (FB) efforts to refocus on mobile has helped propel its share price more than 140% over the past 52 weeks. By the end of 2013, mobile devices accounted for more than half (53%) of its advertising revenue or more than $3 billion. The company's $19 billion takeover of WhatsApp further solidified its focus on expanding its presence into mobile, particularly given the steep price tag by many measures.
In this article, we'll take a look at how CrowdGather Inc. (CRWG) is making a similar move into mobile that could pay off for its own investor over the coming quarters.
Refocusing on Mobile Growth with Apps and Mobile Web
CrowdGather operates one of the world's leading networks of online forums with over 12 million monthly unique visitors, as well as a unique vertical interest advertising platform to help marketers reach its valuable audience. According to Zack's Research, forum users are generally 3.5x more likely to recommend a purchase, 4x more likely to post reviews online, and 3.5x more likely to share new products. These attributes could equate to a higher return on investment for many advertisers.
After launching its first Yuku.com iOS mobile app in July of 2012, the company released a new and improved version in June of 2013 that featured improved moderation and user messaging tools developed with the help of its partner Tapatalk. The same partner is engaged to provide mobile solutions for the firm's other large forum brands, including RapMusic.com and Pocketables.com, among others.
Additionally, CrowdGather developed its own mobile web application for in-browser viewing on its key hosted platforms, Yuku.com and Lefora.com. In addition to mobile web already available on Freeforums.org, this solution offers users an interface that simplifies functionality and improves content viewability. All of these efforts are designed to help target a growing number of mobile users for new monetization opportunities.
Rapidly Growing Mobile Demographic
CrowdGather has already seen a dramatic increase in mobile usage among its members. Currently, approximately four million unique visitors - or a third of its total visitors - access the network through either optimized mobile web interfaces or the 35,000 custom forum apps that its members have installed. The availability of native mobile apps should ensure that these users continue to use the company's network of forums and even offer some usability improvements over their web counterparts.
The company's expansion into native mobile apps could potentially set the stage for greater top- and bottom-line performance over the long-term. Native mobile apps can provide access to a user's location or other variables to enhance ad targeting, as well as send push notifications at opportune times for advertisers. As mobile advertising technology continues to evolve, the cost-per-action for mobile ads could eventually far exceed the revenue generated through traditional web ads.
Compelling Investment Opportunity
CrowdGather's move into mobile should help grow its user base and improve its long-term revenue potential. Despite these potential catalysts, the company's stock continues to trade at a steep discount to both its growth potential and intrinsic value. For instance, the stock's 0.3x price-book ratio suggests investors can acquire the stock for less than the value of its net assets, while its 2.2x price-sales ratio is also below the industry average of 8.0x suggesting undervalued growth.
Recently, company insiders have been taking advantage of the discount in a further sign of confidence. Between December 18th and 31st 2013, CEO Sanjay Sabnani purchased 10,890 shares, while Director James Sacks purchased an additional 3,500 shares on January 13, 2014. Insiders and 5% owners account for about 72% of outstanding shares with institutional and mutual fund investors holding an additional 6% of shares. These dynamics suggest increasing confidence from those familiar with the firm.
Investors in social media stocks, like Facebook or IZEA Inc. (IZEA), may want to take a closer look at CrowdGather. With a successful mobile strategy in place, the company could be well positioned to close its valuation discount and appreciate in price moving forward.
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