Short Term Catalyst With Strategic Alternatives
A sale of the company could be underway
I have been buying this stock pretty aggressively over the past week.
The company has a net cash balance sheet, no debt and a bunch of inventory.
The enterprise value is only $17 million.
The company owns a website that generates 100 million views on an annual basis.
They also own the number one eBay store in the world.
The stock has fallen on a weak Q4 report.
In addition, if you don’t back out of one-time expenses, it appears as if the company is going to be burning cash flow for fiscal year 2025.
The management team recently announced strategic alternatives with the potential sale of the entire company.
Usually management takes questions on the earnings calls, but there was none for Q4. I suspect they are close on entering into a transaction.
The stock is dirt cheap. It is trading near all time lows. If the company liquidated the company today, it would be worth multiples of the entire enterprise value. During COVID the company was trading at over $20 per share and now it is under a dollar, despite over $600 million of sales. There is a lot of inventory, a valuable domain name and a bunch of equipment in warehouses. In addition, the company should be a cash flow generator in future years as expensive one-time costs will not occur in future periods. With the announcement of strategic alternatives, I think this company is set-up to be sold in the near-term and the recent downward spiral in the stock price (likely related to tariffs and a weak Q4) should bode well for investors who are looking to establish a position today.
Let’s dig in…