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IHookup Social, Inc. (HKUP) – OTC BB Monday, July 14, 2014
iHookup Social is a "proximity based" mobile social platform that facilitates real connections, between real people... in real time. It utilizes the intelligence of GPS and localized
recommendations for dating, friends, groups and organizations to break through closed social cliques and expand them, not only virtually, but in real life.
The company's users will be provided with "local" options of many kinds, enabling mobile distribution of locally relevant content and special offers. The company hopes to
bring together a dynamic opportunity for brands, advertisers and merchants to interact in new and innovative ways with the iHookup Social Network, while building customer
loyalty, engagement and revenues. The company is pursuing its growth in its current "dating vertical" market, as well as expanding its reach in the general audience category
of "Social Networking."
On June 16, 2014 iHookup Social confirmed the launch of its first national television advertising campaign to include 10,000 thirty-second spots to run over a one month
period on networks including MTV, ESPN, E!, History, Fox News, A&E etc. The campaign reached a total of 7 million households nation-wide, and coincided with a simple
promotional offer for free, complete access for all females, and other incentives for males.
The company has seen some very substantial organic growth of users in the last four months prior to the completion of their first television ad campaign. For the month of
June, the Company showed growth over the previous month of May with a total of 75,065 new downloads of the social app in the Apple App Store marketplace. This total is
another record for the Company as it attracts downloads and registered users to its growing platform, which has now surpassed over 257,316 registered users.
7,406 New Downloads
120,148 Total Registered Users
6,547 New Downloads
124,588 Total Registered Users
16,599 New Downloads
137,743 Total Registered Users
43,207 New Downloads
164,632 Total Registered Users
67,054 New Downloads
212,528 Total Registered Users
75,065 New Downloads
257,316 Total Registered Users
IHookup seems to be making great strides penetrating the who’s who lists for social networking Apple apps, both in the U.S. and abroad. The company is said to be working
on it’s android app as well, which is available now but in a development stage.
iHookup faces tremendous competition from both free and paid social dating apps and sites including a few powerhouses like Match.com. The company’s business model
is positioned with a much more novel approach, however, and will be classified as more of a meetup tool, as it facilitates finding groups of people to do things with, rather
than finding a single romantic partner. The service is mostly free, and will likely derive the majority of it’s revenue from advertisers. The company has said it is signing up
around ten percent of free users to a paid account.
The company is just starting to see some revenue from the app, and the company is smart to move cautiously with ads, and look for unique ways to monetize. Profits will
come as the user base increases, and looks positioned well for a snowball effect of organic growth. The stock looks extremely undervalued at the moment, when we consider
what has been paid for some of these social startups. At the current stock price the company is worth roughly $3 million, or about $10 per user. Keep in mind that investors
value a Twitter user at $110, a Facebook user at $98 and a Linkedin user at $93.
In the company’s latest annual report, it disclosed over 600 million shares were issued and outstanding, which is a very large number. Further dilution seems to be under
control as four financing deals over the past few months totaling just over a half a million dollars secured with convertible notes with holding periods in excess of one year.
The vehicle that this company is in for investors certainly has some baggage with it, and some share restructuring will likely need to occur that may or may not include a
reverse split sometime in the future.
The company’s financial results are not currently meaningful, as it is still essentially a development stage company. The company has had some trouble obtaining financing,
but since the user base has started climbing dramatically, so have the financing opportunities. This gives some assurance that provided the user base continues to grow, the
company will be able to continue as a going concern.
This trade is based almost entirely on one concept - that the user base continues to grow, investors begin to value each user more, and that future share issuance does not
out way both of these things. The app is not yet established as the leader in the meetup app arena, will face increasing competition, and there is no assurance that it will
become the leader in its space. Also, until user growth numbers from the company are included in its next quarterly report, they are not independently verified.
Our Trading Strategy
We believe that there are two different strategies for trading this stock, and both seem appealing. The first would be a mid to longer term approach, with a focus on the value
of a user. As the user value continues to grow, so can your investment, with the ultimate goal of being bought out by a large player looking to diversify.
The other strategy would be more short term, perhaps several weeks to several months, with a focus on press releases from the company regarding favorable user base
increases, upward momentum on the social networking top download list’s, and whatever else the CEO can come up with.
For both strategies, we would recommend a light investment that would involve little or no averaging down. We would rather be adding shares of something like this as the
price increases, rather than decreases. Ultimately, for both strategies, we would effect whatever means are necessary to facilitate a stop loss in the 1 to 2 cent range. We
would be looking to pick up shares over the next few days anywhere between 2 and 4 cents.