A perfect storm of negative headlines is creating investment opportunities too big to ignore. Sounds counterintuitive, but it's not. In fact, despite a surge in COVID, ramping inflation, weakness in cryptos, and international political unrest, good companies that don't rely on debt as a tool to grow are actually ideally positioned for near-term gains regardless of headline risk. And the ones that have impressive assets supported by a plan to leverage their strength can do even better, faster. Blackboxstocks, Inc. is checking those boxes. (NASDAQ: BLBX).
Investors appear to be catching on, and the trading pattern in BLBX stocks shows that the valuation disconnect could close appreciably sooner than later. Yes, BLBX tends to trade with market sentiment at an intraday level. However, it's also showing an ability to decouple from the market weakness into the close. The pattern started at the end of 2021, with BLBX shares surging more than 25% intraday to hit their highest levels since November. Since then, while shares have been whipsawed intraday, they are closing near the highs of the day. Incidentally, the higher closing prices are supported by elevated volume.
This could indicate at least two things. First, an overstayed visit by short-sellers may be coming to a close. And, second, investors recognize an excellent value opportunity when they see one. Either case adds to a bullish near and long-term proposition.
Here's the better news. As of January 3, 2022, there were only 3,650,274 shares of BLBX stock on deposit with the Depository Trust Corp. In other words, the public float is exceedingly small for a NASDAQ-listed company. But that's not even the best news. BLBX has guided to not only have its best-ever revenue run rate in December but is also on track to post its best Q4 in history. That's not all.
To potentially alter an impressive tailwind into one with gale force, BLBX recently announced a stock repurchase program for up to $2.5 million of the company's common stock. Those dollars could reduce the trading float by almost 25% at current levels. Thus, the combined demand from investors, short-covering, and competition from BLBX's own investment dollars could send BLBX stock soaring in the coming days, weeks, and quarters. Still, don't invest in BLBX because it's a low-float company that can surge from supply and demand imbalances for its stock. Instead, focus on the things BLBX has done to justify a substantially higher valuation. That can turn a near-term gain and trade into an appreciable long-term hold.
There's plenty to support the long-term thesis.
Plenty To Like At BLBX
Foremost, investors should embrace that BLBX is better positioned financially than ever after completing a $12 million public offering last November. That campaign also led to an uplist to the NASDAQ market, providing immediate exposure to a broad group of investors and enhancing trading liquidity. Combining the two added to an already bullish proposition heading into 2022. Still, the new working capital surplus takes matters to a higher level and will likely accelerate several near-term initiatives intended to drive company revenues higher sooner than later.
That's a realistic expectation. Remember, having surplus cash is a luxury that management has not had in the past. Since its inception, BLBX operated under tight capital constraints that made its product development and scaling its customer base challenging. However, what's notable is that BLBX has grown its base substantially despite prior financial limitations, posting its highest-ever paid-subscriber base ever in Q4. In fact, it surpassed the 6,000 paid user level, a milestone number expected to be the first of many in that regard.
Those numbers matter and put BLBX on the path of becoming EBITDA positive as early as Q1 of 2022. That milestone is in play after a banner 2021 where the company reported record revenue in the first three quarters of the year. And the better news is that its record-setting pace is expected to continue, with BLBX providing guidance that it will close 2021 with income between $5.94 and $5.98 million, a 76-78% spike compared to 2020. Of course, those achievements will be historical, and traders like to value companies on a forward-looking basis. In that respect, BLBX again checks the right boxes.
In a shareholder letter this month, management said it's in the late stages of completing and implementing several new initiatives to position the company to grow its subscriber base substantially. Of course, that translates to revenues likely following the same trajectory. Keep in mind, its planned enhancements add to a platform that was already generating significant new user traction. Thus, it's a fair presumption that BLBX will benefit from making an already excellent platform better. Moreover, because BLBX is currently flush with cash, growing pains often associated with rapid growth should be considerably mitigated. Notably, BLBX also made it clear that rapid growth won't come at the sacrifice of brand quality.
Instead, they'll follow a well-orchestrated action plan.
Significant Upgrades To An Already Excellent Platform
Notably, that plan is aggressive and synergistic, capitalizing on the dynamics that have differentiated Blackboxstocks from other trading tools and fintech platforms. Further, while different today, three near-term initiatives are expected to create even more competitive distance from its competitors.
In the queue for this month is an audio broadcast upgrade, which BLBX says will enhance its audio broadcast and integrated chat feature capabilities. The goal is straightforward: to provide its user's additional rooms and channels to connect its community further. The beta version was released last month, and the excellent news is that the final upgrade is likely to launch by the end of January. Hence, results from that testing must have been good.
Another potentially exponential value driver could come from the imminent listing of its native mobile apps for iOS and Android. These two apps combine to put BLBX's target market front and center. In fact, with those two apps reaching more than 96% of mobile users, it puts millions of potential new subscribers in the crosshairs. Combined with its broadcast upgrade, this initiative can add a multiple to an already bullish setup. BLBX said it's in the final stages of internal testing with plans to launch its beta version in the coming weeks.
Here's a side note on the app. It's not designed to lessen the user experience. On the contrary, BLBX built it to recreate the robust user experience provided to its desktop users, including the audio broadcast feature that is extremely popular within its user community. The expectation is that the apps will inspire an influx of user growth and retention, especially as traders return back to work post-pandemic. The sheer number of active traders targeted, which can reach the millions, can exponentially drive platform adoption if the app attracts the expected attention.
Here's the best part. Investors don't need to question whether BLBX will have the infrastructure to support its aspirations. It will. The company says it intends to leverage its recent capital raise to source and acquire additional developers. Not by a small measure, either. They want to double the number of developers and engineers on its team as early as the end of Q2, with plans to add experts in the areas of UI/UX Design and Trading Analytics, as well as additional engineers and developers. Of course, they made clear that the goal of the personnel increase is to drive revenues from adding new features and products more quickly to better serve its members. In doing so, they maintain their place as a leading stock and options trading platform.
Still, while "leading" now, BLBX could emerge as the "leader" in its space faster than many think.
Targeting Growth From The Democratized Trading Movement
That's because BLBX is targeting the soaring demand from a retail trading market needing better tools. Interest was exposed, and new market demand was met back when Robinhood (NASDAQ: HOOD) addressed the need for a platform providing more efficient and cost-effective trading options for retail investors. HOOD indeed did well to start, attracting millions of retail investors to join what has been dubbed the "democratized trading movement." But, more importantly for the sector, HOOD did more than reach a new market; it exposed one. And in many respects, it put companies like BLBX, which were already in the space, into the limelight.
Why? Because while HOOD exposed a market in need, investors soon found better options. Record subscriber levels indicate BLBX is one they like. And it's not by chance that investors are increasingly attracted to what BLBX offers. Its industry-best partnerships combined with an innovative platform are earning that attention. A working partnership with TradeStation helps its cause as well.
Actually, it does more than help, and no competing platform shows it can match the power that a combined TradeStation/BLBX delivers. It's already described as a transformative trading tool that levels the investment landscape for retail traders by providing real-time information, market insight, and lightning-fast trade execution.
While impressive in that regard, the standout feature is that its financial technology and social media hybrid offers real-time proprietary analytics for stock and options traders of all levels. Providing that capability has led users to go beyond describing the platform as "transformative," many refer to Blackboxstocks as a Robinhood platform on steroids.
Integrating With TradeStation Brings Unrivaled Functionality
The biggest reason for that is that the combined Blackboxstocks/TradeStation platform does much more than facilitate trades. While indeed providing that function, it also goes well beyond the expected. A core feature is that the combined BLBX/TradeStation platform offers users a Quick-Click feature that loads proprietary automated alerts for options contracts through a simple two-click process. That feature saves traders critical time on order entry and execution with lightning-fast execution speed. Still, there's much more to like.
Users also get a dual benefit from real-time Blackboxstocks trading alerts and TradeStation's discounted trading rate with no ticket fee to Blackboxstocks members using the Quick-Click feature. Thus, investors save the two most valuable assets in trading, time and money. But, there's more to keep user engagement.
Perhaps the most attractive feature of the platform is that it uses the most current technology, including AI, to do almost all of the pre-trade legwork for its users. And it does so with speed and precision, running thousands of scans at a millisecond pace to provide users proprietary options alerts or options flow data. But not only does it find trade opportunities, but it also sets it up to execute as well.
Once an optimum trade is scored, users only need to click the mouse on the highlighted trade button to run orders at speeds usually reserved for institutional traders. Thus, while the working relationship with TradeStation is transformative for BLBX and helped create a "platform on steroids" for stocks and options investors, investors in BLBX stock can be rewarded as well.
That's likely.
Millisecond Scanning, Benefit To Novice Traders
Remember, user growth will lead to increased revenues. And that's an expectation likely reached from BLBX providing its user's lightning-fast processes and unparalleled detail. Most valuable, perhaps, is that embedded technology continuously scans the NASDAQ, New York Stock Exchange, CBOE, and all other options markets, analyzing over 10,000 stocks and up to 1,500,000 options contracts multiple times per second. That's not all. Beyond that professional-level performance, the BLBX platform provides users a fully interactive social media platform integrated into a user-friendly dashboard, enabling them to exchange information and ideas quickly and efficiently through a shared network. Consider it an enhanced chat room that aligns a common interest to make money.
The platform is especially useful for novice traders and, even for them, instantly levels the investment playing field in many respects. A popular feature is the real-time shared chat feature that allows less knowledgeable investors to follow the ideas and actions of those more seasoned. Still, whether novice or professional, all BLBX users benefit simultaneously from community knowledge, speed, and access to real-time information.
Thus, it's understandable why BLBX posted record-breaking Q3 performance, a surge in subscriber levels in Q4, and a revenue-generating tailwind into the new year. It's a matter of time before BLBX, the stock, gets the attention it deserves. Based on strengthening fundamentals, it should have earned that weeks ago.
Valuation Disconnect Can Fuel 2022 Surge
That assumption isn't blind faith. From all perspectives, BLBX is better positioned than ever to create potentially exponential shareholder value in the current and coming quarters. They have highest ever cash balances, best ever subscriber levels, and a record-setting performance in Q3 that brings a considerable tailwind into Q4. Thus, while a combination of short-selling and general weakness in the small-cap markets may have brought BLBX shares lower, it's positioned to break higher with or without the support of a broader market rally.
Remember, beyond exceptionally strong Q4 and 2022 guidance, a share buyback program, leveraging industry-best relationships, and a three-prong initiative to drive user growth, the most valuable consideration is that they have the cash to turn its ambition into real-time performance. Hence, while plenty of intrinsic assets supports a substantially higher share price, its inherent capabilities can also add a multiple to that number.
So, considering the sum of its parts, BLBX is indeed a bargain exposed despite recent strength. And remember, fortunes have been made from savvy investors buying when others are selling, and thus, playing this overdone sell-off may be a wise consideration. Better yet, with what BLBX has planned for 2022, taking action over deliberation would take advantage of a valuation disconnect too big to ignore.
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