EVR Holdings - a long way from justifying its current valuation? Gary Newman reviews

Don't look if you are easily offended: even David Lenigas scolds the halfwits & thinks his moronic twitter followers are going too far. Read HERE

It isn’t unusual for tech stocks to trade at a very large premium to the actual fundamentals in the early days as value is largely based upon the growth potential, but at some point they have to start showing that they are going to be able to justify the valuation being placed upon them. That would seem to be the case with EVR Holdings (EVRH) now that it has launched Melody VR – which allows users to enjoy VR – given that it is still trading on a market cap of more than £92 million, even after a significant pullback in share price in recent months from the highs of over 19p which were reached back in May.

Sosandar - looking good. Nigel Somerville updates HERE

It is still very early days as Melody VR was only launched on May 2, and the company is still adding further partnerships for live streaming of events, as well as its large library of music, consisting of more than 650 international artists. Investors have now seen a snapshot though of the early progress that the company has made in terms of the monetisation of its app – which is available on the Oculus Go and Samsung Gear devices – and the share price reaction would suggest that the market is less than impressed with the figures so far. The company has just released its results for the six month period up until the end of June, so these included two months of trading since the release of Melody VR. Those results showed revenue of just £6,831 for the period as compared to a cost of sales of more than £225,000, and when you take into account the very high admin expenses of £4.18 million, that resulted in a net loss of nearly £4.4 million.

Kingspan - insulation is a great theme...to be sure. Read Chris Bailey HERE

The trading period since the launch of the product isn’t long enough to really gauge how well it is likely to do and the company is focussed on raising awareness of its product and growing the user base over the next 12 months and beyond, but I find it hard to see how it is going to monitise the product to such an extent any time soon that it is actually breaking even, let alone making a profit. It is all very well announcing partnerships with large players such as Warner, but the company needs to show that will also translate into profitability. What is also interesting when looking at the accounts is that the net assets of the company are largely attributable to the cash that it has on its books, which stood at just over £26 million compared to a net asset value of £28.3 million. So, it would appear that the actual assets relating to Melody VR itself are only valued at around £2.3 million currently.

Tungsten Corp – pleased to appoint two new non-execs, or not?, balance sheet “adequate”, or not? Read HERE

It is great having plenty of cash in the bank, but the company is already burning through significant amounts, and if it ramps up its marketing further that is likely to increase going forward. In my opinion this means that it will have to start showing some sort of return for that level of expenditure quickly. In terms of its assets aside from cash in the bank, it has roughly £1.75 million in intangibles, but over £600,000 of that is in goodwill, with a further £631,000 in development costs. It also has £1.045 million in property, plant and equipment, yet during the six month period the cash flow statement shows that it actually spent nearly £1.8 million on the purchase of property, plant and equipment. The company did manage to raise £20 million before costs at 16p back in May – although it was originally targeting £25 million – and a lot of investors took a lot of confidence from that, despite executive chairman Anthony Matchett and CEO Steven Hancock each selling a significant amount of shares at the same price at that time. The placing represented 9.7% of the enlarged share capital at the time and I must admit that I am a little suspicious of exactly what went on around the placing, given the price drop since then – although there wouldn’t have really been much opportunity to flip those shares for a profit given the price action and volume around that time.

Remember that Catchy Z Cars Theme? Well, Here's My Z Shares Theme. Malcolm Stacey writes HERE

I wouldn’t necessarily be rushing to short the company at the current price of 6.85p to sell, as it is a favourite with private investors, but based on the facts as they stand currently I certainly wouldn’t view it as a buy and that would remain unchanged until such time as the company shows a clearer route to monitisation and getting anywhere near to a profit which would justify the racy valuation that it currently enjoys.

Photo Article from the Greek Hovel - no elf 'n Safey here. From TomWinnifrith.com HERE

Filed under: EVR Holdings, EVRH, David Lenigas, Sosandar, Kingspan, Tungsten Corp, Malcolm Stacey

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11/27/2018

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11/22/2018

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11/19/2018

Falanx - shares to still more than double?

11/16/2018

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11/14/2018

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11/13/2018

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11/12/2018

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11/09/2018

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11/08/2018

Imperial Brands - fade the moral outrage & buy says Chris Bailey

11/07/2018

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11/06/2018

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11/05/2018

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11/02/2018

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11/01/2018

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10/31/2018

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10/30/2018

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10/29/2018

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10/24/2018

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10/23/2018

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10/22/2018

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10/19/2018

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10/18/2018

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10/17/2018

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10/16/2018

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10/15/2018

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10/12/2018

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10/11/2018

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10/10/2018

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10/09/2018

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10/08/2018

Tlou Energy - a speculative buy considers Gary Newman

10/05/2018

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09/25/2018

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09/21/2018

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09/20/2018

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09/19/2018

Tern - Interim car-crash: SELL says Nigel Somerville

09/18/2018

Atalaya offers good exposure to copper plus has plenty of growth potential says Gary Newman

09/17/2018

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09/14/2018

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09/13/2018

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09/12/2018

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09/11/2018

Emerging markets bear market...so buy Ashmore?

09/10/2018

Centrica & Dixons Carphone - investor fear meaning opportunity?

09/07/2018

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09/06/2018

Hurricane Energy - a great deal. Buy says Gary Newman

09/05/2018

Biome Technologies: Strong interims - keep those winners running says Cynical Bear

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Whitbread - a caffeine high. Chris Bailey reviews

09/03/2018

Arcontech - I quite like the look of this one says Cynical Bear

08/31/2018

Fresnillo offers a great way to have some silver exposure says Gary Newman

08/30/2018

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08/28/2018

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08/24/2018

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08/23/2018

Two larger cap resource names to buy (still) from Chris Bailey

08/22/2018

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08/21/2018

Mimedx & Purplebricks - sell call updates from Lucian Miers

08/20/2018

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08/17/2018

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08/15/2018

Why I am still short Tesla writes Lucian Miers

08/14/2018

Whitbread & Patisserie Holdings - a Chris Bailey shopping centre visit special

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Quilter - spin-off opportunity? Chris Bailey reviews

08/09/2018

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08/08/2018

Concepta - suck up justifiable anger, still a buy from HotStockRockets

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08/03/2018

Next - when would I snaffle the shares back? reviews Chris Bailey

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HotStockRockets: RedT Energy - some think it could treble!

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07/31/2018

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07/27/2018

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07/25/2018

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Block Energy - a speculative buy considers Gary Newman

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