Since its 2019 IPO, Verb has struggled to turn a profit and its share price is down more than 70%.
But the California microcap is doing innovative things with video and CRM marketing, and should be able to capitalize on the world's ongoing COVID-19 problems.
100% of analysts rate Verb a buy and expect a 275% increase in share price.
Verb Technology (NASDAQ: $VERB) is primed to blow up.
The young California-based video and e-commerce company has struggled since its 2019 IPO and was selling for about $1 per share when the market closed July 30. But analysts expect the penny stock to make a turnaround and increase by 250% to 300% in the near future.
I share their optimism, which is why I recently purchased a significant amount of stock — and it's a long-term investment.
To be sure, Verb is not without risks. But let me explain why I'm bullish.
Why Verb Could Blow Up Backed by BlackRock and Vanguard, Verb is doing a lot of innovative things with video and CRM marketing, and should be able to capitalize on the world's ongoing COVID-19 problems. Their app is easy to use and provides all kinds of features, including augmented reality technology and an ability to integrate hyperlinks with the video screen.
Viewing Verb videos does not require having the app as content creators can save their video on Verb's website, which can be viewed using a browser. App users can also send their video as a text message or post it to social media. So, if customers are viewing a Verb video on their phone, they can just touch the screen and be taken to a link that enables them to get more information or purchase a product.
Having downloaded the mobile app to my iPhone and played around with it, I can foresee all kinds of uses for it, including e-commerce, work-from-home, eLearning, tele-medicine and political campaigning. In fact, the Verb Go app already has 1.5 million users and a 4.9 Apple Store rating. (Note: Verb offers other apps, too.)
It's also recently been integrated with Salesforce, Microsoft, Oracle and other partnering tech platforms. Verb also has a global user base and is already in 60 countries with clients including: Young Living, Q Sciences, 4Life, Neora, Xyngular, Kyani, Monat and Scout & Cellar. Business users are raving about the app.
Given the $40 billion market customer relationship management (or CRM) offers, Verb would be phenomenally successful if they manage to capture just 1% of it. The company could also cut into the video meeting market currently dominated by Zoom, given its recent problems such as hacking, censorship, data privacy and alleged ties to China's government. Additionally, Verb's leading-edge app may even compete with Shopify ($SHOP) by providing a better online shopping experience.
At this point, you probably think this sounds too good to be true. So, what's the catch?
Reasons to Doubt Verb is still not profitable. During the past two years, their expenses increased from $7.7 million to $20 million annually. They face much competition, including well-known tech Goliaths such as Salesforce ($CRM) and Zoom ($ZM). As a penny stock, Verb is prone to large price fluctuations because daytraders like to "pump-and-dump" it. And its stock price is down more than 70% from its IPO price of $3.44 per share.
But as Baron Rothschild famously said, "The time to buy is when there's blood in the streets."
Verb seems poised for a turnaround. Revenues are way up, increasing annually from $32,000 (yes, thousand, not million) to $10 million, which means increases in revenue are far outpacing expenses. For instance, Verb made $2.35 million in revenue in Q1 of 2020 compared with just $9,000 in Q1 of 2019.
Based on revenue, Verb is trading much lower than it should, at a multiple of 3x its current $30 million market cap value. Salesforce, by contrast, is trading at a more traditional 9x factor. The difference can be explained by profit; Salesforce reported a profit against revenue while Verb did not. Profit is key in business.
However, Salesforce reported a loss in 2016. And many other successful companies, such as Telsa ($TSLA) and Amazon ($AMZN) lacked profit early on in their ventures. You have to spend money to make money, as they say — especially when you're a small, young company like Verb. The investment should pay off: Verb is projected to more than double its revenues in 2021.
Furthermore, Verb has brought on some good leadership, including new board member Nancy Heinen, who is credited with helping Steve Jobs turn around Apple when she was a vice president at Apple. And Verb recently received an influx of about $14 million following a stock offering that closed July 24, so they're flush with cash.
Finally, the fact that the stock has a relatively large insider ownership indicates that the team is very confident about the company's future. It makes me wonder if something is cooking behind the scenes that could make Verb go parabolic like Kodak ($KODK) and Overstock.com ($OSTK) recently did. But I'm probably overanalyzing.
Outlook Speaking of analyzing, analysts are very high on Verb. $VERB has 100% buy rating from analysts, with an average price target of $3.75. Most recently, on July 30, Litchfield Hills Research analyst Theodore O'Neill reinstated coverage on Verb with a buy rating and a price target of $4.00. That would be almost a 300% increase over its current price, which was $1.02 at close of market on July 30! Verb is not without risks, of course. But with a tiny marketcap and great tech, it has lots of room to grow. Moreover, with COVID-19 continuing to require work-from-home and schools likely to be online in Fall, Verb's video app should see a huge revenue boost in the coming months.
In fact, I could foresee Verb making the kind of dramatic turnaround that Jumia ($JMIA) — another e-commerce stock I own — has made in recent months. It certainly seems worth the risk at this $1 price. The potential upside is great. It's the kind of stock that could become especially popular with Robinhood investors, who are known to chase high-risk, high-reward stocks.
But this is just my opinion, and not expert financial advice. As always, do your own research.
Follow me on Twitter @RichGuineaPig Disclosure: I am/we are long VERB, JMIA.