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October 26, 2000
Volume III, Issue 90
Email : info@otcjournal.com
URL : http://www.otcjournal.com

To OTC Journal Members:

This week's Trading Alert is a company which we first looked at in early October when the stock was over $5. Since then we have been waiting for a low in the stock price associated with a lighter volume. Market technicians will tell you this signals a good entry level for a stock.

After several days of euphoria for Bulls, the last two days of  market action should have blown out any weak hands in this stock. Today's reversal in the NASDAQ was awesome, and indicates the Bull may return in force. In addition, we have seen some microcaps that we follow bounce nicely in the recent run-up, suggesting that the worst is over, and it is time to begin bargain hunting. Tomorrow's GDP number may cause a major bounce in the NASDAQ, leading to additional upside pressure on the stock.

Tax selling in small issues has been particularly viscous this year. We attribute this to gains that many investors locked in during the 1st Quarter. Since then investors have had their brains beat out. Now they are selling the small issues to avoid the tax burden. Look for this end of the market to do well in November, and really get strong in December.
 

Trading Alert: uDate.com, Inc (OTC BB: UDAT); Web Site: www.uDate.com

We have been watching uDate since mid September, and waiting for a high percentage entry point. This company has been growing dramatically. Today's press release covering the 309% growth rate after the market closed coupled with the major pull back in the NASDAQ suggest a great entry point for this stock. This stock could trade up beautifully tomorrow especially if we are lucky enough to get a good bounce in the market.

UDate.com is the premier singles community on-line. It is the Internet version of the Personal Section of your local paper. Professional Matchmaking has been around for centuries, and the Internet is the ideal mechanism to deliver this service.

The company launched its community earlier this year, and the membership has grown dramatically. Currently, there are over 875,000 registered members. As we write this Trading Alert, the community has 4081 people on line simultaneously, and 2779 new members have enrolled today (1:15 Pacific Time according to their web site).

UDate has begun converting their trial members into paying subscribers. In the last ninety days they have converted nearly 75,000 trial subscribers into paying members. The average membership fee is $22 monthly. Some have been converted long term, others for a short period of time. Currently, the company is generating $300,000 a month in revenues, and based on current conversion rates the company anticipates it will generate roughly $450,000 in November.

The only viable competition to uDate is Matchmaker.com, which sold to Lycos this past August for $50 million. uDate's technology is superior and allows the member to search for a match based on any criteria they choose. Matchmaker's technology works only off demographic information, leaving the user with limited search parameters.

The company has some interesting and creative marketing strategies which are yielding many new members every day. Eventually, this community could grow to millions of paying subscribers as use of the Internet on an International basis for matchmaking purposes increases.

In today's news release the company indicated they expect to turn profitable in the first quarter of 2001, suggesting the stock could rebound to its previous high of $9 over time.
 

Special Offer

As usual, we have come up with a special way for our members to experience this unique Internet community. Go to the site (http://www.udate.com) and register for a trial membership. The send an email to info@udate.com with your name and password. Identify yourself as an OTC Journal member, and your membership at uDate will be upgraded to Gold Membership. This will give you complete access to every part of the site. Your free trial will last 10 days. Single members might want to take advantage of this free offer to improve your social life. Investors should also take advantage of the offer in order to experience all the features of the community.
 

Trading Alert Details

In our opinion, the pullback in the stock on light volume represents an excellent entry point. Today's news release should stimulate significant volume. For those of you who look at Level II quotes, there are only 500 shares at today's closing offer of $3.625. There are only 2000 shares offered for sale between $3.625 and $4.25.

Here are our thoughts on this particular Trading Alert on uDate (OTC BB: UDAT):

  • Buy up to $4.25.
  • Set your Stop Loss at $2.625 (The all time low of the stock) or what ever your risk tolerance is.
  • If the stock can get through $5.125 within the next five trading days, it could go straight to $6.
These numbers are our opinion only, and not a solicitation to buy this stock. Make up your own mind. If you are looking for a short term trade limit your loss if the stock goes against you. As always, we remind you to review the section on our home page on Trading Alerts, paying particular attention to the section on trading rules. The track record on our previous alerts can be obtained by clicking here.

Here is today's news release in its entirety for your review:
 

Thursday October 26, 4:19 pm Eastern Time
Press Release
SOURCE: uDate.com Inc.

uDate.com Reports Record 309% Growth in Third Quarter Revenues

NEW YORK, Oct. 26 /PRNewswire/ -- uDate.com (OTC Bulletin Board: UDAT - news), today announced 309% growth in third quarter revenues, up from $132,000 in the three months ended June 30, 2000 to $542,000 in three months ended September 30, 2000.

Subscriptions revenues make up 86% of the third quarter revenue total. Seventy-five percent of uDate's members who have paid for the service are still active and paying today. ``We believe that the day of the 'free model' and a total dependence on advertising revenues has passed. Our third quarter results illustrate that uDate provides a service that adds significant value to its members' lives,'' said Mel Morris, uDate's Chief Executive Officer.``

With a registered membership closing on 1 million members, a 'killer' application that keeps users on the site for up to 4 hours each day and a powerful geographic, demographic and psycho-graphically indexed database, an increasing number of businesses are looking to explore partnership opportunities with uDate.

In the third quarter, 19% of uDate revenue came from advertising and the company anticipates launching a targeted advertising and product promotion service in the middle of fourth quarter to increase its revenue from this source. Offers Morris, ``Our ability to target advertising content and product offerings is in a different league from the Advertising networks. We know our members in tremendous detail and every page we serve is individually customized for each and every user. We can finely target in a way that has yet to be experienced on the net.'' uDate already has a number of partnership programs looking to leverage these capabilities in various stages of development. The company expects these partnerships will add further functionality and content to its site while creating strong incremental revenue opportunities.

uDate is now entering its second growth phase. ``The third quarter was characterized by aggressive sales and marketing aimed at leveraging our product in order to develop the uDate brand,'' explained Morris. ``Sales and marketing costs for the quarter were high as a result of our efforts to rapidly establish a critical mass of registered members necessary to broaden our market appeal. Now we are close to the million member level we are able to concentrate our efforts on converting our registered members into paid subscribers and encouraging our active members to introduce their friends to our service as part of an extensive viral marketing program.''

With the enhanced marketing focus, uDate anticipates converting more members to paid membership programs, while simultaneously reducing costs. According to Morris, ``Results for October to date show that we have been able to reduce our marketing costs by more than 65% while continuing to grow our registered membership count at a rate of 100,000 new members per month.'' With revenue increasing in the fourth quarter to more than $1 million, cash burn is expected to reduce significantly and turn positive by the turn of the year. The company is looking forward to profitability in the first quarter of 2001.``

Morris attributes uDate's rapid advances to the company's ability to identify and respond to the changing market conditions since its financing. As he explains, ``Prime movers in this market sector were raising capital and attempting to build large registered memberships from 1997 on. At this time, development capital was freely available and lenders had little concern for revenues or profitability. The results of these efforts saw businesses claiming registered memberships of several million users. However, more detailed analysis showed very poor levels of conversion from registered to paying members and very poor levels of paying member retention.'' A ratio of $100,000 to $150,000 in monthly membership subscriptions per million registered members is fairly typical in this sector.

``By entering the market sector some time after the prime movers and in 'more realistic' market conditions, uDate has been able to take advantage and avoid the mistakes of its forebears'',`` continues Morris. At the end of October 2000, uDate will have more than 900,000 registered members generating monthly membership subscriptions of $300,000. This makes uDate two to three times more effective on the basis of membership revenues per registered member.

During the third quarter, uDate also selected both Stanton Crenshaw Communications (Best Mid-Sized PR Agency by PR Week) and UK-based Mantra to handle their strategic marketing.

``Our high priority branding efforts, combined with outstanding creative, will enable us to generate high visibility for the company,'' said Morris. ``We expect those efforts to translate into an increase in paying members, media coverage, analyst awareness and a strong investor following.'' uDate operates a unique, high-quality online singles community that stresses service, efficiency and personal security. Its vaunted technology enables members to identify, communicate with and meet people who are psychologically, culturally, educationally and demographically compatible. The company's state-of-the-art database, web site design and matchmaking features surpass the most professional off-line services and separate it from the competition. Individually customized page views provide members with the capability to meet compatible and interesting new friends in a fun and effective way.

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, about the Company's business and products, projected revenues, expenditures and operating and capital requirements. Statements that are not historical facts, including but not limited to statements (a) that include the words ``will,'' ``believes,'' ``expects'' ``anticipates,'' ``estimates'' or words of similar importance or meaning; (b) that describe any of the Company's or management's plans, objectives or goals for future operations and products, or (c) that concern the characteristics and growth of the Company's markets or customers or products or the expected liquidity and capital resources of the Company, are forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions, including changes in the market conditions in the industries in which the Company operates. 

SOURCE: uDate.com Inc. 


 
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