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NeWave (OTC BB: NWAV) Opens New Division; Rapid Growth Continues

Since giving OTC Journal members a "first look" at NeWave in the February 15th edition, the stock has been an outstanding performer. It closed at $2.75 that day, reopened at $2.80, and found its way to just north of $4 one month later for a net 35% short term gain. 

NeWave offers a service badly needed by those interested in setting up their own online store. Through wholly owned subsidiary www.onlinesupplier.com, members are provided with a turnkey online solution for setting up a web site to selling goods. $29.95 per month gets you the whole solution, and it can be set up in four easy steps.

Lest you think online commerce is not a growth sector, I suggest you consider this table, which is already one year old. This table predicts 121 million people in the US will be shopping online in 2005: nearly half the population. The shoppers are looking for two things: convenience, and bargains.

Along with online shoppers, there are also online stores. As the 450,000 individuals who make a living on eBay have already learned, the barriers to entry for opening an online store are minimal. This is where NeWave comes in. This company provides a turn key solution for next to nothing if you want to open your own online store.

NeWave's growth is indeed rapid, as evidenced by the last press release the company issued. On April 21st, NeWave announced it would be relocating to a new 16,000 square foot facility. In the current space, the company has about 60 full time customer service reps. The new space will allow the company to expand to 100 to meet the current demand.

In the same news release, NeWave announced it had surpassed 50,000 registered members: This means 50,000 people have now paid a fee to the company to access its service. This is quite an accomplishment, when one considers NeWave only began operations last August.

After the close today, NeWave announced it would be opening a new division to fill the demand on the bargain or deep discount side of the business model. The company is opening a new division, which will begin operations on July 1st. This Division, known as "Discount Online Warehouse" will specialize in large volumes of deep discount, overstocked items. This will allow the company to further leverage it's subscriber base and help with customer retention.

As you can see from the chart, the stock has been grinding sideways for the past month after appreciating nicely during our first month of coverage. 

The March quarterly financial statement will give us a first look at this company's financial condition. It should come out in about 2 weeks. Growth numbers as compared to the same quarter will be infinite, as the company did not exist one year ago. Revenues over the December quarter will be much more revealing. 

At some point in time the company will publish NeWave's audited financial statements for 2003. They began operations in August. Therefore, we will be able to compare five months of operations in 2003 against the first three months in 2004 and compute the growth rate. I believe it will be off the charts.

To date, 50,000 people have become paying customers. For competitive reasons, the company has not disclosed how many are ongoing paying customers. I believe customer retention is the key to the company's long term success. If customers make enough money to justify the minimal monthly fee of $29.95, NeWave's monthly recurring revenue will continue to grow rapidly.

The stock has been grinding sideways in concert with lousy market conditions. There is almost no sell side volume on this stock. Accumulate before the rest of the market wakes up to this company. 

Here is the complete text of today's press release for your review:
 

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