I’m dreaming of a Green Christmas- Green for profits- and there is little doubt Christmas is coming early this year with the numbers Commerce Planet delivered in Q3.
In truth- I don’t know what the heck these guys are doing to generate this kind of cash flow, but it is sure working. Subscriber loyalty must be at some kind of new all time high for the company to generate over $6 million in subscription revenue. That equates to something like 200,000 paying members monthly.
Here’s the totals: $9.7 million in combined revenues, equating to $3.1 million in profits: or $.07 per share.
As the company points out in its press release (which is quite unusual)- the PE ratio of the stock on an annualized $.28 per share in earnings is 5.7- this held against an industry average of 26.2- therefore, if the company can simply maintain its current level of profitability and the stock eventually trades at the industry average, your price target is $7.33.
There is one fly in the ointment: There is a discrepency I can’t quite figure out- The press release says the company generated $9.7 million in revs and $3.1 million in net profits. The 10Q says the company generated $7.6 million in revs and $3.1 million in profits. I will try to get to the bottom of this.
So- ask me now if the stock will trade over $2 this year? I believe the answer is yes- perhaps very soon.
Here’s a longer term chart:
This is a weekly chart going back the entire trading history of the stock. All I want for Christmas is the stock trading at a new all time high- that’s all I ask- it could happen today. We’ll see where we go from there.
I’ll publish an edition later today with more details. If you don’t own this stock by now, you can’t say you didn’t have the information.
As far as any futher trading goes- if you buy it today, you should still probably do very well. Comments in a full edition later today.
Comments and questions are welcome.
sheesh… why the selloff?? this thing should be going up! people not woke up yet and read the pf?
what a letdown… this has a great future, just had a greater expectation for the Q3-release-day.
Editor: I just don’t get it on this one. I know stocks often trade poorly after an earnings release when they have traded up out in front of it, but this is ridiculous. I guess there were sellers just waiting for the event, and they buyers are just matching them around the $1.50 level. Amazing. I am quite stunned.
In readint the 10Q, I see the sAt June 30, 2005, there were convertible debts and warrants to purchase common stock which were outstanding and may dilute future earnings per share.tatement :”…Wonder if this with the banner headloines on Quarter’s revenue (which includes inter-segment sales is making the investors more cautious in buying even at this price
Editor: I can’t say for sure. They published the fully diluted number as 54.5 million- I believe this includes the ESOP. Even fully diluted $.055 per share for the quarter. This is gut check time. I guess if you have doubts you have to sell. I would bet the stock will not be higher in the next trading day or two, but will be higher by the end of the week.
What is inter-segment sales ?
If our actual profits are 3.1 million based on 7.6 million then that just makes profit margins bigger!!
Very interesting how this stock is trading !
Andy
Editor: It’s the best margins I’ve ever seen for a company in the $30 million rev run rate space. Interesting is one way of putting it. How about terrible?- let’s see what the rest of the week brings.
um, whats going on here. Does someone have it out for Commerce Planet? It seems as though the sell off is happening again. There are only a hand full of people that have the amount of stock to make this happen. Has anyone looked into Efunds or Dutchess? Why they might be selling? this bums me out
Editor: No question- bums me out to. As I said in last night’s newsletter, the next week is pivotal.
I think your Part II is right, especially about how the market may be signaling a corporate problem. These numbers are great, but only in the sense that the return to early chain-letter and pyramid investors are great. Have you visited their sites? Tried to escape from them? Priced their specials against Amazon? Considered that the retail site competes with the stores created by customers of its wholesale site, at the same price?
The business about the intercompany revenues is upsetting because it’s very clear that you can’t count the money you spend on your vertically integrated cost centers. If these subs were third parties, the expense would count, but not the revenue; since they own their “vendor,” they can count neither, but the reduction in expense generates a return on the investment in the subs.
Any company can claim that it COULD outsource something and so what it spends on that function ought to be counted as revenue. But that’s not what’s done.
And CPNE has not just counted the intercompany revenue, it has made it part of a headline, burying the real thing so deeply in the PR that you missed it on the first read. That sort of overreaching is never an accident – and it is most often a powerful indication of the character of the people behind it. I sold my shares this morning, not because I was waiting for the event, but because the PR, with its inflated numbers and effusive self-congratulation, turned my stomach.
This stock may well go higher as bigger fools buy in, but these guys treat their shareholders as customers of their stock, not as partners in their business. And that stinks.
Editor: Nevertheless, the company is certainly generating a lot of excess cash flow. If it concerns you, you made the right choice in selling your shares. I hope you made a decent return. I agree with you on the tone of the press release- very poorly written and not well thought out.
I am wondering if they are planing to move to the regular Nasdaq. I notice that on finance.yahoo that only 5 days of quotes are listed
Editor: I know they have a plan in place to do it down the road. It could be a ways out- for starters, you need a $4 stock price.
It’s Duchess unloading, only 3.6 million shares to go. They will easy off of it in a day or two only to start the selling again. It’s unfortunate but it’s the reality.
Editor: Not likely- I would say eFund is the culprit. That guy is problematic.
Two points on the selling pressure.
1. Duchess & Efund are selling shares on a monthly basis. The first few minutes today, a large block came into the market for sale.
2. When a penny stock moves into the 1.50 to 2.00 area, the penny stock investors make a decent return and may move onto other cheeper priced companies. However at this level, a whole different breed starts to look over the fundementals and move in.
Bottom Line….If it stays down here in the 1.50 level, this is a gift and I will continue to load up on a monthly basis.
By the way, the diference in the revenues may be tied to CPNE’s recent aquisitions.
Hang in there…..
Skip in Tampa
Editor: I covered the difference in revenues in last night’s edition. I believe this is a pivotal week. I believe it is likely we will close higher this week, which would be very bullish.
I won’t repeat the editors comments…but I was astounded as well. I thought this would open at $ 2+ and go to 2.50-3.00. How could the report been any better..No debt..cash building..profits exploding..but there was a lot of selling by someone for some reason. The only thing I do not like about this situation is giving away 2+ Million shares to the CEO when he already has 7 million and the 5% pre-tax income bonus to him and his new man..the president..as I recall it Warren BUffett makes $ 100K year and has no incintive plan for a % of profits..this is outragious….and I Faxed him with my comments…which are too caustic to post here.
Editor: Incentives should be based on stock price to some extent- however, you have to admit from a fundamental basis it has been earned. I did not like the structure of the news release. I thought both the language and the timing were terrible.
Look people, the company is caught in the grips of Duchess and Efunds. They have 12MM shares to sell. I just hope they sell in a prudent way and they don’t start competing for the lowest ask.
Editor: I believe they have created a panic sell off in the stock. Efund is probably the culprit- the Dutchess guys are too smart to sell stupid.
Maybe we need a hedge fund to take us private
Editor: Now there’s an idea. I will tell them to look into it.
Well, dear friends, looks like the party is over for CPNE. I just unloaded all my 10,000 shares. It’s very disappointing to see the mega sell-offs. Does anyone of any idea as to why it’s behaving after such a good Q3 report?
Thanks.
Editor: Check my current BLOG. Be prepared to buy it back at $1 and start the party all over again.
How many shares does E-fund own? Could Commerce planet actualy buy back the shares from E-fund or Dutchess directly to solve the sell off problem. If this could happen wouldn’t that save the constant sell off. The stock will never go anywhere if Dutchess and Efund constantly sell off 800,000 share a week. No one will want to buy.
Editor: I believe jointly it is about 12 million shares. I went through the SEC filings, but was unable to find the information. However, the shares are subject to restrictions on being sold as control persons- they can’t just sell tons of them anytime they want. They have windows of opportunity, and volume restrictions. This is a technical concern. However, others will want to buy their shares simply because of the value. It’s that simple. It just might take some more time, but someone will come along and want a lot of this stock if they keep generating these kinds of numbers. That’s the nature of any stock that does well- early high risk shareholders and financiers get replaced by new shareholders who want to take a little less risk. If the company continues generating results, it’s just a question of time.