The title is "HOT STOCKS". But why is this one so hot?
Business Times - 28 May 2011
HOT STOCKS
SGX queries Artivision after its share plunges
Six-cent drop comes after the firm, whose stock price rose five-fold in the past six weeks, reports Q4 earnings
By VEN SREENIVASAN
SHARES of Artivision Technologies, which had risen five-fold in the past six weeks, plummeted some 22 per cent yesterday after the company reported its fourth-quarter earnings.
By the close of trading, the Catalist-listed stock had given up six cents to close at 21 cents, prompting a query from the Singapore Exchange.
But this is a counter which had risen five-fold from around 4.5 cents a month ago to a recent high of 29 cents after it unveiled a new application (App), called Advision, which it claims will enable online social network users to monetise their videos and pictures via advertisement inserts.
Artivision said it was not aware of any unannounced information which, if known, would have explained the trading.
Brokers said the stock fell yesterday following the release of the company's fourth-quarter results.
For the three months ended March 31, 2011, Artivision narrowed its net loss to $1.37 million. Full year net loss also fell to $5.7 million.
But more worrisome was its balance sheet, which showed a negative equity of almost $1 million - effectively meaning accumulated losses had exceeded shareholders' funds.
Yet, even after yesterday's close, its 477 million shares and another 39 million options give Artivision - whose sponsor is Collins Stewart Pte Ltd - a market capitalisation of some $100 million.
Some observers reckon the market is judging Artivision too harshly, arguing that this is a tech start-up which is a concept play. And now it has this potentially game-changing product in Advision.
Indeed, it all looks good in theory.
The company has already obtained tacit approval from Facebook to place its Advision App on its pages. And by clicking on the App on their Facebook page, users give Artivision permission to solicit advertisements from third parties and media-buying houses. These ads can then be displayed on the users' contents, thus generating ad revenue. The ad revenue will be split between the company and the Facebook page member.
The potential appears huge: The global market for online advertising is estimated at some US$4 billion annually.
In a posting on SGXnet late on Thursday night, Artivision said there are some 600 million Facebook-registered members. Each member has on average 345 friends and, together, they upload about 100 million new self-created and third-party videos every month. There are also about 100 billion photographs on Facebook.
'Based on market feedback, the current price for online advertisement in video is between US$0.50 to US$2.80 per 1,000 impressions whilst for advertisements in still photographs, the price can be even higher,' Artivision said. 'With this Advision application, the company wishes to capture revenue from online advertisements.'
At present, the company says it is still doing 'test runs' of Advision on Facebook. But when it releases the final platform, which it expects soon, Artivision will likely have to ink a formal commercial arrangement with Facebook itself. It will also have to invest in more hardware and servers around the world (it currently has servers only at its technical development base outside Tel Aviv, Israel).
To do all this, Artivision will need funds - which seem to be in short supply, judging by its balance sheet.
Many market watchers expect it to raise funds via placement or borrowings. But some analysts reckon that if the Advision product is really as hot as it is made out to be, Artivision itself could become an acquisition target.