So is Thursday's 20% pop from Motricity, Inc. (NASDAQ:MOTR)
just a little volatility, or is this the beginning of something more? The odds seem to lean towards the latter... that MOTR is past the worst of an ugly period in its history.
The clues may be overlooked with just a quick glance, but a more detailed review has all the telltale signs. Take volume for instance. Yesterday's big rally from MOTR also came on 4 million shares - the second highest volume we've seen from the mobile marketing stock in months, and a move that carried the stock above the 20-day moving average line (blue) for the first time since October.
More than that though, we're seeing subtle supportive clues from Motricity, Inc. One of them is not just Thursday's strong volume, but the developing bullish volume trend. The wave of accumulation actually started in late December - note the blue volume bars get progressively higher since then - around the same time the 2011 downtrend was stopped and a floor around $0.76 developed. That floor ended up acting as a springboard for MOTR shares yesterday.
Of course, one day's strength is nice, but it's going to take more than that to keep the rally going. Does Motricity have what it needs to keep the buying interest alive long enough get the stock going higher again? In a word, yes.... at least by small cap stock standards.
It took a while to hammer it out, but the company reorganized itself (fiscally as well as strategically) a couple of weeks ago. Now there is no lack of confusion.... MOTR is a mobile phone marketing company. It allows advertisers - agencies and enterprises alike - to connect with consumers using all the functions and features of a smartphone. In other words, it's officially a mobile marketing company.
And by and large, it's a good one. Though Motricity, Inc. isn't profitable, and doesn't expect to be any time in the near future, it's generating reliable revenue. The company did $133 million in sales for 2010, well up from its inaugural full-year revenue of $103 million in 2008. While 2011's totals aren't in yet, we know it's done another $133 million for the last four quarters; sales are at least stable.
The overhaul didn't fully materialize until mid-January though, and the retooling does indeed look like it's put the company on target within the fast-growing mobile marketing business. For reference, the number of 'clicks' spurred by mobile phone marketing has grown by more than 700% in the last twelve months. Yet, smartphone ownership has barely even scratched the surface. Gartner research forecasts that the number of active smartphones will reach 1.82 billion by 2013, tripling the current count of 627 million.
In that light, it's no wonder MOTR is starting to perk up... investors see where this is going. With a market cap of only $44 million, the lack of earnings now pales in comparison to the low price/sales ratio. And, that sales figure is ready to be ramped up after Motricity's recent self-overhaul.