https://youtu.be/xYPD3xfPm-I
On August 18th, Seeking Alpha released a hugely bearish article on HUMBL targeting their recent quarter financials release. Let’s discuss this article and why I think their stance is wrong when viewing HUMBL as a long-term investment.
What’s great is that ticker HMBL’s stock price is still up 160,000% from the $0.0004 of 12-months ago!
Here is what Seeking Alpha had to say in their article:
- That in Q2 2021, the company booked revenues of $0.23 million, and the net loss stood at $21.2 million following an impairment on two recent acquisitions.
- Looking at the pro-forma financials, Tickeri and Monster Creative had combined revenues of less than $1 million in H1 2021.
- Retail investor interest seems to be fading, but assuming all Series B preferred shares are converted, HUMBL is still valued at $5.19 billion as of the time of writing.
- Seeking Alpha doesn’t think the business isn’t worth much in its current state and that this one is a sell.
But first, before we continue, remember this is all my opinion, and not financial advise but for entertainment only. But before we continue, I’d really appreciate a like on this video, to show me you’d like to see more videos like this one.
Seeking Alpha stated that it expected HUMBL’s revenues to be much higher after launching its mobile payments app in the middle of April and its pivot to the non-fungible token (NFT) market. I personally found this to be surprising as this was all just launched, and this is a new app and blockchain market. I’ll share more in a few minutes regarding the positive feedback from HUMBL’s financial statement.
Seeking Alpha went on to say that HUMBL’s balance sheet looked ugly as the shareholders’ equity was negative as of June. They also were concerned that the event ticketing platform Tickeri includes a clause in their purchase stating that its former owners can get back control if HUMBL can’t service its debt. (This is only prudent to include for any company in a purchase, as Tickeri would get nothing out of if the debt payments weren’t made).
Seeking Alpha continues that “this is among the most compelling bear cases I’ve seen in my time on the stock market.”
HUMBL was accused of pivoting to too many new market niches as it had cryptocurrency Exchange Traded Index known ETX products, then it was about NFTs, bought ticketing company, and with plans to leverage the blockchain and real estate.
The article’s author states that HUMBL, according to their blog, was created to help simplify and package new technologies – like blockchain – for global consumers in digital payments, ticketing, real estate, and NFTs.
The author goes on to say that in reviewing Humbl’s first half 2021 financial report, it’s hard to say where the focus is as there are barely any revenues. As he mentioned in his May article on HUMBL, Q1 revenues were just $0.16 million, and revenues in Q2 came in at, what he termed, “a measly $0.23 million despite the launch of the payments app and the purchase of Tickeri.” To me, isn’t his growth positive for a new company in a new space?
The main growth of revenues in Q2 came from HUMBL Financial, which Seeking Alpha displayed on the screen here, which houses the company’s ETX products. He went on to say that The payments app should form part of HUMBL Pay, but this segment generated no revenues.
What Seeking Alpha failed to mention is that between April 1, 2021 through May 16, 2021, Humbl was able to add 7,500 customers to HUMBL Financial, which is estimated to grow the revenues of that segment by $37,425 per month. Also, Humbl launched their mobile application on April 16 and has since then received more than 35,000 downloads with over 30,000 active user accounts and 13,000 plus merchant accounts. Between the growth in revenues by fees generated by HUMBL Financial and through sales of merchandise in HUMBL Marketplace during the same one and a half month period HUMBl was able to grow their cash position to $4,538,337.
Before we dig further into Seeking Alpha’s article, as a reminder, HUMBL is unique, leveraging a competitive edge leveraging blockchain. They offer a Web 3, digital commerce platform, built to digitally connect consumers, freelancers and merchants. HUMBL’s offering is similar to the way previous cycles of e-commerce and cloud were packaged by companies like Facebook, Apple, Amazon and Netflix. In looking at this, remember it took these companies, particularly Facebook and Amazon to gain loyal customers and take off! Remember also that HUMBL is built on a patent-pending decentralized technology stack that utilizes core and partner technologies, to provide faster connections. The company’s offering include:
- HUMBL Pay – A mobile app enabling connections in the digital economy
- HUMBL Marketplace – A mobile marketplace that allows consumers and merchants to connect in the digital economy
- HUMBL Financial – Financial products and services, offering simplified investing on the blockchain
Let’s talk about how these offerings as connected versus Seeking Alpha’s view:
With HUMBL Pay, HUMBL is developing a mobile application enabling customers to migrate to digital forms of payment, including services such like maps, ratings and reviews. The company plans to integrate the search, discovery, peer-to-peer cash and ticketing around the world, as these services migrate into digital and blockchain-based modalities.
Seeking alpha had to say that The Marketplace segment includes HUMBL’s online marketplace as well as the newly acquired Tickeri and creative advertising agency Monster Creative. They comment that there was a $12.1 million impairment expenses in this segment in Q2, and how bad this is as it pushes the group’s shareholders’ equity into negative territory and that these acquisition deals included a significant amount of debt. My take is that the Tickeri acquisition was not completed until June, so couldn’t affect the financials other than the negative cost of the purchase. HUMBL also just made the commitment to purchase Monster Creative in early May.
Seeking Alpha points to the financial impairment coming from Tickeri and Monster Creative, but that Tickeri added $20.1 million of goodwill:
And that Monster Creative added another $8.5 million of goodwill:
The article goes on to state that they view these two companies as terrible purchases as they add very little in terms of revenues and significantly increase HUMBLs losses. (Again, I think it is ludicrous that the author expected to see big gains from these companies, in time for the release of these financials.)
Seeking Alpha also points to the share price action, the trading volume and share price which have decreased significantly since their peaks and it seems that retail investor interest could be fading.
I continue to think that this is a narrative-driven story and as I’ve mentioned in previous
In summary Seeking Alpha states that HUMBL managed to attract significant retail investor interest but has little to show for it in terms of revenues or profits. The article encourages investors to take advantage of HUMBL’s current financial state by short-selling the shares.
He does close with a statement that he could be missing the next PayPal, and the share price could soar due to renewed retail investor interest. But the author finishes with, at this stage, both of them seem highly unlikely.
You can see here per the OTC short report that the short sellers are taking advantage of HUMBL’s current state with the short percentage soaring to 68% on the day that the Seeking Alpha article was released.
To me, HUMBL is courageously entering the disruptive technology space. Blockchain and Fintech are really hot right now, but overall OTC stocks are getting hit hard in the stock market. Investors will need to be patient. This is stock definitely worth watching closely or to possibly to start slowly averaging into an investment. But remember this is not financial advice, so do your own diligence.
Please let me know, in the comments below, what your thoughts are about HUMBL, or if there is anything I missed. I’d also love to hear about any other stocks that you are excited about right now. Go here to discover hidden gems in our Penny Stocks under $1, playlist.