Why I’d Choose Blinkx Plc Over Audioboom Group PLC

Blinkx Plc (LON:BLNX) and Audioboom Group PLC (LON:BOOM) are under the spotlight.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Say you are bored with Blinkx (LSE: BLNX), that you’re a brave investor, and you are looking for a really exciting equity investment that might deliver stellar returns by 2017 — how about Audioboom (LSE: BOOM) then? 

Audioboom: show me the money

With Audioboom, a digital audio platform with a market cap of £25m, I think it makes sense to investigate its financials in the wake of a poor performance on the stock exchange in recent months. 

The focus here is on pre- and post-roll advertising (online video advertising formats that resemble regular TV ads) whose revenue trajectory is very difficult to model over the medium term. As the group says, it aims to “create the world’s first aggregated audio content syndication and advertising network,” yet it’s currently burning £3m–£5m a year on less than £100k of revenues. 

Its total assets are essentially cash and cash equivalents of £6.2m. So, if you’re looking to snap up its shares now, 25% of their value is represented by current assets, but there’s little more than that on its books. 

Its half-year results show that it has more than four million registered users — that’s one million more than in November 2014 — and over 3,000 active content partners. Its chief executive, Rob Proctor, said in July that the group was confident of being able to deliver “substantial growth in advertising revenues next year and remain focussed on achieving our long-term goals, targeting cash generation and profitability in 2017.”

The shares still trade in line with the level they recorded after its half-year results were announced. My best guess is that until the company doesn’t provide a clear indication with regard to how it intends to monetise its content, the stock unlikely move far away from 5p a share. 

Blinkx: is it time to be patient? 

The shares of Blinkx trade at 24p, a share price that implies a market value to cash ratio of 1.6x — and that’s not bad, really. Strategically, it’s focussing on mobile while paying less attention to desktop, which makes a lot of sense. 

The second quarter was particularly challenging after a decent performance in the first quarter, but the business is in restructuring mode and its will take time to pay off. 

For the half-year ending 30 September, Blinkx said that it expected revenues of between $85m and $95m, an adjusted operating cash flow loss of between $5m and $8m, and cash balances of between $82m and $85m. 

The amount of cash that Blinkx holds on its books is very important, following its latest trading update dated 24 August, when the company pointed out that “the cash balance anticipates operational losses of c$5m to $8m, with c$4m for strategic, one-time investments in the core product lines and c$2m for restructuring during the period.”

Frankly, it’s a long way to go, but its shares are not overpriced right now. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young black colleagues high-fiving each other at work
Investing Articles

Is Legal & General Group one of the FTSE 100’s greatest value shares?

Legal & General shares boast low P/E ratios and massive dividend yields. Could they be one of the London stock…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

I’m looking for the best FTSE 100 value stocks to buy now. Have I found them?

Barclays, NatWest, and Imperial Brands shares are recovering strongly. But these FTSE 100 stocks still trade on rock-bottom earnings multiples.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Where on earth will Nio stock be in 1 year?

Nio stock has demonstrated extraordinary volatility over the past 12 months, but where will it be in a year's time?…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »

Investing Articles

Is the Amazon share price primed for a drop?

The Amazon share price has been on a tear for the last year, but can this trend continue? Gordon Best…

Read more »

Photo of a man going through financial problems
Investing Articles

Down 15% in a week! What’s gone wrong with the National Grid share price?

The National Grid share price isn't supposed to crash but now it has. Harvey Jones is wondering whether to take…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Taylor Wimpey just paid me £158.78. I’m aiming to turn that into a £100k yearly second income

Harvey Jones says small, regular dividend payments can turn a few pounds into a mighty second income, if he gives…

Read more »