SMSI Has A Big Coming Out Party (One Day Down and Two To Go)!

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You’ll get this in the AM, but right now it’s 10PM local time and I just got back from today’s activities (which began at 8AM). The night was capped off with a few drinks at the W Hotel, where I spotted (and individually spoke with) several members of Chardan and Smith Micro.

Nobody from either side will admit it, but it’s clear to me that Chardan is preparing to launch coverage on SMSI. Based on my research into Chardan’s Jim McIlree, I expect a Buy rating and a generous price target.

Of equal importance, you don’t need a report from me to know that SMSI is being well-received at the conference (and that I was a buyer once again).

Even through Friday’s S-3 scared some retail investors out of SMSI in the morning (despite my warnings to the contrary), the stock took off Monday. It rose 7.55% on nearly a million shares of volume, the 3rd highest in over a year. Only the March financing generated more volume.

Despite what some might think, I’m sure I had almost nothing to do with today’s breakout. I was meeting with so many companies that I barely had time to think, much less share what I learned about SMSI.

In fact, my full write-up will have to wait another day because 1) I gathered too much information for one post and 2) I’m exhausted.

But many investors will be hearing the story today and tomorrow, so I’ll give you a quick taste for what happened…

Personally, I thought it was awesome. They provided a new set of exciting data points and addressed every concern I could think of. Sharing everything will require several days / posts.

I polled several investors and they all liked what they heard. Of course, they would like to see Sprint continue to ramp and for SMSI to sign new customers, but most didn’t realize 1) how much profit they stand to make with Sprint not 2) how many customers they’ve already signed — six — in addition to their pipeline of potential deals.

The scary part is that not many investors even heard the story before the market closed! Bill Smith finished his public presentation right at the closing bell (1PM PT / 4PM ET), so nobody in the presentation room had time to react to what they heard (nor would they react so quickly — these are professionals).

In other words, the only likely buyers from here were the small handful of investors that met with them one-on-one in the morning (and I was one of them).

Many of you commented that CEO Bill Smith’s presentation sounded good online. Well, you should’ve SEEN how it looked.

Smith had the largest presentation room at the conference (which holds about 100 people) and it was packed — standing room only.  I feel confident that many of them will react in the coming days. When Bill Smith walked through his margin guidance for Safe & Found (a question I purposefully asked), the room lit up with pens to paper.

So, after meeting with just a few investors DURING market hours, the stock was up 7.55%. AFTER the market closed, they spent the rest of the day meeting more prospective investors (institutional and retail)… and will spend the next day and a half meeting with even more.

But the conference won’t end for them on Wednesday, because there’s no way they can meet with all of the prospective investors that were in that presentation room.

In short, with the effective float dwindling, the S-3 behind them, Sprint ramping, Chardan coverage likely to launch in the coming days, and a bunch of prospective new investors coming in, things could get crazy fast (as if Monday’s action didn’t qualify).

I told you that this was setting up to be a fun month ;^)

Wow.

Anyways, I’m completely exhausted now, but I’ll give you one seemingly minor data point before I hit the sack:

I learned about one of many Sprint stores that just started selling Safe & Found yesterday. From what I heard, they signed four families. Now, that may not sound like much, but I keep preaching that you have to analyze every data point. So….

To put this one into perspective, if each Sprint store (there are 4,000 of them) sells just four subscriptions per WEEK (not per day, like this one did), SMSI’s revenue will increase by $8 million per QUARTER over the next year (on TOP of the $3 million per quarter that should come from Sprint’s current base of Location Labs customers).

Based on Management’s margin guidance, that could/would take SMSI’s EPS well over $1 per share.

And that wasn’t even the most exciting thing I learned today.

More to come. Stay tuned…

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18 thoughts on “SMSI Has A Big Coming Out Party (One Day Down and Two To Go)!

  1. Hey Mark! Great job at the conference, and thanks for keeping us updated! I’m sure by now you are also up to date with Apple’s WWDC anouncements. And one of them is right up SMSI’s alley – namely app usage addiction and app allowances for children. What’s your take regarding how future innovations baked directly into manufacturer’s OS might impact SMSI’s future business? On one hand, I see this as bullish news, since SMSI are clearly targeting an area of interest. But can they adequetley protect their business model from companies like Google or Apple that can simply take the same features and offer them as part of their OS to anybody for free? Frankly, at $2 / share, this is not an immediate concern, but what do you/management think about this further down the road?

    Cheers, Andrei

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      1. PLEASE NO, seems anytime Apple is interested in a co. they manage to get so entrenched they end up making their own product to compete with whomever and leave wreckage in their wake

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        1. For people who are new to the story, this is a great point to explore (and you framed it very well). However, I’ve already addressed this SEVERAL times.

          People said the same thing about location functions becoming free and yet Location Labs STILL makes an estimated $20M a year!

          Location Labs got beat by SMSI because they are not innovating. SMSI’s roadmap is way ahead of every carrier-focused vendor. It’s cross-platform (simultaneous support for iOS AND Android… very important!), incorporates hardware devices (IoT), and has the marketing support of carriers.

          This COMBINATION of qualities differentiates themselves as a best-of-breed product versus cheaper low-end offerings.

          Like the S-3, the possibility of competition might scare weak investors, but it’s a non-issue. It’s like QADA versus SAP/ORCL. Specialization won’t make you the next Microsoft, but it can deliver a multiple bagger (and quite possibly a buyout).

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    1. I asked the company about this and they were excited. Most retail investors are unfamiliar with the concept of evangelization.

      Comes down to best-of-breed versus low-end functionality. The attention is going to make it easier for their app to get sold by Sprint and other carriers.

      I’ve seen it a million times before. The small innovators multiply in size on the backs of the big guys’ basic products.

      Liked by 5 people

  2. Folks, be sure to read my comments before making a comment or asking a question that’s already been addressed. Shorts are bringing up long-known issues.

    The S-3, free functions, and bad reviews have all been discussed and addressed. As you saw yesterday, people who fell prey to the shorts’ S-3 fear mongering missed the big pop.

    I can’t spend my time hand-holding. Do your research (read my 100+ pages of research) and understand that SMSI is ahead of the curve and ramping up.

    Liked by 1 person

  3. Thanks Mark for all your hard work here. As a small investor I truly appreciate you helping me with your vast investing and research knowledge. You help more people I am sure than you realize and I just wanted to give a big thank you. Hopefully I can pay off my kids college and that is huge in my book!

    Liked by 7 people

  4. … and they’re building a platform. This isn’t a one-off application this is a proxy-war for the future: location’s a cornerstone for all future robotic,wearable, network, analytic tech… just think about what that means if their only competitor is Apple to the T-Mobles and Sprints of the world.

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  5. Mark, on the ST board someone posted that AEHR is presenting tomorrow at the LD Micro conference. Were you aware of this and if so are you going to listen. Thanks again for all your research.

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  6. The final bullet point on slide 26 sums it up nicely! Thanks Mark for your efforts and hard work…and sharing it all for free!!! Very much appreciated.

    Liked by 1 person

  7. Thanks for the input, gentlemen! I’ll make sure to dig in the comments sections as well (I wasn’t aware this issue had already been discussed).

    Looking forward to any updates and enjoying the price action for now! Mark, we all owe you a great deal, that’s for sure!

    Cheers!

    Like

  8. Mark, can you qualify your comment from Twits on the preferred conversion reducing expenses by 300k, is that per quarter or annually? Might be leading to a new post you have queued..

    Like

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