2021 Strategy Series: Digital Turbine – APPS

Vested with initial price at US$38.30. 

This is a new series that I am doing in 2021 as commented in this post. It is meant to be written in a way to maximize research with minimum words. If you have any questions, do comment here or on the FB page, email us, or find us in the Fundamental Scorecard Telegram Group.

It will be written as per analysis method indicated in this post.

So…Let’s Start!

The first company of this series is Digital Turbine Inc.

Part 1 – What the Company Does?

This was taken directly from this post from SeekingAlpha by Cobiaman as I felt it really explains parts of the company.

“Digital Turbine is the middleman between service providers and advertisers who put apps on phones. The company negotiates the rates for app placement with advertisers, collects the money, and then remits about 60% to the service providers...while keeping the rest…With SingleTap, when the Starbucks ad shows up in your game, you click on it and bingo, you have downloaded the Starbucks app and stayed in the game that you were playing…Mobile Posse is a media product that goes natively on a phone and includes news, weather, sports, and ads…”

In short, the company works with OEMs and service providers via (1) Dynamic Installs that install rooted apps into your android phone, (2) Single Tap allows users to install apps through a click of an advertisement, and (3) acquired Mobile Posse where a media product can goes natively into your phone where it includes news, weather, sports and ads.

Part 2: The Segment of Fundamental Scorecard That Caught My Eyes

Fundamental Scorecard is a visualization tool that simplify all quantitative information into graphs while calculating the intrinsic value using timeless theories, and providing conclusions about the company for the reader to have an easier time to make decision. (If you are interested, do click on this link).

Are you able to see what caught my eyes?

Part 3: Business Analysis using SWOT

Understanding SWOT = SW (Internal) + OT (External). Only the main points are listed.

Strengths:

• Over 100% Revenue Growth Currently + Turned Profitable
• 500+ M users + Growing outside of US
• Monopoly within its own Android space

Weakness:

• Works only on Android

Opportunities:

• 5G requires new phones to access. Phone without 5G hardware cannot gain access to faster internet.

Threats:

• Google, OEM or Service provide cuts their partnership with the Company.

Part 4: Conclusion

The company, being the monopoly within its space, has huge potential moving forward – because people have to change their phone if they want access to 5G. 

But this investment also carries a huge risk since any partnership, especially Google, that is lost, will significantly impact their revenue. Nevertheless, my opinion to this risk is that Google is already under the antitrust probe and rooted/preload apps is like a "negative aspect" - So Google, OEM, Service Provider will not want to get involved in this business. Probably better to let others do the "dirty" job?

However, in view of the above points and the already significant gain in the share price, I will not be adding to my position unless there is a pullback or after the company releases its next financial results. But I am also not selling since I am still bullish on this company.

Like the company but not so much about the share price at this moment.

If you are interested, please do bookmark this Blog or follow me on TUBInvesting FB, or Fundamental Scorecard Telegram Group (please google for the links!).

Stay tune for my next post!