Last Thursday, we saw another hot and memorable session for the stock of Sprylogics International Corp. (CVE:SPY) on the Canadian Exchange.
The volume of 6.2M traded during the day was the second largest in the company’s history. The 43.75% jump in the share price was quite impressive, too. The stir happened shortly after the Sprylogics announced its strategic plans for the coming months.
The next day, however, gave signs that the bulls are starting to weaken as the stock retreated by 4.35%. So, which way will the shares go now – up or down Here are several considerations that could possibly provide some sort of an answer.
- Some technical indicators, such as MACD, suggest SPY might climb up in the near days;
- The present market value of Sprylogics International is $8M, while the net tangible worth of the business is roughly $1.3M. These figures imply that the company is overvalued and there is no huge room for future appreciation of the share price;
- On the other hand, Sprylogics owns the innovative Cluuz search technology. The company classifies it as a “next generation search engine platform” which extracts important terms, clusters them and displays these in a chart format known as semantic graph.
Perhaps, for this reason lots of analyzers, stock researchers, investors and just ordinary people express more than optimistic views about Sprylogics on the stock forum discussions. There, among others, we may see the following statements:
- “For a patented semantic search engine utilizing cluster graphs for information extraction, this valuation (this relates to the company’s $8M market cap) is ridiculously cheap.”
- “There is a huge market for SPY’s smart search technology.”
- The search engine sector is “ultra competitive and very profitable.”
This probably explains why many participants in the forums find the company “considerably undervalued”.
In addition to these positive points of view, we must have in mind another important achievement of Sprylogics, though not a recent one. In mid-July, the company informed that its subsidiary, Devesys Technologies, Inc., has met the requirements to “earn the Silver ISV competency after its TrakWeb case management software passed Microsoft’s standards for platform tests”. Thus, Devesys got in the ranks of these 5% of all Microsoft partners who have an active Silver competency.
Finally, we should return to the unpleasant part of the story. The latest financial reports reveal that Sprylogics recorded a net loss of $1.2M for the three months ended July 31, 2011. This is mainly due to the weak revenues – only $102 thousand for the mentioned quarter.
Besides, the average number of shares has almost doubled compared to the corresponding period in 2010. This raises the risk of stock dilution.
