I’ve gotten several messages from Australia over the past few days about a promo that’s headlined “The Everything App”, and it does catch the eye… not least because they’re talking up a five-cent company that they think will be over a dollar by the end of the year, and that may surge as soon as July.
So what gives? Let’s dig in and get you some answers…
The ad comes from a fellow named Härje Ronngard, who has recently started a newsletter called Wealth Eruption — it looks like this is the latest “entry level” newsletter from Port Phillip Publishing, which is an Agora affiliate in Australia and uses the same aggressive copywriting hype that we’re familiar with from Agora affiliates (and so many others) in the US.
And the main focus of the ad is that if you subscribe, he’ll send you his special report, ‘The Age of the “Everything App”: The 5-cent ASX Tech Marvel That Could Payout 20 Times Your Money.’
So… let’s look at the clues as we endeavor to ID that “everything app” stock for you…
“Grabbing a stake in this 5 cent tech genius now could be like investing in Amazon back in 1997
“Amazon made it convenient for anyone to shop online.
“All you need to do is push that little yellow button.
“The Everything App has taken Amazon’s idea and kicked it up to a whole new level.
“It centralises all your favourite apps in one place.
“It’s like a combination of iTunes, Amazon, PayPal and AirBNB ON STEROIDS.”
OK, that sounds like a lovely idea… though hardly believable as a market force if it’s a small player, not even in the somewhat isolated Australian market. What else?
“Before July a radical online breakthrough, Bloomberg calls a: ‘revolution’…
“Is primed to connect one BILLION people and kick-start a potential $36 trillion windfall for early backers.
“This could be your shot to join them and potentially pocket a 2,880% gain ….”
That “July” bit is about China and 5G — so this is where we learn that this isn’t really an Australian company, it’s a Chinese company… though yes, it is listed in Australia.
That “revolution” quote from Bloomberg is just about 5G in general, and about the huge difference it will make in extending internet access to more people around the world, at higher speeds — and while China is no slouch in internet penetration, there are certainly a lot of lower-income and rural Chinese who do not have internet access.
That’s not going to change with the flip of a switch in July, so that’s clearly a made-up catalyst designed to get us to believe there’s an urgent need to sign up for a newsletter immediately. Yes, China is planning to implement 5G quickly, and to roll out commercial products as fast as they can to try to establish some leadership, but that doesn’t mean you’re going to see the 40%+ of Chinese who don’t have Internet access all getting online by the end of the year — most likely, the penetration will continue to be relatively gradual, growing 5-10% per year as it has been, as costs go down and quality goes up.
5G is expected to have its first official standards released this Summer, so there is some reality to that timeline — and China has been pushing companies to develop “pre-commercial” products so that they’re ready to be among the first to release 5G products once the international community agrees on technical standards… but presumably all the big wireless infrastructure and device companies are thinking along the same lines. No one is trying to be slow, or to be last.
What, then, is this company? We’re told that this “Everything App” is already in demand from a lot of huge partners in China, though the specifics aren’t that clear…
“Nine of the world’s richest banks…
“At least 14 Fortune 500 high-flyers…
“And $747 billion ecommerce juggernaut Amazon…
“Are all looking to the Everything App to rake in billions in extra profits from the fastest growing consumer market on Earth.”
What’s that, you say? WeChat and Alipay dominate the Chinese mobile payments and mobile commerce environment? Well, yes, you’re right… but Ronngard says he thinks there’s a little wedge of the pie left for his “Everything App” company…
“Today, China’s mcommerce industry weighs in at a hefty $24.25 trillion.
“Most of that wealth is owned by just two digital commerce giants Tencent and Alibaba.
“Tencent (owner of Tenpay) commands 37% market share. While Alibaba (owner of Alipay) controls a staggering 55% market.
“Big numbers, no doubt.
“Still, the 8% market share up for grabs — about $1.94 trillion — is more than enough to turn the Everything App into China’s third force in mcommerce….
“The Everything App is already a dominate player in that 8% slice. But I believe they could grow their dominance even more….
“If the Everything App can grab another 1% of this 8% slice, that’s around $26 billion in transactions…and after a 3% commission, that’s an extra $780 million in sales.
“With only US$19 million in sales so far that translates into a 4,000% increase in revenue…”
OK, that leads us to some uninspiring math… how are they a “dominate” player if 1% of the market means $780 million in sales, and they currently have $19 million in sales? If 1% gets you $780 million, then $19 million means you’re getting 2/100ths of one percent of the market. That’s not “dominate” in my book… so the way I see it, either they’re not actually currently earning a 3% commission/fee on their current market position, or their revenues are trivial in comparison to the other players in the space. Or, perhaps, both.
And they’ve probably pitched this one before, though I haven’t looked at the ad previously — I say that because the ad itself pitches this as a 5-cent stock, but the email I received most recently introducing the ad talked it up as a 14-cent stock this morning. Still exciting if its really on its way to a dollar or more, I suppose, but no longer five cents — perhaps because heavily promoting a five-cent stock with a relatively inexpensive newsletter means you’re going to dramatically impact the stock price with a flood of new and enthusiastic investors.
What else do we learn?
He talks about the stocks he recommends in general, noting that he prefers small caps…
“The kind of breakthrough companies that could eventually end up the next Google, Amazon and Microsoft.
“These stocks are small (usually below $300 million) and that makes them high-risk….”
And yes, we’re told that this is an ASX-listed company. We’ll find out in a moment if there’s any way to trade it outside of Australia, too.
Just like the US newsletters, there’s usually a bit buried somewhere in the middle about how they do not, in fact, have a magical crystal ball, and there’s a real chance that you’ll lose all your money:
“There is nothing guaranteed or set in stone with the Aussie-listed creators of the Everything App.
“As you’ve seen today, I’m banking on a big pay-off. But that doesn’t mean it WILL unfold.
“There’s a chance this company could hit a hurdle…a regulatory challenge. Or user numbers could dry-up. Any one of those could see this stock nose-dive.
“And that means you could lose money. In fact, your entire stake could go down to zero.”
The key, of course, is that they hope you’re so hopped-up on greed by the time you get to this point that you’ve already gotten a little taste of that delicious bait on your tongue, and you’re willing to suffer the hook just to have a little more worm. He says he has a “rock-solid stop-loss point” on this stock, which is pretty common for newsletters (though they don’t often mention it in the ads, fearing that they’ll put the idea of “loss” into your head… so that’s a credit to Ronngard, at least).
And, of course, we have no idea what skill or talent this fellow might have in picking stocks or managing portfolios — this is, as he says, his “maiden pick” that he hopes will launch his Wealth Eruption newsletter.
So what’s he talking up when he says “I don’t think you’ll find a better chance to potentially pocket a 10-fold gain in your lifetime?”
Clues into the Thinkolator now…. chewing. Shall we talk about something else? Did you see that Bruins-Lightning series? Sad news up here in Massachusetts for our B’s, though perhaps they deserve to lose after star forward Brad Marchand had to be asked to stop licking — yes, literally licking — opponents… but we spend a lot of time near Tampa and one of the Little Gumshoes is also a big Lightning fan, and all the Little Gumshoes were born in DC, so we hold out hope for a Stanley Cup going to one of our adopted cities.
Ah! Back to the Thinkolator… there we are, answers come crawling out — the clues are a little sleepy down under at the moment, but we’ve finally got it for you: This is 99 Wuxian (NNW in Australia).
And yes, just an Australian ticker — there does not appear to be any rational way to trade this one outside of Australia… there used to be an OTC ticker in the US at NNWXF, from what I can tell, but it seems no longer to be supported. Which is probably all the better, the stock is tiny and illiquid enough even in its home market — if you feel compelled to trade it, you’ll have to do so directly (I’d use Interactive Brokers for this if I were interested in owning shares of this company — which I’m not — but many brokers can trade direct in Australia for you these days).
99 Wuxian is a pretty fascinating story — it was started by well-connected CEO/Entrepreneur Amalisia Zhang, who got partnerships with the big banks several years ago and was widely lauded in the early days after they went public in Australia… pretty consistently getting referred to as a “leading mcommerce” company and getting lots of hype for signing new clients… but each year the stock seemed to make big news-driven swings without ever making any real progress.
And then just under a month ago, the Financial Review (often called AFR) posted a scathing critique of the company and its lackluster performance on the Aussie stock market on the five-year anniversary of its public listing, in conjunction with a rising tide of angst about some of the lesser Chinese companies that have gone public in Australia without much oversight in recent years. 99 Wuxian did respond to the points raised by the AFR article here.
I don’t have any idea where the truth lies, and haven’t read through the filings… but it seems pretty unusual for your auditor to force you to dramatically change the way you classify “sales” (and therefore just about cut your revenue line in half), and even before they made this change and dropped their revenue number sharply, the actual operating numbers for the company in recent years just seem absurdly small for a firm that has access to hundreds of millions of customers through China’s largest banks. They have certainly grown in five years, but not as much as you’d expect in the past year or two. This is what the stock chart looks like since they went public in Australia about five years ago:
That doesn’t mean it’s impossible for this story to work out, just that it doesn’t look particularly interesting to me. If you’re not rapidly growing in China, even with good connections with the banks and a pretty large user base, then it strikes me as highly likely that your product isn’t very interesting or useful. And products that aren’t interesting or useful don’t usually end up making anyone any money.
This seems to be an app aggregation/single login/rewards service, providing a single login and platform for all kinds of purchases and orders and for banking and financial services, and somehow sweetening the pot with “reward points” … and yes, they’ve applied for an insurance license, among other things. That doesn’t strike me as inspiring or new, or likely to wrest users from the clutches of WeChat and the other dominant platforms in China, but I’ve certainly never seen or tried it in person — and, of course, WeChat is owned by $460 billion behemoth Tencent while 99 Wuxian is a sub-$150 million company, so any comparison is silly.
That’s not enough to say definitively that 99 Wuxian will fail, for sure, I have not read all their filings or studied the business and they are certainly operating in a vast and rapidly changing marketplace… it’s just that from looking at it for a couple hours this morning I don’t see any reason to spend more time on the company.
And yes, there’s good reason for the fact that the ad cites it as a five cent company and the actual trading is at 15 cents now (both numbers in Australian dollars, of course) … The attention from Port Phillip Publishing on what was previously a low-volume stock with a market cap of only about A$50 million apparently caused that 200% move in a single week (it’s now over A$150 million… still tiny, but a big jump). That surge caused the Australian Stock Exchange to ask 99 Wuxian what was happening, as is usual, and they responded with the standard “we dunno”. My experience is that newsletters can absolutely cause a huge jump in the share price, particularly for a very small company, but that the stock price tends to get back to “normal” once the promotion dies down and there are no longer thousands of new speculators looking at the company every day. Doesn’t always happen on a timeline, but it’s rare for a newsletter-caused spike like this to stick.
If you want to research the details, a good place to start is the annual report — they just filed theirs for 2017 here, from a quick glance it appears that the bright signs are the growth in registered users and transactions, and the weakness comes in the gross transaction value and in revenue per user (and, of course, in overall revenues), though given the big accounting changes forced by the auditor it may be that the 2017 and 2016 numbers are not particularly comparable.
So that’s what I see… Your mileage may differ, of course, and I’d be delighted to hear your take — is this the next great Chinese tech story that I’m giving short shrift? Is Ronngard onto something big? Let us know with a comment below.
P.S. In case you’re wondering why this sounds familiar — Steve Sjuggerud over at Stansberry used a very similar phrase and concept, the “one tap app”, in teasing Tencent pretty heavily last year. And, of course, Tencent is a colossus and could buy tiny 99 Wuxian, should they so wish, with less than one week’s worth of profits.
Disclosure: of the companies mentioned above, I own shares of Apple, Amazon, and, indirectly through Naspers, Tencent. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.