Top Facebook dating application “Are You Interested?” has experienced an incredible couple of weeks as the press positioned the parent company, SNAP Interactive, as a great way to play the Facebook buzz. In the past two weeks the company’s stock has surged over 1,000 percent.
Previously valued at approximately $8.3 million, the company has reported gross cash receipts of $3.46 million in the fourth quarter. The stock has been a sleeper until the past week with practically no volume. Then on December 23rd, the company’s stock doubled from 25 cents to 50 cents per share on a whopping 600 shares traded. As soon as the stock appeared on the top gainers list, it attracted the attention of Bloomberg as well as Business Insider, which wrote a glowing review of the company.
With surging revenue, a fast growing user base, and cash in the bank, SNAP Interactive is sitting pretty. The impact of Facebook on company stock is not only limited to SNAP Interactive (OTC: STVI). Over the past few weeks, AllFacebook’s parent company (WebMediaBrands) has watched its stock double thanks to an article about this site’s new Facebook services directory. The only conclusion I can have is that the Facebook effect is an incredible one, especially for public companies that have anything to do with Facebook.
Given that SNAP Interactive generates the vast majority of its revenue from subscriptions generated through its application on Facebook, it’s not surprising to see all the buzz. If the “Are You Interested?” brand can continue to post solid revenue growth, there’s a good chance that this stock still has room to grow beyond being a cheap dollar stock (previously penny stock). SNAP has definitely entered a new phase as it begins to grow beyond the years of being a small business.
DISCLOSURE: This is not a stock recommendation. Additionally, I have employee stock options in WebMediaBrands and am not in a position to recommend either of these companies. You should perform your own research before investing in any company.