Paltalk, Inc. (NASDAQ: PALT) is a social media company where users are able to chat, meet, broadcast, and play games in a secure environment through the Paltalk network. After acquiring a live streaming application, PALT stock increased 25% due to the potential this acquisition brings to the table. With this in mind, some investors are speculating PALT could be a candidate to merge with former President Trump’s TMTG since its SPAC merger may no longer be the company’s best option. In light of this, PALT stock is one to watch this year as the company introduces new features thanks to this acquisition.
PALT Stock News
With the Covid-19 pandemic impacting human interactions, live video apps like PALT have been growing rapidly thanks to the increased demand for these services. As one of the world’s leading live video platforms, PALT has been capitalizing on this rising demand by seeking accretive acquisitions. With this in mind, PALT already has a portfolio of live video apps including Camfrog and Tinychat which has allowed the company to take advantage of this growing market.
On that note, the global video communications platform as a service market is currently worth $4.3 billion and is expected to reach $13.3 billion by 2031. Given the size of this market, PALT is well-positioned to secure a significant market share through its live video apps. As well, 57% of Americans use video chat platforms – many of whom had not used any video chat platform before the pandemic. With 85% of users expecting to continue using video chat platforms after the pandemic, PALT has the potential to witness more growth in this market.
For this reason, PALT acquired the ManyCam platform from Visicom Media for $2.7 million in cash and a potential earn-out payment of up to $600 thousand. As a live streaming software and virtual camera, ManyCam allows users to deliver professional live videos on any streaming platform or video conferencing app. Although this acquisition is in line with PALT’s existing video chat platforms, ManyCam offers PALT an opportunity to compete with video conferencing apps like Zoom and Google Meet as it allows users to share presentations, spreadsheets, or documents with each other.
Based on this, PALT’s CEO Jason Katz is bullish “the integration of the ManyCam software into our current application offerings has the potential to generate positive cash flow in the near term and contribute to positive EBITDA over the long term”. With this in mind, Katz believes “ManyCam is a logical extension for the Paltalk and Camfrog customer base, and we believe it is an application that our existing users will be willing to pay for”. In this way, PALT could be positioned to attract more users – allowing the company to realize more revenues in 2022 and beyond.
While PALT operates with a freemium model, the company is able to generate revenues from subscriptions which unlock more features and status, in addition to virtual gifts. At the same time, PALT is exploring opportunities to develop projects with third parties and develop new technologies to increase the value of its ads to ad buyers.
PALT has been working on increasing its ad revenues by partnering with marketing companies. Most notably, PALT partnered with NoGood to increase the visibility and awareness of the Paltalk platform as well as converting its users to paid subscribers. Moreover, PALT is working on increasing Camfrog’s visibility by partnering with another marketing firm – yellowHEAD. Through this partnership, yellowHEAD is expected to utilize its AI technology to boost Camfrog’s growth to increase its popularity among video chat platforms. In light of these efforts to raise awareness for the company’s platforms, PALT stock has the potential to grow its aueince significantly over the long-term.
Despite the company’s solid fundamentals and business model, PALT stock has gained some new interest thanks to speculations it could become a merger candidate for TMTG. While TMTG agreed to a SPAC merger with DWAC, a report by Kerrisdale Capital Management showed that the merger could be in jeopardy as the SEC and FINRA are investigating the merger. Considering that a SPAC’s lifespan is two years and an average SEC investigation lasts for three years, former President Trump’s company could be looking for an alternative in case the deal with DWAC fails.
With patented technologies and an existing platform, some investors believe PALT could be the best option for former President Trump to merge his company with. As is, PALT is fundamentally undervalued based on its $21.93 million market cap – which is barely above the $20.4 million cash and cash equivalents it has on hand – and is $6 million below the value of its total assets. It also has services which are not offered by Rumble (NASDAQ: CFVI) or TMTG currently.
Using its patented technology, PALT has become profitable and now its has a dedicated audience which it is transitioning from free users to paid subscribers. While its userbase is small, it could scale quickly and its latest acquisition could introduce it to a new audience looking for video conferencing services.
PALT Stock Financials
In terms of its financials, PALT reported $27.5 million in assets compared to $28.8 million in the previous quarter, and $20.4 million in cash on hand compared to $21.6 million in cash on hand in Q4. Despite this decline in assets, PALT remains in a solid financial position as the company decreased its liabilities from $3.8 million to $3 million. Meanwhile, revenues declined QOQ from $3.1 million to $2.8 million. At the same time, operating costs increased to $3.6 million compared to $2.9 million – yielding a net loss of $738.9 thousand compared to a $916.7 thousand net income a quarter ago. While this decline is mainly due to the easing of Covid-19 restrictions, the company appears to be on track to continue growing financially through its marketing efforts.
Media Sentiment
@HawkHoldings noticed PALT stock could be a runner based on its acquisition
Technical Analysis
PALT stock is currently trading at $2.23 and has a support at 1.89. Meanwhile, the stock shows resistances near 2.51 and 2.87. PALT’s recent acquisition of ManyCam triggered a 25% increase. It is worth noting that there is a gap up near the support which could be filled.
Some investors sold the news causing accumulation to dip, however, it is starting to regain some of the momentum. Meanwhile, the MACD is bullish to the upside. The RSI is holding at 59 – approaching overbought. As is, PALT has an OS of 9.8 million and a low float of 5.4 million.
PALT Stock Forecast
With the company operating in a growing market and showing consistent financial growth, PALT stock is emerging as a promising social media investment. Considering the recent acquisition of ManyCam, PALT has the potential to compete in the video conferencing market by integrating ManyCam’s software with its platforms. For this reason, many investors are bullish PALT stock has long-term potential.
Another reason to watch PALT stock could be the speculations of an affiliation with TMTG. While stocks with a Trump affiliation tend to run, PALT stock is considered a promising long-term investment in its own right.
If you have questions about PALT stock and where it could be heading next feel free to reach out to us in our free alerts room!
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