One of the most obvious statements available to that subset of investors who are “very interested” in investing and trading stocks is that “investing and trading stocks is very interesting”. It’s tautological.
From a market cycle standpoint, it is also inevitably true that as a bull market ages and matures, more and more people become very interested in investing and trading stocks. We are now about 13 years into a secular bull market, and investor enthusiasm hasn’t been surging at this level since the late 1990’s. It’s one of those times when everybody is in on the game, and everybody is making money.
It won’t last forever, but it could still last for years.
During this type of market environment, one of the biggest winners among industries is likely to be financial technology providers of services to retail investors and traders.
There are low-hanging-fruit examples to confirm this idea, including those that allow transactions, such as Robinhood (13 million users today vs 0 in 2015) or those that allow social community interactions around trading, such as Stocktwits (>2 million users today vs 250K in 2017).
This has been augmented by a massive surge in options trading and a drop in fees charged by brokers to, in many cases, $0/trade.
One of the most dramatic examples of the sudden dominant interest of retail market participants is the massive short squeezes we are seeing in stocks such as GameStop Corp (NYSE:GME) and AMC Entertainment Holdings Inc (NYSE:AMC).
This scenario – a raging bull market that casts advantages upon new technology services for market participants – forms the context of the opportunity we highlight here today: Blackboxstocks, Inc (NASDAQ: BLBX).
That’s one of the reasons why a recent analyst research report (see here) gave this stock a $10/share price target.
Blackboxstocks, Inc (OTCMKTS:BLBX) is a rapidly growing trading analytics platform that uniquely provides social engagement and trading education to its users.
According to a recent analytic report, the Company describes itself as ‘Bloomberg meets Twitch’ and cultivates a community of traders who share insights and market trading strategies, complete with ‘Team Traders” (seasoned experienced traders curated from the community) who attempt to demystify and democratize trading for the newer members on the platform and the broader trading public. Subscriptions for the use of the platform are sold on a monthly and/or annual subscription basis to individual consumers through the Company website. The service is only offered through a monthly subscription at $100/month, or an annual subscription at $959/year. The Company does not offer the standard free trial period options common in most continuity programs.
The BlackBox Trading Platform has 3 Integrated Features available to all users: Trading Analytics, Social Engagement, and Education.NASDAQ
On the analytics side, the platform has most standard market features including real-time price data and news feeds as well as advanced charting capabilities. In addition, the platform has several proprietary features. These include volatility indicators, algo driven scanners, stock and options alerts, and option flow scanners.
In terms of social engagement, the BLBX platform provides for multiple ways for the user base to interact with one another. These include live streaming of charts and analytics, the ability to view, listen and chat with others on the platform, the capacity to click on tickers from other broadcasters with included dashboard dynamics, and the broad capacity to learn from others in terms of analytics and strategies. This set of functions provides for the ability for participants to monetize their following on outside social platforms via the Blackbox affiliate program. According to a recent report, the affiliate program in particular provides a financial incentive for BLBX members to promote the platform on all of their major social media platforms. Many BLBX affiliates are seasoned traders that have a large social community of followers on Twitter, Facebook, YouTube, etc. They target potential subscribers from their follower base to join BLBX and act as mentors in the community platform providing advice and education in dedicated BLBX rooms and channels. Affiliates earn $25/month each month for referrals for the duration of the subscription, and also earn $250/year for each yearly referral.
On the Education side, trading stocks or options can be intimidating to a beginner. BLBX offers a full education calendar for users to learn various aspects of trading, including topics such as Option Flow, Trading bootcamps, etc. The Education feature alone can allow for many users to stick to their monthly subscription for an extended period and prevents ‘Quick View’ cancellations.
Growth. Given this business model, and the company’s full services and feature-set, one would expect this to be a growing service. And one would be right. BLBX has seen rapid user growth from just under 1,200 at the beginning of 2020 to end the year just under 5,000. This growth was driven by a more aggressive marketing campaign by the company. Monthly recurring revenue has progressively increased to nearly $600K by year end 2020. The Company’s user base grew more slowly in prior years mainly because it was undercapitalized. The Company was able to invest more in marketing after raising capital in 2020. Customer acquisition cost is near $100 per user and with monthly subscription costs starting at $100, and on average customers staying for more than 8 months, this works out to an 8x ROI. This is a very healthy level and shows the promise of the business model.
Forward projections. According to recent research on the company, with a tested marketing strategy, the company is poised for further growth in 2021 and the coming years. Estimated user base is expected to cross 10,000 in 2021 and 35,000 by 2023, driven by ongoing marketing campaigns. It is important to note that even with these numbers the Company’s user base is still expected to allow for a lot of runway for growth, given that it would still be less than <1% of an estimated 20 million active/semi active trader demographic.
The company has established partnerships with major industry players, including TD Ameritrade, E*TRADE, and Tasty Works, the brokerage created by the founders of Think or Swim (acquired for $600+ Million), plus a platform integration agreement with Trade Station.
Blackbox executes an SaaS subscription revenue model that addresses a market with at least 54 million self-directed investors and 23 million active investor traders in the U.S. This includes a growing surge of Millennial and Zoomer investors who are actively seeking modern, cutting-edge Fintech solutions.
Blackbox also features an experienced management team combined with a proven and successful software development team that includes the former Sr VP of Technology at Schwab and Co-Founder of CyberTrader (acquired by Schwab for $488 million).
The main catalyst in play right now is the company’s financial results for the first quarter of 2021, with the following highlights:
Gust Kepler, CEO of Blackboxstocks, commented, “Blackboxstocks continued on its strong growth trajectory throughout the first quarter of the new year after the banner year that we had in 2020. The GameStop short squeeze/ WallStreetBets phenomenon that began this January has brought an enormous amount of attention to democratized trading. This theme of ‘rise of the retail trader’ has dominated the 2021 news cycle to date, further bolstering our confidence in the Blackboxstocks hybrid platform that we’ve created.”
This follows the company’s post of its 2020 full-year results:
In the associated release, Kepler commented, “2020 was a pivotal year for Blackboxstocks as we obtained the capital necessary to conduct a sustained marketing initiative that drove an increase in our user base of 309% over 2019. The resulting revenue increase combined with our lean operating structure enabled us to refinance potentially toxic convertible debt on favorable terms and exponentially lower the cost of our debt financing. With a stronger base to support operations, we are looking forward to another banner year in 2021.”
BLBX shares have been consolidating in a range between $2-$3.50 over the past year. But the upper end of that range has developed into a potential hot-spot trigger zone for covering and momentum participation if the stock can breach the barrier based on its recent strong growth trends.
This is where we see the bull ascending triangle and 50-day moving average triggers in confluence.
BLBX is in the sweet spot for markets right now. The retail-focused fintech services space is well-suited to a late-stage bull market context. More and more people are becoming active market participants, which points to a growing market for the company’s services.
BLBX has shown very strong growth in recent periods, which makes sense given its exposure, model, and vision. But the stock hasn’t seen enough liquidity to pay-off the thesis at this point. That could change as more market participants become aware of the story.
The social trading idea is a growth thesis as more market participants from the Millennial and Zoomer demographics get involved in markets. Clearly, the further we go into the future with markets, the more markets will be at the mercy of coordinated, socially informed participants.
This includes education and analytics, which are also part of the BLBX platform.
This report is for information purposes only and is neither a solicitation or recommendation to buy nor an offer to sell securities. The Bull Report is not-a-registered-investment-advisor. The Bull Report is not a broker-dealer. Information, opinions, and analysis contained herein are based on sources believed to be reliable, but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. The opinions contained herein reflect our current judgment and are subject to change without notice. The Bull Report accepts no liability for any losses arising from an investor’s reliance on the use of this material. Starting on June 1, 2021, The Bull Report has been compensated $20,000 per month for coverage of BLBX by BlackBoxStocks, Inc. The Bull Report and its affiliates or officers have purchased 6885 common shares of BLBX in the open market after initiating coverage on this security on June 1, 2021. The Bull Report and its affiliates or officers may purchase, hold, and sell shares of common stock of this stock, in the open market at any time without notice. The Bull Report will not update its purchases and sales of this stock in any future postings on The Bull Report’s websites. Certain information included herein is forward-looking within the context of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning manufacturing, marketing, growth, and expansion. The words “may”, “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend,” ” project,” and similar expressions and variations thereof are intended to identify forward-looking statements. Such forward-looking information involves important risks and uncertainties that could affect actual results and cause them to differ materially from expectations expressed herein. *The Bull Report does not set price targets on securities. Never invest in a stock discussed on this website or in this email alert unless you can afford to lose your entire investment.
Additionally, The Bull Report has been compensated $152,500 for coverage of BLBX in November 2021, by BlackBoxStocks, Inc.