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SurgePays (SURG)
NASDAQ:SURG
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SurgePays
(NASDAQ:SURG)
46Neutral
Positive Factors
Market Opportunity
There are ~100 million adults in the U.S. that are underbanked, representing a significant market opportunity for SurgePays’s products.
Strategic Partnerships
The company recently signed a major agreement with AT&T to offer a full range of mobile wireless, voice, data, and messaging services on the nation's largest wireless network.
Valuation
SurgePays stock is trading below cash value, which is very low compared to any fintech, retail, or consumer company.
Negative Factors
Financial Performance
SURG reported a 3Q24 results with a net loss of ($0.73)/share as the Affordable Connectivity Program (ACP) expired in mid-May 2024.
Program Termination
ACP was the source of 97% of SURG's gross profit in 2023, so no re-funding creates a huge revenue 'hole.'
Revenue Loss
SURG voluntarily continued to provide wireless services to its 280K ex-ACP customers even though it was receiving no ACP revenue.
SurgePays (SURG) vs. S&P 500 (SPY)
Market Cap
$27.02M
Dividend YieldN/A
Average Volume (3M)89.24K
Price to Earnings (P/E)―
Beta (1Y)1.64
Revenue Growth-40.73%
EPS Growth-176.24%
CountryUS
Employees22
SectorTechnology
Sector Strength51
IndustrySoftware - Application
Share Statistics
EPS (TTM)-1.11
Shares Outstanding20,161,547
10 Day Avg. Volume63,252
30 Day Avg. Volume89,243
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.32
Price to Cash Flow (P/CF)-0.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.50Price Target Upside548.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
SurgePays Business Overview & Revenue Model
Company DescriptionSurgePays, Inc., a financial technology and telecommunications company, provides services to the underbanked community in the United States. Its blockchain platform utilizes a suite of financial and prepaid products to convert corner stores and bodegas into tech-hubs for underbanked neighborhoods. The company offers voice and SMS text messaging services to subsidized and direct retail prepaid customers, as well as to low-income consumers. It also offers subsidized mobile broadband services to consumers in California, Colorado, Florida, Illinois, Maryland, Mississippi, Missouri, Nevada, New Jersey, Ohio, Oklahoma, Rhode Island, Tennessee, and Texas, as well as prepaid wireless plans. In addition, the company provides marketing business intelligence, plaintiff generation, and case load management solutions primarily to law firms in the mass tort industry. Further, it operates a bilingual operations center offering the Company with sales support, customer service, IT infrastructure design, graphic media, database programming, software development, revenue assurance, lead generation, and other various operational support services. The company is headquartered in Bartlett, Tennessee.
How the Company Makes MoneySurgePays generates revenue by facilitating and processing transactions through its proprietary platform, which connects retailers with suppliers and distributors of financial and prepaid products. The company earns money through transaction fees and commissions on the sale of prepaid wireless and financial services products. Additionally, SurgePays partners with retail locations to distribute its services, expanding its reach and customer base. Key revenue streams include fees from activating prepaid wireless plans, selling top-up services, and providing financial services such as bill payments and mobile banking solutions.
SurgePays Financial Statement Overview
Summary
SurgePays is grappling with profitability and cash flow issues, as evidenced by negative margins and cash flow challenges. Despite some improvement in equity, the company faces significant financial hurdles with a volatile revenue trend and high production costs relative to revenue.Income Statement
SurgePays shows volatile revenue trends with a notable decline in the TTM period. The gross profit margin is significantly low, indicating high production costs relative to revenue. Both EBIT and EBITDA margins are negative, reflecting operational inefficiencies. The net profit margin is also negative, highlighting profitability challenges.45
Neutral
Balance Sheet
The company's balance sheet reveals a strengthening equity position with positive stockholders' equity in recent periods. However, the debt-to-equity ratio remains a concern, although it has improved. The equity ratio suggests moderate financial stability, but the company must address its liabilities to maintain this trajectory.55
Neutral
Cash Flow
Negative operating and free cash flows in the TTM indicate cash management issues. The free cash flow to net income ratio is concerning, and cash flow from operations does not cover net income, highlighting liquidity risks. The significant financing cash inflow suggests reliance on external funding.40
Negative
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 83.60M | 137.14M | 121.54M | 51.06M | 54.41M | 25.74M | Gross Profit |
| 3.85M | 35.64M | 13.47M | 6.17M | 2.47M | 5.44M | EBIT |
| -22.54M | 18.87M | 873.66K | -5.99M | -8.40M | -6.78M | EBITDA |
| -20.64M | 20.08M | 1.86M | -5.23M | -5.40M | -7.94M | Net Income Common Stockholders |
| -22.90M | 20.62M | -148.85K | -18.80M | -16.90M | -8.22M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.60M | 14.62M | 7.04M | 6.28M | 674.00K | 346.04K | Total Assets |
| 8.79M | 41.93M | 34.00M | 19.50M | 7.33M | 9.99M | Total Debt |
| 8.42M | 5.44M | 8.11M | 7.68M | 7.67M | 8.50M | Net Debt |
| 6.82M | -9.18M | 1.08M | 1.40M | 6.99M | 8.16M | Total Liabilities |
| 19.18M | 13.52M | 28.89M | 15.95M | 18.05M | 14.69M | Stockholders Equity |
| -10.39M | 28.25M | 4.99M | 3.55M | -10.73M | -4.70M |
| Cash Flow | Free Cash Flow | ||||
| -11.17M | 10.01M | 94.69K | -15.34M | -4.33M | -6.76M | Operating Cash Flow |
| -11.46M | 10.29M | 793.27K | -15.29M | -4.33M | -6.53M | Investing Cash Flow |
| -10.31M | -281.30K | -1.50M | -376.72K | 8.35K | -32.24K | Financing Cash Flow |
| 22.96M | -2.42M | 1.46M | 21.27M | 4.65M | 6.47M |
SurgePays Technical Analysis
Positive
1.31
Price Trends
1.40
Negative
1.57
Negative
1.99
Negative
Market Momentum
-0.03
Negative
49.86
Neutral
79.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SURG, the sentiment is Positive. The current price of 1.31 is above the 20-day moving average (MA) of 1.25, below the 50-day MA of 1.40, and below the 200-day MA of 1.99, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 49.86 is Neutral, neither overbought nor oversold. The STOCH value of 79.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SURG.
SurgePays Risk Analysis
SurgePays disclosed 20 risk factors in its most recent earnings report. SurgePays reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SurgePays Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $2.31B | 43.25 | 3.66% | ― | 9.41% | ― | |
59 Neutral | $450.37M | ― | -3.20% | ― | -22.61% | -173.59% | |
58 Neutral | $22.11B | 10.47 | -17.86% | 2.40% | 4.75% | -24.81% | |
54 Neutral | $4.29M | ― | -60.76% | ― | -4.13% | 76.87% | |
46 Neutral | $27.02M | ― | -80.54% | ― | -40.73% | -176.24% | |
40 Underperform | $23.77M | ― | -71.86% | ― | 6.44% | -307.54% |
* Technology Sector Average
Performance Comparison
SURG
SurgePays
1.31
-2.79
-68.05%
CLFD
Clearfield
31.87
3.42
12.02%
SMIT
Schmitt Industries
0.02
>-0.01
-33.33%
TTMI
TTM Technologies
23.42
8.02
52.08%
RKDA
Arcadia Biosciences
3.14
0.84
36.52%
TPCS
TechPrecision
2.37
-1.13
-32.29%
SurgePays Earnings Call Summary
Earnings Call Date: Nov 12, 2024 | % Change Since: -22.94% | Next Earnings Date: Mar 25, 2025
Earnings Call Sentiment Neutral
Despite significant revenue decline and increased losses due to the end of ACP funding, SurgePays is strategically transitioning to Lifeline and other growth initiatives, showing potential for future growth.Highlights
Strategic Transition to Lifeline Program
SurgePays successfully transitioned 70,000 customers to the Lifeline program, aiming for a total of 280,000, which is expected to cover overhead and bring cash flow breakeven closer.
Prepaid Top-Up Revenue Growth
Monthly revenue growth in the prepaid top-up platform surged nearly 400% in five months, reaching $2.2 million, with expectations of continued growth.
New Master Service Agreement with TerraCom
A pivotal partnership with TerraCom, Inc. to migrate 280,000 subscribers to Lifeline, establishing a steady alternative subsidy channel.
ClearLine SaaS Deployment
ClearLine point-of-sale platform is ready for market deployment and expected to contribute meaningfully to consolidated revenues by Q1 2025.
Expansion in El Salvador
Opened a dedicated sales and operations center in El Salvador, transitioning nearly 100 team members to full-time SurgePays employees to support growth.
Lowlights
Significant Revenue Decline
Revenues decreased by 86% year-over-year from $34.2 million in Q3 2023 to $4.8 million in Q3 2024, primarily due to the shutdown of the ACP funding program.
Increased Loss from Operations
Loss from operations was $14.3 million during the third quarter compared to a $7.1 million profit in the year-ago period.
SG&A Expenses Surge
SG&A expenses increased by 97% year-over-year due to additional noncash stock compensation and contractor fees.
Decreased Cash Balance
Cash, cash equivalents, and investment balances dropped to $23.7 million at the end of Q3 2024 from $38.4 million in the previous quarter.
Company Guidance
During the SurgePays Q3 2024 earnings call, the management highlighted their strategic focus on transitioning from the Affordable Connectivity Program (ACP) to the Lifeline program, following the cessation of ACP funding in May. They emphasized their efforts to migrate 280,000 subscribers to Lifeline, leveraging a new partnership with TerraCom, Inc., to ensure sustained revenue generation. The company's Q3 revenue was $4.8 million, a significant decrease from $34.2 million in Q3 2023, primarily due to the ACP shutdown. However, their prepaid platform services segment saw a 69% growth to $4.7 million. SurgePays is also ramping up its LinkUp Mobile brand with plans for a significant rollout in Q1 2025, expecting to secure a direct carrier connection to enhance service offerings. The company's ClearLine point-of-sale SaaS platform is anticipated to contribute meaningfully to revenues by early 2025. Despite the challenges, the company is optimistic about achieving cash flow positivity by scaling its Lifeline customers and expanding its prepaid services.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.