Why I Shorted A Facebook App Stock Up 2,000% In 2 Months Whose Growth Is Slowing

As PennyStocking Silver subscribers and TIMalert subscribers know, I issued this real-time alert within seconds of my actual execution:

TIMalert: shorted 7k Snap Interactive Inc (STVI) at 4.07, volume fading, possible 1st down day, latest spike due to TheStreet.com article, I spent morning researching, growth has slowed, this is HUGELY overvalued, stock is up from 20 cents/share due to media hype, risk is another hyped up PR, more press, goal is mid 3s

(To those who think my success is due to frontrunning, you’re wrong…shorting the worst companies doesn’t work that way hence why all the highest paid pumpers focus on LONGS, not shorts…just ask Tobin Smith, Charles Payne and Ian Cassel…because with shorting it’s all about share availability and on this one good luck finding shares to short, Interactive Brokers had some early today, but they went fast…I used my special new broker that only people who fork over $4,500 for 3 months of PennyStocking PRO and sign a non-disclosure agreement, no joke, no exceptions, know about.)

Crazy to think about how far STVI has come in just 2 months:

snap interactive

snap interactive

…especially since we’ve been focusing on buying it on technical breakouts (see this video lesson I did about buying the technical breakout at $3ish), (and mind you subscribers of my 4 newsletters have made over $16,000 on this one, see all the trades) but upon closer inspection, STVI might just be up purely on media hype…after all, in the past 2 months during this astounding runup its had feature articles in Business Insider, Bloomberg, TheStreet.com, Businessweek, The New York Observer and The Washington Post (talk about good press, there’s very few other major media outlets left to write about their “success”), STVI’s major AreYouInterested.com app has barely gained any users:

areyouinterested

areyouinterested

…compare STVI’s dating app growth chart to now dominating Facebook dating app leader Badoo which has seen remarkable growth during the same time period:

badoo

badoo

(STVI’s critics say the app is somewhat spammy/questionable, perhaps that is what’s slowing its growth vs. Badoo? I don’t know, just speculating)

Heck even newcomer Speeddate is adding 75,000 users per day compared to just 50,000 for AreYouInterested.com so there’s plenty of competition:

speeddate

speeddate

And while STVI is new to getting a ton of press, and they seem to have learned how to monetize (which to their credit most in the social media space sadly have not), this hyped up product/Facebook App of theirs is NOT new, check out as of July 2008, nearly 3 years ago, it had 13 million users (now around 30 million)…so given that was 3 years ago, my guess is most, if not all of those 13 million users are irrelevant now, probly having already found a date or wife or husband or changed emails or don’t use the app anymore…

Which brings me to perhaps the best point of all: the online dating website sector is a TERRIBLE business and the # of users stats are all skewed..read this fascinating blog post with some serious math and see why…I won’t even disrespect it by quoting any of it here, you need to read this loooooong blog post.

My final point: with a $140 million-ish marketcap, STVI is now valued considerably higher than crowd favorite Foursquare…a Facebook app whose growth has slowed and has competitors galore with no discernible competitive advantage vs. Foursquare? I don’t think so…STVI may be a good company, but here at $4/share, it is simply overvalued….I do congratulate STVI on their solid PR savvy — no doubt a byproudct of bringing IR in house, their CEO being a former Lehman Brothers analyst (he knows how to get stock prices up) and their recent financing with the evil Rodman & Renshaw (probly overjoyed at hyping the many new media features given they did the financing in the $2 range just a few weeks back)

Oh screw it, I can’t help it, this entire runup is media hype, look: STVI also reported revenues up 100%+ back in November 2010 — guess what the stock did…it was near unchanged at 23 cents/share with volume of 15,000 shares, just like when they reported guidance in October, the stock was up from 17 to 21 cents/share on volume of 68,500 shares and August 2010′s earnings when the stock was flat at 35 cents/share…I wish I could find more shares to short here, but this is the gift and curse of my strategy/intelligence…

Actually this is more of a longer term short call, probly better for my new longterm newsletter (which you can see more details about now!), but this stock is a good short now and I can’t hold back quality research because it’s just too damn exciting to be able to break it to the world! (Suck it Bloomberg, TheStreet…all you guys who simply are too incompetent/gullible to do the hard/required digging)…and my longterm newsletter doesn’t launch until next week!

Anyway here’s a video explaining why the STVI chart is pretty prime for a short too…good on a daily chart and intraday given that it already ddi a classic morning panic from 4.50 to 3.70 (usually the beginning of the end for multi-week runners like this…as students of my instructional DVD packages know)

Posted in Basics, Short Selling, Short Selling Penny Stocks, Story Stocks, Video Lessons, Videos

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  • Tom Whitford

    It might go up 5% it might go down 5% can someone say gammmbling. Decent call with MCZ at 1.40, although your potential short was off when you first mention MCZ. tomorrow I think its going to gap, morning spike to 2.20-60 tank or consolidate. I also think you sholdnt talk about your short positions I remember the last time you did it, albeit you had a huge position in that oil property play, people knowingly squeezed you. The reason I also say that is because people know what that downtick before eod was all about. It would actually be “scarier” if people didnt know you were gambling. The teacher is now the student.

  • http://www.timothysykes.com Anonymous

    haha i will ALWAYS be 100% transparent, post $2+ millions in gains on http://profit.ly before u teach me anything, nice try though

  • http://www.timothysykes.com Anonymous

    PS for the 30 minutes after my report came out, STVI traded 100 shares and it was a buy…there are so few shares available to short, nobody can follow even if they wanted, which is good so it forces them to learn…dont u dare post assumptions on my site

  • Tom Whitford

    Is that an invitation to kick your butt publicly?

  • http://www.timothysykes.com Anonymous

    sure just stop wasting my time here

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