On the stock market, “no news” means not seldomly “bad news” and in the case of app developer Bitzio, we believe the time has come to turn cautious on the company’s short-term prospects. We have previously highlighted the potential in the company’s strategy. However, Bitzio has still not managed to deliver anything tangible.
Bitzio’s highly anticipated NFL Football Trivia App was supposed to be released in mid-December and the company even showed a sneak-preview clip at an investor conference in early December. Since then, it has been silent and week after week has passed without any news. Now that Super Bowl has taken place and the NFL has entered off-season, we think there is a high likelihood that the app will be postponed even further and even if it was to be launched any time soon, chances are high that it will not get full attention from potential gamers.
The problem with that is that Bitzio seriously needs the cash flow from the NFL app. Its strategy of tailor made apps to existing audiences and fan communities sounds good and the company has several interesting license agreements with media and sports organizations (like NFL Players). However, there is still no app on the market that has the potential to earn any meaningful money for the company.
We are not certain how the future financing of Bitzio will look like. It seems likely that there will be another round of equity or convertible financing. Given the delayed execution and lack of real products to show, we believe the conditions for the new rounds of financing will be less and less favourable for existing shareholders.
From the start, we highlighted Bitzio as a high risk – high potential case. It’s a good reminder that it takes time to build a sustainable business, even with a good plan. We do not want to exclude that Bitzio will succeed one day. The road is simply too long and bumpy for our taste.