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The Motley Fool’s Latest Article About Investing in XPE Shows How Little Effort They Go To.

So, you’ve probably seen the ads for the Motley Fool spreading share market clickbait around the internet. You’ll never guess which stock is about to rise by x%! You won’t believe what will happen to your shares if you click here and sign up to our newsletter! See which stocks we picked last year that went up, and we won’t mention the ones that shat themselves leaving retirees and well-intentioned parents in the lurch as they lost their hard earned!

Example:

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They’re pretty much the buzzfeed of the investing world, relying on sensationalist ‘clickbait’ headlines to reel in readers and sign them up for a newsletter and eventual paid subscriptions, which could be quite disastrous to an amateur investor that gets the impression there are any sort of experts behind the racket and buys the stocks that the Fool generally already owns (and thus benefits as an influx of newbies pay a higher price).

Today’s article “Why the XPED Ltd share price is rocketing today” (Link here) really requires a sad shake or two of the head. Real investors should be concerned that this is being passed off as any combination of news, research or analysis rather than just copying and pasting the first few facts they could find in a vague attempt at ‘downramping’ for the writer or site owners to buy in cheaper. Amateur investors would be worried at how little research had gone into this article if they also half-arse their paid articles the same way. In a moment, I’ll pick it apart.

In the interests of full disclosure, I am a shareholder of XPED limited (XPE). Why? I did my research and did even more research, and despite the ongoing volatility of 10-20% in some single trading sessions, I realised that management were extremely competent, the company has plenty of cash at bank, and the actual business idea is extremely revolutionary and backed by actual tech-heads who now have the money to make their dream come true. This is not some marketing company or dot com-esque hype which attempts to pump and dump through using the word ‘technology’ or ‘internet of things’.

So, Motley Fool’s ‘Tom Richardson’ has come up with that article. Presumably, and call me cynical, it was only written while sitting on the toilet in a 5 minute period without doing any real research because their uninformed subscriber base have been asking questions as the share price ‘rockets’ and they have to pretend to have been following it or know something, anything, about it. But what does he have to say?

Shares in micro-cap tech business XPED Ltd(ASX: XPE) jumped around 24% to 0.078 cents

XPE-chart-18-5-2016

First mistake there.. 0.078 cents is a tiny fraction of a cent. Perhaps you meant 7.8 cents? I’d be backing up the truck to put more of my money in if it was under 1 cent again, that’s for sure. I may be nitpicking here, but when you’re dealing with the Fool’s uninformed amateur subscriber base, you might want to be accurate and making sense.

Xped says that it has developed some revolutionary technology that will allow anyone using their smartphone to connect and control other everyday electronic devices via the Internet of Things.

It has named the technology Automated Discovery Remote Control (ADRC)

I guess that’s accurate-ish.. but it’s only the tip of what they are doing. Again, you could always actually read about the company to make it look like you had heard of them before today.

This may also explain why Xped has a wide following of retail shareholders who are hoping to strike it reach by speculating on its shares and money-making potential. Another reason for the evangelical-like belief of some in Xped’s potential may be the success of ASX-listed Altium Limited(ASX: ALU).

I don’t think a lot of existing holders are trying to strike it ‘reach’ as an end goal. More that we’ve done analysis and seen deals starting to come through with different companies and seen what the company might realistically be worth. We’ve realised that it won’t take a lot of revenue to make this current share price and market cap seem incredibly low. Even 1 of the deals in progress (any of them) could provide the revenue alone to justify today’s market cap, so with 2-3 finalised shortly? You do your own maths.

Also, I think Altium barely gets a mention from most investors who are interested in this one – it’s strange to just throw a mention of that in there (oh wait, motley owns shares in Altium, now that makes sense) – the investors who bought in over the 2-4 cent range were more interested in the real world applications ADRC has and the high quality people involved who are very quickly getting things done.

However, Xped remains at the speculative end of the market with a value around $77 million according to Commsec

Whoops! You’re just looking lazy and unironically foolish now! It’s closer to double that, which it took me 2 minutes to find out from their April Investor Presentation document!

xped capital structure

I can barely continue..

It raised $8.02 million through the issue of shares over the period and investors might want to consider how long that cash balance can last before the company will need to bring in some revenues or find more capital.

Bring in some revenues.. as the company’s own timeline suggests will only be a few more months? Also, presumably all the above XPEOB options will be converted by shareholders before expiry due to the 1.5cent strike price. That equates to hundreds of thousands of dollars extra.

xped timeline revenue

 

And that was before they acquired a revenue generating healthcare company and announced the Telink deal.

As harsh as it sounds, this is a terrible article.. if the minimal effort here went into a high school assignment the Motley Fool would be given a C+. Potential subscribers can make of that what they will. I was one, but I chose to invoke the money back guarantee (which was admittedly hassle-free). Even 10 minutes research instead of 5 could have made all the difference. Whoever Tom Richardson is, he wasn’t cut out for the world of investing.

 

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