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Signal Bay Inc (OTCMKTS:SGBY)'s Rollercoaster Ride Could Be About To Soar

Signal Bay Inc (OTCMKTS:SGBY)'s Rollercoaster Ride Could Be About To Soar
Written by
Chris Sandburg
Published on
April 25, 2017
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Signal Bay Inc (OTCMKTS:SGBY) has been a bit of a strange stock over the last six months. The company ran up ahead of the recreational legalization ballots in the US last year, but ran up a little earlier than the vast majority of the other names that subsequently benefited from the sector hype. It actually declined into the ballots, and eventually dipped to trade nearly 65% off highs between very early November and mid to late December.Signal Bay has since picked up a little off these lows, and currently trades for around $0.02 (a 25% premium to the above noted December low), but in a sector that's continually rewarding seeming non-entities on nothing but loose ties to the predicted boom of the cannabis space, this is nothing more than flat action.As to why Signal Bay isn’t getting the boost that some of its peers are, and especially against a backdrop of continued operational development and expansion, in line with that of the industry, we've only got one guess – that it's under the radar right now because it’s a business to business company, and not a business to consumer entity. The latter type, in this space, seems to have been far more active in brand recognition than the former over the last six to twelve months, and while in other industries this sort of disparity in client type doesn’t make any real difference, in a nascent space like recreational cannabis – it might.Anyway, management just put out a release detailing the company's latest numbers, and we think this release might go some way towards closing the gap on actual and perceived value, and in turn, should serve to catalyze a return to the upside momentum after a drawn out period of sideways consolidation.Here’s our highlights from the release.The numbers relate to the company's performance during the first quarter of fiscal 2017, which for Signal Bay, translates to the three months to end December, 2016.For this period, revenues came in higher than the entire of 2016 combined, and on a year over year basis (so comparing the first quarter of fiscal 2017 to its comparable quarter in 2016) revenue rose by just shy of 300%. Revenues from the company's EVIO labs operations (regular readers will remember that it's this element of the company's operations that we highlighted in our previous coverage as being the element with the most growth potential) increased more than 1,330% between the two periods in question. Gross profit increased 143% year over year.The company now employs 35 full time members of staff, spread across six US cities, and is well on its way towards expanding this base as it rolls out additional laboratories (again, we're looking at the EVIO operations here) throughout 2017 and into 2018.Bottom line, Signal Labs is growing operationally, and this operational expansion is reinforced by the numbers that the company just reported – things are moving in the right direction on all fronts. That is, of course, except share price.So what's next?Well, for us, it's all about execution on the hub and spoke strategy we've discussed in the past. As the recreational cannabis space heats up, and it is doing already and it's going to continue to do so for the foreseeable future, the quality testing element of the industry will become not only a preferred option for grows distributors and (ultimately) consumers, but it will likely become a necessity. We're already seeing this type of shift in Oregon. For a company like Signal Bay (which for those not familiar with the company, is a cannabis quality testing play) this mandate activity is going to be a game changer.Sure, it's a small company right now, and sure, it's a dilution risk. Signal Bay has repeatedly issued to raise over the last twenty-four months, and it's likely to continue to do so during the coming twenty-four. From a growth perspective, however, there's plenty in the pipeline to add value above and beyond that lost through adding shares to the base.We will be updating our subscribers as soon as we know more. For the latest updates on SGBY, sign up below!Disclosure: We have no position in SGBY and have not been compensated for this article.

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