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Towerstream Corporation (OTCMKTS:TWER) has had more than a rough ride over the last twelve months, and as if things couldn’t get any worse, the company just delisted from NASDAQ and now trades OTC for little more than $0.25 a share. This is a company that was trading for more than $7 a share this time last year. Eighteen months ago, Towerstream touched $50.

Now, we don’t know where this one’s going to bottom out, but the there’s only so far a company like this can fall before either shorts start to cover, or speculative buy volume starts to roll in in anticipation of a bounce. With the delisting now formalized, and the immediate threat of a reverse split lifted, there’s a good chance this bounce could come soon, and with such a tiny float, any transaction volume boost could translate to some sharp upside momentum.

Before we get into the details, what’s Towerstream?

The company is a wireless broadband provider with a focus on the commercial side of the space. Essentially, it attaches extended range routers to the tops skyscrapers in large US cities, and then rents out access to the broadband that these routers transmit to the occupants of the skyscrapers. Its services are currently available in New York City, Boston, Los Angeles, Chicago, Philadelphia, and the San Francisco Bay area, as well as a few other places, and includes what should amount to a total of 430 buildings by the end of this year.

The thing is, a company trading for pennies at this end of the market doesn’t usually have the underlying operations that Towerstream boasts. It’s got substantial (relative to market cap) revenues, which are growing rapidly year over year. For the third quarter this year, the company posted revenues of $6.7 million, and EBITDA of $525,000. This is the third quarter in a row that Towerstream’s EBITDA has risen, and it represents a complete pivot from the negative $452,000 recorded in the first quarter of 2016.

So with quarterly revenues outweighing total market cap by a more than two times multiple, and growing EBITDA, why is the stock down where it is?

Debt’s the real issue, and that’s what’s weighing on value right now. Well, debt, and the above mentioned threat of an RS, which has now lifted since the company won’t need to split to stay on the NASDAQ.

Debt came in at circa $37 million at the end of the third quarter, but this dropped to closer to $32 million by way of an equity swap on November 10. It’s still a fair amount of debt to hold, even when offset against cash on hand (just shy of $13 million at September 30), but it’s not unserviceable.

So what’s next?

Well, as mentioned, it’s tough to say with any certainty when the current decline will bottom out, but at a current market cap of just $3.4 million, and the underlying operations as described, there can’t be much farther to go with respect to value loss. For us, it’s all about management staying course. Costs are falling as rollout expands. If Towerstream can hit on its target building count by the end of the year, it will have an addressable market footprint of close to 13,000 customers. It’s able to offer high speed broadband at a discount to the available alternatives in the buildings in question, in many cases up to a 40% discount, and so the pitch isn’t that difficult. Near term dilution isn’t a concern as long as the cash holds out, and as we’ve said above, once the company starts to swing it should pop up sharply on its low float. We’re on the lookout for any sign of this pop, in the form of operational updates that reinforce the company’s chances of hitting its own targets.

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Disclosure: We have no position in TWER and have not been compensated for this article.