WTF!?!? Verb Technology’s Stock Price Makes No Sense!

Let’s say I offered you a chance to get an instant $13 back for every $4 you spent.

Too good to be true, right?

That’s what I thought when I first stumbled upon Verb Technology Company’s [NASDAQ: VERB] FY2024 results.

But, lo and behold, there it is, plain as day, sitting right there on its balance sheet:

• ~1 million shares outstanding;
• ~$13.4 million in cash (and cash equivalents) on its books (i.e. ~$13.40/share), and;
• A share price that’s hovering not far above the $4 mark.

In other words, if you went about buying up every Verb share right now (without moving the price… but good luck with that), shut down its entire business, and walked away with the bank accounts, you’d pretty much 3x your investment overnight. Simple as that.

Now, I know what you’re thinking at this point.

“This all seems a little simple… a little too good to be true… surely there’s a catch!?!?”

“Is the company up to its eyeballs in debt?”

“Do its liabilities outsize its assets?”

“Are you simply confused and somehow conflating intangible with tangible assets…?”

Weirdly enough, the answer to all of those is nope, nope, and double nope. Although, to be completely honest, I am simplifying things a little bit.

Yes, Verb does have a little bit of debt ($464k). And yes, it also has a handful of liabilities ($4.6 million).

But, it’s also got a bunch of stuff offsetting this — $2.8 million in receivables, plus another ~$4.2 million worth of non-current assets.

In fact, when all’s said and done, Verb’s tangible book value comes out to slightly over $13 million — not too far off that $13.4 million cash figure I quoted before.

So what exactly’s going on with Verb Technology Company [NASDAQ: VERB] here?

Let’s take a closer look.

First, What the Heck Does Verb Even Do?

For what seems like years now, we’ve been hearing murmurings about how so-called “livestream social commerce” was set to be the next big thing.

This all kicked off back in the late aughts when the format first appeared in China with Alibaba’s [NYSE: BABA] 2016 launch of Taobao Live.

By early 2020, the format had well and truly penetrated the mainstream: 62% of Chinese internet users had used the format by March 2020, spending over RMB434 billion (US$ 66 billion).

In short, we’re talking about crazy growth, and every eCommerce pundit and his dog were counting down the days until it started its westward expansion.

Enter Verb Technology Company [NASDAQ: VERB] — a (you guessed it) livestream social commerce technology platform that fetched some big valuations over the COVID-19 period as investors piled into everything and anything remotely “online”.

Sadly, however, the trend never really caught on in the West.

Or, at least, it didn’t catch on during COVID.

But then something happened.

In 2023, McKinsey (yes, that McKinsey) put out a report: Ready for Prime Time? The State of Live Commerce. In that report, they noted that uptake in the West was finally starting to happen. One key stat here: at the time, only 2% of live-commerce users in China were first-time users, whereas 78% were first-timers in the United States, 82% in Europe, and 83% in LATAM.

Translation — livestream social commerce was starting to catch on.

And, a year later, the numbers were backing this up — by late 2024, U.S. live shopping sales on TikTok had increased 40% YoY.

And, as for Verb — its revenues absolutely exploded, from just $63k in 2023 to $895k in 2024.

That’s 1,321%.

Let me repeat that.

Verb’s revenues exploded by 1,321% in 2024.

And they’re showing no signs of slowing down. In fact, they’re showing all the characteristics of a good ol’ hockey stick curve. (Q2: $37k, Q3: $128k, Q4: $723k)

No wonder Gary V’s so excited.

That’s Great, But Where’s the Catch?

If you’re still with me, then I’m gonna guess you’re in one of two camps.

Either you’re in the “Ah, I get it!” camp.

Or, you’re in the “But really, where’s the catch?” camp.

If you’re in the latter, then this bit’s for you. (If you’re in the former, then you can skip this section.)

So far, what we’ve seen is a company that’s not only experiencing explosive growth, but also has a balance sheet that’s a little too good to be true (compared to its market cap).

So, how did we get here?

The first hint that gives it away is the first half of the last section.

To recap:

• Livestream social commerce went gangbusters in China.
• Everyone expected the same to happen in the west, especially during COVID.
• Expectations saw Verb fetch some handsome valuations.
• By the time COVID lockdowns ended, livestream social commerce still hadn’t caught on in the West.

Naturally, with a timeline like that, what you end up with are some rather deflated investor expectations.

After all, if COVID lockdowns weren’t enough to make livestream social commerce catch on in the west, then clearly, the thinking would go, it’s never going to happen… therefore, Verb’s going to die a slow, protracted death.

And that, dear reader, is how you end up with a company whose book value far exceeds its market cap — investors expected it to die.

Now, to be completely fair, if it weren’t for the turnaround we started seeing by late 2024 — the 40% growth on TikTok in the U.S… Verb’s 1,321% revenue explosion — that would’ve been an entirely fair assessment.

Until late last year, Verb had all the hallmarks of a company that was about to die… until it didn’t.

So Where’s Verb Technology Going From Here?

At this point, it’s tempting to take Verb Technology Company’s [NASDAQ: VERB] 1,321% YoY growth figure and project that forward.

But let’s be real for a moment… unless you think Verb’s somehow going to overtake Walmart’s [NYSE: WMT] $680 billion revenues within 5-6 years, that’s a silly metric to use.

A more realistic metric to use is to look at updated expectations about livestream social commerce growth in the West.

Unfortunately, (reliable) statistics here are hard to come by.

One source forecasts a 32% CAGR from 2024 to 2030.

Another says 28.84% through to 2034.

And yet another says “just” 21.5% over the same period.

In other words, no one really knows exactly how much growth we should expect. The only thing we do know is that we should definitely expect growth (and a lot of it).

How?

Well, there are plenty of statistics pointing that way.

One such statistic is that Gen Z (Born 1997 to 2012) is the most enthusiastic demographic by far (83% surveyed use the format). Using that, we can then do a little bit of math:

• Gen Z makes up ¼ of the U.S. population (~85 million).
• Divided by 15 years (1997-2012), that gives us about 5.67 million Gen Z kids “coming of age” per year.
• 83% of that is about 4.7 million new livestream social shopping consumers per year. (And we get even bigger numbers if we calculate for increasing generational purchasing power.)

That’s a start.

But there are plenty of other figures pointing towards potential growth.

For instance, the same survey that found 83% of Gen Z shoppers were using live shopping also found that only 12% of them are using it monthly. As for why they weren’t using it more regularly, the majority said they would “if it was more consistently available”.

So we have a sort of chicken and egg problem — brands want to see regular users before they bother creating regular content, but would-be regular users want to see more regular content.

Fortunately, last year’s sudden acceleration in livestream social shopping should start to prompt more brands into action. And, if it does, that should set off the flywheel effect.

More content, more consistent users. More consistent users, more content.

And don’t forget about the way these things filter up through the generations.

Once the youngies adopt anything, it’s only a matter of time until their elder siblings, then their parents, and then their grandparents start using it. It’s a narrative we’ve seen play out with just about anything ‘tech’, from Facebook to TikTok, and everything in between.

Now, as for how we apply any of these (admittedly vague) growth forecasting metrics to Verb, expect to see Verb frontrun the growth.

Why?

That’s what we’ve already seen with Verb’s FY2024 results vs broader livestream social commerce growth. And, as more of a platform provider than a commercant, I’d expect to see that trend continue.

After all, brands wanting to dip their toes into the livestream social commerce waters will be turning to Verb to do so. Thus, Verb will be generating revenues right from the get-go.

Of course, that probably won’t be enough to keep Verb’s 1,321% growth going in perpetuum (compound that over several years and see what happens…). What it will deliver, however, is strong, above-market-trend growth for at least the next couple of years.
And once you couple that with a “too good to be true” balance sheet, one thing starts to become exceedingly clear… but I’ll leave it up to you to figure out what happens next for Verb Technology Company’s [NASDAQ: VERB].

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(Featured image by Born2Invest)

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