Previously, we ran a special on Surge Holdings Inc (OTCQB:SURG) focusing on some of the technical factors, as well as fundamentals that have got under the radar for most of 2019. From that report, when SURG was at $0.305 per share, we have updated Surge Holdings to a “BUY Status at 97%”, with support holding for the last 10 trading days, with moving average lines now converging. Most significant: From a 3-way (ARP) moving average convergence as of last week, we were looking for SURG to break $0.34 in order to put it into the next trading channel. Today, SURG broke that level with a 280% increase in trading volume, with a high today of $0.35.
A Recent acquisition adding 9,800 retail locations and over $48.7 million in annualized revenues to Surge Network an additional 40,000 locations contracted through national trade association now positions the company to maintain the new trading channel.
However, today investors were taken by surprise when the company announced that it now has an annualized revenue run-rate in excess of $10 million, with rapid growth in Surge Logics sales with an increase of an estimated 1000% in January 2020 Versus the same period as last year. This puts Surge Holdings Inc into a completely difference category in the OTC Markets, and the volume today was the first indication that a large base of shareholder now has SURG on their watch-lists.
Brian Cox, Chairman and CEO of Surge Holdings, commented,
“We are generating significant traction in our Surge Logics subsidiary. This is best illustrated by the fact we achieved unaudited gross revenue of nearly $1 million in January 2020, close to a ten-fold increase versus the same period last year. This puts us at an annualized revenue run-rate in excess of $10 million within this division alone.”
Source: GlobeNewsWire Press Release: “Surge Holdings Reports Rapid Growth in Surge Logics; Surge Logics Sales Increase Nearly 10-Fold in January 2020 Versus Same Period Last Year”
After hours today, a report came out putting Surge Holdings in the Debt/Revenue Convergence category. This essentially tracks the company through 2019 where it spent money to expand its network and model. In order to approach the Debt/Convergence model, a company would need to show a dramatic increase in revenues, that was a direct by-product of the spending that was made the previous year. This is a high priority principle among leading investors as it shows, before the fact, that the company is near a position of cash flow positive. In the case of Surge Holdings from this mornings announcement, their revenues are exponentially growing.
A prime example of this is Surge Holdings Inc (OTC:SURG), which is now a top candidate. Surge shares are undervalued due to the companies lull in 2019, which say the company spend on large development projects. However, today’s press release shows that the debt/revenue convergence is within sight now. Investors were first alerted to this possibility with the completion of the ECS Prepaid Network acquisition in November 2019 notable adding over $48.7 million of top line revenues and 9,800 retail locations with significant cross-sell opportunities for other Surge products and services.
Taken together, this positions the company to expand significantly, and hence, dramatically increase the price per share of the stock. In first the first week of April 2019, SURG attempted to break the $1.00 per share target, ultimately losing steam at $0.94 per share. At that time, the company did not have 9,800 retail locations and over $48.7 million in annualized revenues to Surge Network an additional 40,000 locations, and a run rate of $10 million within a single division alone. However, now they do and this time there is a higher number of investors watching as the company can now witness the price of the stock following the growth of the company, which as of 2020, has been exponentially high.