Elephant Talk Communications Inc. (NYSEMKT:ETAK)

CAPS Rating: 1 out of 5


Player Avatar TSIF (99.96) Submitted: 12/9/2011 1:09:22 PM : Underperform Start Price: $3.25 ETAK Score: +12.08

Elephant Talk Communications has "played the $2.20 to $3.20 game several times over the last few years. While some of my fellow fools who downthumbed it at around $2.40 the last month or so weren't respecting the cycle, they also missed a little potential "catalyst".

Elephant Talk Communications ran up from $2.40 to $3.35 in anticipation of moving to the Big Board AMEX. This gives them quite a bit more validity than they had as an OB stock. IN most cases a runup to the big boards also implies that some index funds will pick them up and with the low share volume give it another boost. What they miss is that that runup is usually short lived and the AMEX in particular has few indexes that ETAK would fit into.

While I've always believed Elephant Talk is a real company and it has some potential, it is FAR, FAR ahead of it's current valuation. IT may double sales every quarter, but double a million is two million and far from a $320 MIllion Market cap and an 8X P/B and 10X P/S. The company constantly issues stock to maintain cash flow. It's services, especially it's mobile security MAY catch on, but it's too early to invest in MAY at these levels. Cash burn continues to grow faster than reveneue. Losses mount from the land line side.

I'd suggest those interested look back at a few quarters of the verbage that goes with the quarterly reports.

Back to playing the cycle until this one deserves to keep a runup. I might miss a breakdown as some other fools were looking for, but I'll keep an ear on it. I won't forget....

Member Avatar Mega (99.97) Submitted: 12/12/2011 7:05:01 PM
Recs: 0

Agreed. The MVNO side of their business is pointless. But hope for mobile payment security provides the vast majority of the stock price. I would not short in real life because the speculative upside is huge (even before they moved up). Of course the fundamental downside is huge as well.

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