Shares of 1-Page Ltd (ASX: 1PG) have swung wildly in recent months. After hitting a high of $5.69 in September, the share price has cooled considerably and is now trading at $3.07, down 46% from that point.
Who is 1-Page?
Inspired by the book called “The One-Page Proposal”, 1-Page is a Silicon Valley-based company that is striving to revolutionise the way in which businesses around the world hire and promote new talent.
Essentially, the business has developed a platform that allows companies to save time and money in reading through thousands of resumes by instead asking applicants to complete a one-page proposal. It can reportedly reduce the time-to-hire from 13 weeks to just 4 weeks and eliminates most applicants who are not suitable (or not qualified) to complete the tasks that would be involved in the job.
It can also help to reduce staff turnover by better ensuring the right person is hired in the first place.
Along the way, 1-Page has picked up a number of key clients, including businesses such as Starbucks, Red Bull, Amazon and Sears. Most recently, it said it had signed nine annual contracts with a value between US$50,000 and US$300,000. These deals are extremely important for the company, and indicate a promising future.
Indeed, the concept behind the business is exciting and was one of the primary reasons why the company’s share price rose an astonishing 2,745% from the time of its initial public offering (IPO) in October 2014, to its peak price in September this year. Even at today’s discounted price, the business boasts a market value of nearly $470 million.
If 1-Page’s platform truly takes off and becomes a global success, that price will likely look very attractive in hindsight. Indeed, it could go on to rival established and dominant businesses such as SEEK Limited (ASX: SEK) and LinkedIn.
The fact is however, it’s still very early days for 1-Page and there is a very big risk that it won’t succeed in its endeavors. To begin with, the company is generating very little revenue today (just $158,900 in revenue in the six months to July 2015), while cash flows also remain weak, which makes $470 million a very expensive price tag on the business. That likely explains the recent pullback in the company’s share price.
Although 1-Page’s revenues and cash flows remain low, it will begin to generate more as it signs more customers. For instance, 1-Page said revenues increased 20% during the third quarter (compared to the quarter immediately prior) and a “material uplift” is expected in the fourth quarter.
Should you buy?
Personally, I’m very excited to see what 1-Page can achieve, and believe management is capable of growing the company significantly from where it is today. While investors could look to take advantage of the recent dip in price it is vital that they remember 1-Page is a very risky and speculative business which should only be included in a properly diversified portfolio.