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AppsVillage (ASX:APV) share price rockets 134% higher on TikTok agreement

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The AppsVillage Australia Ltd (ASX: APV) share price has been on fire on Thursday after returning from its trading halt.

At one stage today, the Software-as-a-Service (SaaS) solutions provider for small and medium sized businesses saw its shares rise a remarkable 134% to 22.5 cents.

The AppsVillage share price has since given back a good portion of these gains, but is still up 87.5% to 18 cents currently.

Why is the AppsVillage share price rocketing higher?

Investors have been scrambling to buy the company’s shares after it announced an agreement with leading video-sharing social networking platform TikTok.

This deal will allow its small to medium sized business customers to advertise on the TikTok platform via AppsVillage’s advertising campaign manager, JARVIS.

According to the release, JARVIS for TikTok will provide an optimised solution for small businesses to quickly and easily create and manage intelligent online advertising and promotion campaigns in a matter of minutes.

This follows TikTok’s decision to launch its self-serve advertising platform in July, which is focused on encouraging and increasing the advertising spend and reach of small and medium businesses.

What will AppsVillage earn from this?

AppsVillage currently has approximately 4,500 small businesses as paying customers. They will now have the ability to advertise on the TikTok platform via JARVIS.

Though, it is worth noting that these businesses already had the ability to advertise via TikTok by going direct. The JARVIS campaign manager merely makes the process easier.

Management expects to achieve a gross profit on every advertisement made via JARVIS on TikTok. And while it couldn’t reveal the exact terms for commercial reasons, it expects to add “between 15-30% of the amount charged by TikTok to the Company.”

It added: “The actual revenue the Company will receive is based on TikTok advertising by APV’s current and new customers (SMBs). However, given the popularity of TikTok and as such, its ability to drive revenue for SMB’s, the Company expects that it will see material revenue over time from this new strategic partnership.”

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Returns as of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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