VERB Stock Price Down 15% Today – Time to Buy VERB stock?

The price of VERB stock is retreating 15% today after two days of frantic gains during high-volume trading sessions.

On Tuesday, the price of VERB rallied 17.4% to end the day near the session’s highs at $1.55 per share while the rally continued yesterday, with the stock closing at $2.05 per share for a 32.5% gain.

However, yesterday’s price action shows that significant selling took place, as the price slipped sharply from a session high of $2.55 to then settle at the lower level indicated above.

Data from Finviz shows that traders may have pulled a short-squeeze on VERB stock as short float stands at 7.25%, which results in around 4 million borrowed shares. Under normal circumstances, it would take short sellers around three to four days to fully cover their position without affecting the price too much.

However, a sharp increase in the price such as the one the stock experienced in the past couple of days would have forced these short-sellers to quickly buy to cover – a situation that may have led to the pronounced push seen yesterday.

With the stock still remaining a bit inflated after the squeeze, could this be an opportunity to buy VERB at a moment when retail traders might are increasingly focusing on the stock’s price action?

The following article takes a closer look at VERB’s fundamentals to see what kind of company this is.

VERB stock – technical analysis

A closer look at VERB stock shows that the share price has at some point reached very elevated levels above $45 per share. However, the stock has declined swiftly to current levels amid the firm’s inability to push its revenues as high and as fast as the market once expected.

Meanwhile, yesterday’s candlestick formation shows that some heavy selling took place during the session and today’s price action is following that same rhythm. All of this points to the potential exhaustion of the short-squeeze play while the company’s valuation metrics are not at all attractive at current levels based on the company’s historical performance.

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VERB stock – fundamental analysis

Verb Technology is a software-as-a-service (SaaS) company based in Utah that has designed a mobile CRM platform that features a video-chat module through which sellers can interact with customers by using their smartphones.

The company’s software supports 48 different languages and it can be integrated with other popular CRM and ERP platforms such as Oracle NetSuite, Adobe Marketo, and Salesforce.com. Revenues come from subscription fees paid by companies, solopreneurs, and other users. Additionally, the company generates revenue through affiliate marketing.

The firm produced revenues for the first time in 2019, with sales landing at $10 million last year for a 9.5% advance compared to the previous year. The company’s gross margin is around 50% while net losses for the firm have grown from $3.4 million in 2012 to $25 million last year.

VERB Technology has been aggressively expanding its share count to raise money for its operations, with the company’s share count moving from 20.2 million in 2019 to 62.63 million by the end of the first quarter of 2021.

By the end of these first three months of 2021, VERB’s long-term debt landed at $3.75 million on assets of $43.6 million including $25 million in intangibles. Meanwhile, the firm had $12.9 million in cash by the end of that period.

According to estimates compiled by Seeking Alpha, analysts are expecting to see Verb’s revenues landing at $13.5 million this year, which would result in a 35% jump compared to last year’s top-line results. Based on those forecasts, the company is being valued at around 6.5 times its estimated 2021 sales.

This multiple seems fairly stretched considering that the firm has only been reporting revenues for two years while it does not display the kind of growth that one would expect to justify such a high multiple.

All in all, Verb is an early-stage startup that has not moved past the adoption stage. The company would have to convince many more clients to adopt their CRM software to ramp up its revenues in the future and its ability to do so has not yet been proven.

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