Loop Media Completes $12 Million IPO Terms (OTCMKTS:LPTV) – Seeking Alpha | Jewelry Dukan

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What is Loop Media?

Loop Media, Inc. (OTCPK:LPTV), based in Glendale, California, was formed to distribute short video content through its own operated locations and through a network of partners.

Management is led by Co-Founder, Chairman and CEO Jon M. Niermann, who has been with the company since its inception in May 2016 and was previously the Founder of FarWest Entertainment and President of Electronic Arts Asia.

The company transitioned to an advertising-based business model in early 2021 and had 12,584 quarterly active units as of June 30, 2022.

A recently formed partner will be responsible for 17,000 new screens and another network of partners will bring 13,500 screens into the company’s system.

As of June 30, 2022, Loop has booked $84.3 million in equity and debt investments at fair market value from investors including Dreamcatcher, Running Wind and Jeremy Boczulak.

The company is seeking network partners to operate from its public space Home Media locations in North America.

Loop’s IPO date and details

LPTV’s initial public offering (IPO) will take place on September 21, 2022 and will be open to retail investors for trading on the open market starting September 22, 2022.

(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing in an IPO or immediately after an IPO. Also Investors should stick with it, however, because many IPOs are heavily marketed, past company performance is no guarantee of future results, and potential risks may be underestimated.)

Loop intends to raise $12 million in gross proceeds from an initial public offering of its common stock and is offering 2.4 million shares at a proposed mid-price of $5.00 per share.

The Company’s shares are currently listed on the OTC Pink under the symbol “LPTV”.

An existing shareholder has expressed a non-binding interest in purchasing up to $5.0 million in shares at the IPO price.

Assuming a successful IPO, the Company’s enterprise value at IPO would be approximately $276.1 million, excluding the impact of underwriters’ over-allotment options.

The free float to outstanding share ratio (excluding over-allotments by underwriters) will be approximately 4.23%. Note: A number below 10% is generally considered a “low float” stock, which can experience significant price volatility.

Management says it will use the net proceeds from the IPO as follows:

for marketing, developing new customers, paying offer-related bonuses (totalling approximately $1,100,000) to certain of our officers, working capital and other general corporate purposes.

How to invest in the company’s stock: 7 steps

Investors can purchase shares of the stock in the same manner as shares of other publicly traded companies or as part of the pre-IPO allotment.

Note: This report is not a recommendation to buy stocks or other securities. For investors interested in making a potential investment after the IPO closes, the following steps to buying shares will be helpful.

Step 1: Understand the financial history of the company

Although not much public financial information is available about Loop Media, investors can view the company’s financial history on its Form S-1 or F-1 with the SEC (source).

Step 2: Evaluate the company’s financial statements

The primary financial statements available for publicly traded companies include the income statement, balance sheet, and cash flow statement. These financial statements can help investors understand a company’s cash capitalization structure, cash flow trends, and financial condition.

Loop Media’s financials have shown fast-growing revenues, higher gross profit but fluctuating gross margin, high and variable operating losses, but growing cash burn for operations.

Free cash flow for the twelve months ended June 30, 2022 was negative ($12.3 million).

Selling, G&A expense as a percentage of total revenue has varied significantly as revenue has increased; its sales, G&A efficiency multiple rose to 0.8x over the most recent period.

The company currently plans not to pay dividends and intends to reinvest future profits for its general corporate purposes.

Step 3: Evaluate the company’s potential against your investment horizon

When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader might be interested in short-term growth potential, while a long-term investor might prioritize strong financials over short-term price moves.

Step 4: Choose a brokerage

Investors who do not already have a trading account start by choosing a brokerage firm. Account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.

Investors who prefer fee-based advice can open a trading account with a full-service broker or independent investment advisor, and those looking to manage their portfolio at a reduced cost can opt for a discount brokerage firm.

Step 5: Choose an investment size and strategy

Investors who have decided to buy shares in the company should consider how many shares they want to buy and what investment strategy they want to adopt for their new position. The investment strategy determines an investor’s holding period and exit strategy.

Many investors choose to buy stocks and hold them for an extended period of time. Examples of basic investment strategies are swing trading, short-term trading, or investing over a long-term holding period.

Investors wishing to receive an allocation of shares at the IPO price prior to the IPO would “express interest” to their broker prior to the IPO. Declaring an interest is not a guarantee that the investor will receive an allotment of shares prior to the IPO.

Step 6: Choose an order type

Investors have many ways of placing orders to buy stocks, including market orders, limit orders, and stop orders.

  • Market Order: This is the most common type of order filled by retailers. A market order executes a trade immediately at the best available transaction price.

  • Limit Order: When an investor places a buy limit order, they set a maximum price to be paid for the shares.

  • Stop Order: A buy stop order is an order to buy at a specific price, known as the stop price, which will be higher than the current market price. In the case of buy stop, the stop price is lower than the current market price.

Step 7: Submit the trade

After investors fund their account with cash, they can set an investment size and order type, and then submit the trade to place an order. If the trade is a market order, it will be executed immediately at the best available market price.

However, when investors place a limit order or stop order, the investor may have to wait for the stock to reach its target price or stop-loss price for the trade to complete.

The final result

LPTV seeks public capital market investment to fund its general corporate initiatives and to pay bonuses to its executives.

The digital out-of-home media market opportunity is expected to grow at more than 11% CAGR through 2031, allowing the Company to capitalize on positive industry growth momentum.

Roth Capital Partners is the lead underwriter and IPOs led by the firm over the past 12 months have generated an average negative yield (60.0%) since going public. This is a lowest performance for any major underwriter over the period.

The main risk to the company’s prospects is the shift from a subscription model for its ScreenPlay system to an advertising model through its partner network, which only launched in May 2022.

As for valuation, management is asking investors to pay an EV/sales multiple of 13.1x while the company continues to post heavy operating losses, which is negative in the current market environment.

Like so many companies currently looking to go public, the company is pricing its shares at $5.00, meaning it’s primarily targeting retail investors.

While the stock’s low notional price may attract day traders, the risk level of LPTV, which is transforming its business and revenue model, is too high for me, so I’m waiting for the IPO.

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