If you’ve been watching over the last few months, you’ll have seen we started telling you about Plurilock (PLUR.V) as it was heading up to $0.30 from $0.15 back in April.
That was a good run, but it was also just the start of things, as the company rang up a $5.5m financing at $0.20, with warrants at $0.30, and then rocketed for a four-bagger (so far), leveling off a bit today at $1.45.
I say ‘leveling off’ even though it was up 41% on the day, because it did hit $1.60 briefly before some profit-taking.
I’m comfortable with that. Some folks clearly decided to take their original stake off the table at the end of the day, and PLUR found some balance.
But is that it? Are the salad days over?
The big rise seen on the right over the last few months is a nice win for those who listened and believed, and we’re getting a lot of texts and calls here from folks who are arriving to the story late, which tells me there’s still a bit of juice left in this lift.
But there’s also going to be a lot of people who see a rise like the one on the right and think the worst.
There’ll be plenty who’ll predict doom and gloom.
A bubble.
Maybe even, a pump.
I get it. When I see a company bring a vertical spike like this, I rarely take the time to think it’s based on something real. Experience tells us that these sorts of rolls rarely last, that gravity eventually grabs a hold and starts yanking things down, and folks are inclined to not want to be the last one out when that time comes.
But I have a suspicion PLUR is not about to slingshot down, that it’s a little bit different, and the following summarizes my feelings on why.
These are ALL THE REASONS YOU WON’T BUY PLURILOCK – and why you might be wrong.
Alright, party people, let’s get negative.
CRITICISM: THE MARGINS ARE LOW;
Plurilock is an information security company that sells cyber-products to big business and government agencies, and those products aren’t super high margin, it’s true. That’s a FAIR CRITICISM, but on the other side of that, Plurilock has made clear it’s working on a solution. By acquiring competitor companies with extensive client lists and plugging their products into Plurilock’s platform, they’ve created an up-sell business that is allowing them to put SEVERAL low margin products together without having to go find new clientele for every sale. In addition, they’ve begun consulting to those companies to help put all those tech tools to good use, and the consulting end of their business is a 50% margin, so you can see there’s a likelihood the margin issue will be solved over time.
CRITICISM: IT’S A SERVICE COMPANY AND SERVICE COMPANIES SUCK;
This is also a FAIR CRITICISM, because companies that have to continually sell themselves are hard work.
They’re expensive. They’re cyclical, even seasonal.
Think of, a few years back, how everyone at Christmas got an Instant Pot. Everyone was looking for a way to invest in that company but, fairly quickly, they reached critical mass and couldn’t maintain their sales cycle.
Government contracts don’t renew automatically, they need to be renewed through a vote by elected representatives, so you’d be forgiven for thinking of Plurilock as a cyber-Instant Pot in the making – except that information security is a whole other beast from most industries. Once a company lets an info-sec firm get under their skirt, it takes a terrible catastrophe to make that organization want to go through the process of unplugging it all and taking the time and effort, and government approval process, to switch to another provider.
Yes, you have to constantly renew those contracts with ongoing government appropriations every year, BUT it’s really unlikely those departments will decide to have less computer security going forward. If anything, every breach sees organizations double down.
This is a service company with repeatability, and government agencies PAY THEIR INVOICE ON TIME
CRITICISM: THIS UPWARD MOVE IS TOO HARD, PEOPLE ARE GOING TO TAKE PROFITS;
They already are. In fact, they took profits at $0.50, $0.75, $1, and now $1.50. And yet, the next day, more people climb on.
Here’s the thing though; even with this giant move up, Plurilock is not in uncharted waters. Check out where they were a year ago.
Even with the big recent spike, the company is STILL CHEAPER THAN IT WAS IN 2023, when the company was far less mature, had to constantly raise to cover losses, and had some outsized debt that it has since taken care of.
Now the debt is manageable, they have $5.5 million in cash, and a much fatter shareholder base – and it’s STILL CHEAPER.
Admittedly, the company hit some resistance at $1.50 today, but it blew through previous resistance levels without too much bother, and I think taking a few days where things level off and the market cap settles down are a healthy thing.
Today’s trading volume was a record for the company, which tells me while some were taking their profits, others were taking the opportunity to climb in and see this price as still a good deal.
When the price passes the 2023 number of $1.70, maybe that’s a good time to reassess, but for now there’s still some movement left to get there.
CRITICISM: THE EARLIER $5.5 MILLION FINANCING IS FREE TRADING IN AUGUST;
Sure is. That’s a popular messageboard warning, and it’s – again – a fair criticism.
But my answer to that is, we have a month to get to that place, and that’s a long time in the markets.
By all means be watching the ticking clock, BUT, if things are still climibing as the trade halt ends, there’s no reason for those early guys to jump out of PLUR and execute a tax hit if they’re still seeing an upward track.
Head on a swivel. Have your stop losses set. But don’t necessarily assume the worst unless you see the signs leading into August.
CRITICISM: THE WARRANTS ARE IN THE MONEY;
They sure are, and usually you’d see a sell-off of stock so investors could clear funds to execute them. But, as mentioned, a lot of that stock isn’t free trading yet.
So the big test will come in finding out if the company is seeing warrants executed NOW.
If they are, and an extra $5.5 million in cash is landing in their account, that just puts the bank balance in even healthier shape, without the usual ensuing stock sell-off.
And those warrants have their own four-month hold which could see us into November..
CRITICISM: THE SHORTS ARE COMING;
This is the final boss. When a stock runs like this has, you’ll inevitably get to a place where the big guys see things being potentially wobbly, especially with a big financing coming free trading, and they’ll begin borrowing stock to set up shorts.
This is the retail market’s worst fear, because we little guys just aren’t equipped to fight back. I tried to fight a short on a tech stock I liked once and it ate me alive.
The WORST scenario is when the guys that drove the stock high are the ones setting up the shorts because, et tu Brutii?
But there are reasons I’m not worried about that scenario here.
- There’s really not a lot of stock out there. Borrowing it for a short, currently, isn’t easy.
- I don’t think anyone in deep with this run is in it for a quick few hundo grand. We’ve gone up 400% so far, and it’s only back to the point it was a year ago before the market initally lost faith.
- We haven’t seen any analysts weigh in yet with price targets, which could push another run.
- Anyone choosing to short this stock right now is, let’s be honest, going to war with an unknown enemy, and could well have their ass handed to them.
In August, the shorts will inevitably loom, but I don’t see them being an issue for a while yet.
Finally; IT’S A PUMP, DUDE.
Look man, I don’t know what to tell you on that one. I don’t see massive marketing campaigns out there. I see a couple of guys promoting but they’re not pouring spurious bullshit into all the channels. They’re saying mostly what I’ve been saying – perhaps not as much of the ‘keep your head on a swivel’ stuff that I’ve been spouting, but when you compare it to, say, American Aires (WIFI.C), where the pump was so ferocious that the promoters were basically shrugging and saying, “I know, I know, but it’s working,” we’re not even close.
AT THE END OF THE DAY, I’M STILL BUYING.
Yup. Bought more today at $1.35.
I honestly think a price target of $3 makes sense for this company so I’m not buying the promote, I’m buying the undervalue.
Here’s more from the CEO:
— Chris Parry
FULL DISCLOSURE: Not a client, but has been in the past, I know management and respect them, and I’ve been buying for weeks. Conflicted up and down. If you buy, understand what you’re getting into and do your DD.
