What’s Ahead for CMGR (OTC US: CMGR) as its Model Develops (NASDAQ: PLBY) (NASDAQ: MUDS) (NASDAQ: FB) (NASDAQ: CMCSA) (NASDAQ: VIAC) (NYSE: TWTR) (NYSE: PINS) (NYSE: SNAP)
May 06, 2021 at 08:55 AM EDT
Imagine you live in a stadium full of a hundred thousand people. That stadium and its one hundred thousand people represent the whole of creation.
In that world, imagine you want to start a business. Perhaps you want to sell concession items. Popcorn. Hot dogs. Beer. Cotton candy. Whatever.
Now imagine that other people in the stadium want to start businesses selling stuff, too.
Here’s the big question: what’s more important in that business economy — the product idea or the degree of access one has to the stadium public address system microphone?
We would argue that, in this particular example, if two companies are both selling hot dogs, and one has direct access to the PA system mic, while the other one doesn’t, it’s clear which is the better investment.
We would also argue that this stadium represents the world as it actually works today better than traditional B-school models. We live in that stadium. And social media reach equates to proportional PA system access in that allegorical example.
Furthermore, the difference between success and failure in that example isn’t about product design or feature-set, it’s about access to the minds of the people in the stadium.
That shouldn’t be a difficult argument to accept.
The next step is to realize that a collection of 3 social media influencers with an aggregate 300 million followers all represented by the same firm will offer less value than a collection of 50 social media influencers with the same aggregate reach of total followers because the firm representing the latter aggregation will have more control to coordinate the total reach than the former aggregation because the former will be composed of far more independently empowered influencers.
In other words, a company that represents a massive social media reach made up of lots of separate strong social media influencers all willing to participate in a coordinated marketing effort around a single process of influencer-based marketing represents a resource of enormous value in today’s world – something much more powerful than the branding potential of a small number of independently powerful influencers.
But it is also a unique model.
While it represents extraordinary prepotency, it can only be found in one publicly traded stock right now: Clubhouse Media Group Inc (OTCMKTS: CMGR).
The Future of Clubhouse Media
The future here is relatively obvious, as we see it: CMGR is NOT a marketing company. It is a branded products seller. It just hasn’t yet landed on its product. But the prepotency is there, perhaps more than for any other consumer products name in the market.
This is a unique model. While there is uncertainty, the reach is already in place — the channel between what the company does and its end market is as clear in this case as in the case of perhaps any other publicly traded company.
According to a recent article published in a top-25 major syndicated newspaper, the company has already established a dominant presence in aggregate reach, with a currently estimated 280 million social media followers through its Clubhouse Media influencers, as well as an additional 9 million through its own branded accounts.
In other words, Clubhouse Media has established its access to the PA mic in the stadium. It just needs to decide whether it wants to sell hot dogs or cotton candy.
Once that decision is made and it has its product in place, the upside here is potentially enormous as we see it. It already has established its access to the microphone attached to the PA system in the stadium of planet Earth.
After bringing in leaders like Andreesen Horowitz partner, Andrew Omori, and former top exec at NBC, BBC, Viacom, and PBS, Perry Simon, Clubhouse Media Group Inc (OTCMKTS:CMGR) appears poised to step into the spotlight and monetize its 280 million social media followers for potentially powerful gains in shareholder value as a unique force in the emerging social media influencer-based marketing industry.
But the key here, in terms of timeline, is about product establishment.
A good example of this process is Kylie Jenner’s “Kylie Cosmetics”. Kylie Jenner became a major force on social media through her association with the Kardashians. Ms. Jenner realized the power of that reach and founded a cosmetics company.
Over a short period, that cosmetics line became worth over a billion dollars. Kylie Cosmetics was valued at nearly $1.2 billion when it sold a controlling stake to Coty, Inc in November 2019. That value was built by first cultivating a massive influencer following. And, by the way, that following was far shy of where Clubhouse now stands.
In other words, Clubhouse is in a superior position to where Kylie was then, and it has a partner from the world’s leading VC firm and a legend in mass media already on board.
It’s just a matter of nailing down the specifics. The prepotency is in place.
The opportunity in this case is built of the fact that no company has really tried this model before on such a grand scale. We can’t point to a publicly traded company that has tried this strategy and say, “Clubhouse Media is like that”.
In that respect, the company is in uncharted territory.
However, that’s why this could be such an interesting opportunity. Because it is an unproven model, the stock’s shares haven’t priced it in. That offers prospective investors with a discount bargain-basement “free look” at this stock. That sense is further augmented by the fact that it went public via reverse merger onto the pink sheets.
In other words, the stock is pricing right now in a manner that reflects absolutely no “benefit of the doubt” valuation. If it ends up working out, this is the cheapest you will see it.
And we are talking about a company with what could potentially be one of the most potent marketing channels in the world right now in terms of scale of access to consumer minds.
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