NEW YORK, April 21, 2021 /PRNewswire/ -- Argus Research, an independent investment research firm, has launched Equity Research Report coverage on CooTek, Inc. (NYSE: CTK)
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COMPANY HIGHLIGHTS: (as conveyed by Argus Analyst Steve Silver) include:
CTK: A developer of user-focused and technology-driven mobile internet content
In our view, CooTek has developed a robust ecosystem for delivering mobile internet content that can generate substantial advertising revenue. Using its AI and big data capabilities, the company has built new online literature and gaming platforms over the past two years.
In 2020, CooTek invested to expand its user base, and significantly increased both daily and monthly active members. We expect customer acquisition costs to moderate going forward, which should position CooTek to achieve profitability for the full-year in 2022.
As of December 31, 2020, CooTek's cash, cash equivalents and restricted cash were $49.6 million, down from $60.0 million a year earlier. The company also has access to up to $20 million in capital through an institutional equity purchase agreement. As such, we believe that it has sufficient capital to execute its business plan.
CTK ADSs rose briefly above $7 in early 2021, but then fell back to their previous 52- week low amid weakness in small-cap technology stocks. CTK also remains well below its 2018 IPO price of $12. We attribute this weakness in part to a soft advertising market and slightly slower user growth in the second half of 2020.
We believe that CTK's current market cap of approximately $125 million, or just 0.3-times 2020 revenue, does not adequately reflect the company's success in building its content ecosystem, or its prospects for long-term revenue growth and near-term profitability. Based on our forward P/E analysis, we see a fair value estimate for CTK of $9 per ADS, well above current levels.
INVESTMENT THESIS excerpts (Click Hereto view full Argus Equity Research Report):
CooTek is a fast-growing internet company that offers a portfolio of content-rich mobile applications supported by big data analytics. The company leverages the insights gained from its users to deliver targeted advertisements through these applications. Most of its advertising revenue comes from the Chinese market.
The company has gained user insights from its legacy TouchPal Smart Input mobile app, an adaptive, multilingual tool that helps users to communicate more efficiently by offering next-word prediction, mistyping correction, and auto spelling correction on mobile devices, among other features. The app uses big data analytics to improve its language model continually, and provides users with a customized experience over time. The app, which was launched initially in 2010, has more than 125 million daily and 163 million monthly active users in more than 200 countries.
In our view, CooTek is well positioned to maintain a strong market presence by developing its data-driven technology. More than half of the company's employees are software engineers and product designers. The company also has an active IP strategy, with a growing number of patents, trademarks, copyrights and website domains, both in and outside China.
About Argus Research Corp. Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934) ̶ providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and pre-IPO research. In addition, Argus has recently committed to providing a sponsored research solution for small & mid-cap companies seeking coverage. Our Institutional Asset Management, Bank Trust, Sell-side Advisor and Self-Directed Investor clients value Argus's proprietary equity research methodology, analysis and commentary. Argus's Equity Research/earnings estimates are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.
Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.