GEMS UNDER $1-PEOPLESTRING CORP PLPE FEB 6TH

PeopleString <Ticker PLPE>  is a Multi-level Marketing company masquerading as a Social Networking Site.

Checking PLPE Alexa rankings shows:

Page Views Down 24% last 3 months
Page Views/User Down 12% 3 months
Single Page Views Up 15% 3 months
Search Engine Request up 56% Yesterday

< http://www.alexa.com/siteinfo/peoplestring.com >

Here is a 4 minute interview by Bloomberg with the CEO of PeopleString describing his company:

Technical View:

The stock has descended via a 3-stair down move, completed by the fast rate of decent in the 3rd leg of the decline; which is typical for bottoms.

We then see a nice consolidation basement box of 7 weeks, lending further evidence of solid support at this level. The shares broke to the upside on Friday, almost reaching the upper Boilinger Bands around .17c.

I suspect the Facebook IPO news was used as the catalyst to force the shares higher and work off the oversold condition.

The Questions are:

a> what is the upside potential of Peoplestring verses downside?

b>Is there a chance FaceBook would be interested in buying this company?

Lets answer the 2nd question 1st,  NO Facebook would have ZERO reason to want this company.

PeopleString just isn't big enough to move the financial needle for FaceBook and its shareholders. FaceBook will have a 100 Million Market Cap, thus needing big scale revenue streams to justify what is sure to be a very bloated valuation.

Per CNBC this morning:

Facebook is set to begin showing advertisements to users on mobile devices within weeks in an effort to tap a new source of revenues before it goes public

Valuation:

When I am looking to buy a Micro, I always look at buyout potential price, then bounce that against the current price. For the unproven revenue streams of many Micros, I like to use the rule of thumb 2x revenue. There are endless ways to value a company for purchase, this is the route I take to determine a fair market price.

Looking at the annual revenue numbers reported on Yahoo:

2010   2009

2.6M   742T

PLPE float is 21 million shares.

If we assume the same growth rate going forward of 300%, then I am willing to use 3 multiplier, just to give PLPE the longest valuation rope.

Assuming PLPE can generate revenue of 8 million by Dec 2012, fair value for the shares would be .37cents per share, more then a double from Fridays close. Cut the revenue growth in half to 150%, still very respectable; this gives us a low target of .18c per share. 

The company per Yahoo has zero debt.

Conclusion:

I view mirco stocks as mini State Lotto Scratch off tickets. Unlike Mega Jackpot Lottos, where your odds of winning are millions to one; scratch off tickets odds can be tilted much closer in your favor.

I can offer no intelligent view for the future of PeopleString. However, I believe the shares, offered at a steep discount to the current closing price, lets say under 5cents per share, is well worth a sizable investment for a swing at the Grand Slam Home Run Lotto Stock Jackpot! 

With 300% growth, no debt and a low cost operating base; at the right price the shares are worth the risk.

I'm putting these shares in my MicroCap Alerts list and setting the target at 5c for purchase.

Tim Kathlina