OSN Analyst RSM2008 and His 2009 Outlook for OneSeason
Happy New Year to all.
Quite an interesting few months for OneSeason in 2008. The nation seems comprised of a mix of traders, some who were in from the relative beginning, and others joining at various stages of the market correction along the way, providing different perspectives on what happened through 2008. Here are a few thoughts both short and long term I have for OneSeason in 2009.
The reverse split phenomen has had more of a drastic short term effect on the market than I had imagined it would. The reverse split mechanism has the market in a downward trend it doesn’t seem to want to, or be able to pull its way out of. Initial viewpoints were that lowering supply would increase demand, there has been no evidence of that to date. Every SOI that has reverse split has immediately dropped in value the next day relative to other SOI’s taking the market in a downward direction that wont reverse direction until a combination of money sitting on the sideline decides there is a bottom, and new money enters the site.
In terms of new money entering the site, that tap has basically shut off. It has been discussed that OS is not attempting to do any marketing until they have all of the bugs worked out of the system, and feel it is ready to roll out on a grander scale without problems the site experienced in the boom in the first few weeks. New users basically come from word of mouth, and there aren’t many existing users touting the opportunity of OS lately. When the reverse splits started, there was a large increase in new users. I suspect people felt that would create a bottom and spread the word that it was a good time to enter the market. From that point the market has lost over 50% of its value and new user enrollment appears to have all but stopped, and likely won’t pick up until there is a market reversal.
That leaves existing traders set to move the market one way or the other. There is limited demand for SOI”s anyone wanting to sell, basically finds the cheap offer from the buyer. It took quite a while for KING to finally reverse split, his owners were fighting it, and as I’ve discussed in other threads, the reason being that his relative value to other SOI’s was at its highest pre reverse split. If the market moved back up before that SOI reverse split, those owners may have benefitted. KING went from over 12% market share pre split and is now back at just over 8.5%. YAOM has not yet split, and is at his highest historical percentage of market value at 7.5%. The resistance is there as well. I sense the consensus being that these 2 SOI’s need to reverse split before anything will happen. With no new money coming into the platform, the market won’t turn until traders feel we’ve hit a bottom, and they have had every opportunity to start to buy, yet it hasn’t happened. I think Bullpup said pre KING rs, that it was inevitable, and I wasn’t sure. I am now convinced it is inevitable, and that at a minimum these two SOI’s need to reverse split then we’ll see what happens.
The market is now at a value of less than $400,000, a level it has not seen since Oct 12. Along the fall from a $18 million market cap, there have been many levels of support established temporarily along the way. $3 million saw it for almost a week, once shares hit $1, there was support for a while. Right now, the support levels are just above split values for many SOI’s and even at that, the volume of support isn’t that great and sellers would eat right through the buy orders if they chose to.
So from here what happens, first, things could continue along as they are, with no new market growth, and eroding values, users could lose interest in the site, withdraw what little money they have left and the opportunity wil have been with those that cashed out early. Given what has happened, I can’t discount this possibility, although I don’t think that will be the result.
Another possibility is the market does rebound in value. If that happens in the current trading environment, I suspect we would just see growth spikes followed by more contraction. Although the site has over 20,000 registered users, I suspect the number of those actively trading today would be in the hundreds. Any market recovery with a small number of traders would just see a value spike followed by profit taking, and we’d likely have a cycle of buying and selling, but without material long term gain. It would remain a day traders market.
If 2009 is to see the market make a substantial turn around, I believe SOI’s need to become a currency. Right now they are just what they are defined as “synthetic”. No tie to performance, only the opportunity to have someone want to pay more for them than you did. There is no sustainable underlying value that way. There have been a number of discussion regarding 3rd party applications. I suppose early this year, we’ll see some of the ideas and perhaps prototypes start to surface. This would clearly provide an opporunity to use SOI’s as “currency”, but even if applications do develop, we need volume, and right now that isn’t there in terms of active users and available SOI’s in the market. There are currently 2 hockey SOI’s in the market, game ideas have to be somewhat limited when there are only 2 players. The next full season upon us will be the baseball season this spring. If some of these applications are to emerge, it may make sense to introduce more baseball SOI’s in the next few months, if this is a direction OS wants to head in. I know the IPO process is automated, perhaps if the nation feels these applications may move the market forward we need to “Yinka Dare” a few key baseball SOI’s.
Anyway, those are a few of my thoughts on OneSeason in the coming weeks, and months ahead. I’d be interested to hear others viewpoints on short, medium and long term outlooks as well.
Tags: analysis, IPO, OneSeason, OneSeason.com reviews, trading help
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January 5th, 2009 at 4:42 pm
Good post. I think you highlighted some key points on what OS needs for a turnaround, and why it will struggle to do so. Some other points:
- One statement in the article I’d disagree with is “The reverse split mechanism has the market in a downward trend it doesn’t seem to want to, or be able to pull its way out of.” You have to remember, this downward trend started way before reverse splits ever did. It once seemed every stock was days away from splitting and surely nothing would drop below $10. Then $6, $5, surely nothing would get below $2, then $1… that was quite a huge downward trend already.
- Reverse splits were seen by many to “take supply” off the market, but that wasn’t the case. In fact, the few IPO’s that happened actually INCREASED the supply of PLAYERS to purchase. A poll on this site asks “How attractive do the prices/outstanding shares need to get for you to jump back in or make another deposit?”, but all the options are phrased as “$x for a 10% share of an average SOI”. No matter how many reverse splits there are, there will always exist 10% of an average SOI.
- On October 12, the market cap was 412k, per your article. A key difference is the number of players available. I don’t know for sure, but I’d guess it’s about half what’s out there now? Most (all?) stocks that were here on day one are lower than they were on day two, which is really disturbing. Another disturbing trend I’d like to know more about: volume.
- I really agree with your points about IPO’s. If there are to be compelling 3rd party applications, surely there need to be more IPO’s out there, and specific ones, not ones people campaign for. However, there isn’t the volume out there to support them. This is the quandary I believe OS is in. http://www.baseballboss.com (I haven’t bought anything from them) is an example of a game that COULD be made by OS. Baseball Boss doesn’t let you sell it’s “cards” for real money, which would be a difference between it an OS. But OS doesn’t have enough players out there to support a game like this (Baseball Boss also has a MLBPA partnership).
Short term outlook: Sell
Medium/Long: Avoid (wait for sustained support, new 3rd party apps, ad campaign, whatever)
January 10th, 2009 at 6:26 pm
No the reverse splits are the reason the market has rebounded…it just needed more than one reverse split…it was way more inflated than people realized…I think we have now seen the worst…and the market will start to climb again…if too many new users come at once and over-inflate the prices…you could see it drop again. But make no mistake about it. The market having 2-3 days of green in a row is because there is low enough supply that with the added demand it’s now back in lock step…It’s simple market economics the only thing people(including myself) didn’t realize was just how over-inflated it was, and how much correction(read reverse splits) would be necessary before it would improve