Why BBTV’s stock spiral doesn’t tell the whole story
Founder Shahrzad Rafati walks us through why she’s confident despite a steady decline on the TSX.
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It’s really difficult to get in Shahrzad Rafati’s way. Unless, I suppose, you're a neglectful barista. When Rafati appeared on my Zoom screen last week, it was a few days later than expected as she felt sick the week prior. I expected to hear tales of long lines at COVID testing sites and the proper distance one should insert a nasal swab. Instead, it was an affliction as old as time, not just our society’s near history.
“I got food poisoning. I had a cappuccino and the milk was not the best, I guess. I think it was the worst food poisoning of my life. I don't remember the last time that I did not work on a workday. Literally, I've done knee surgeries where, right after, I was back in. This thing was just brutal,” she details.
That habit of working through (almost) anything has come in handy for Rafati lately. Her company, BBTV, a leading creator monetization outfit, has leaned into its place in Vancouver’s Web3 scene as the technology’s foothold accelerates. Last May, BBTV launched an NFT division which, a few months later, made a $250,000 USD minority investment into Nifty's, a social NFT platform. Then, after building that side of the business out, BBTV launched Pay to Crypto to enable payments in cryptocurrencies at scale to content creators.
“I'm very proud that we founded and built BBTV right here in Vancouver, especially at a time when the city is home to so much disruptive thinking around Web3,” Rafati says of her company’s position amongst Vancouver’s robust space. “2022 is going to be a really big year for us, not only because there's so much ahead for [BBTV] but because it's actually set to be a transformative year for the way people interact and engage with the digital world. We're really at the onset of something monumental here. We built one of the largest audiences in the world, we are at the centre of the creator economy—with scale and an incredible team—and we're based in Vancouver.”
Despite Rafati’s confidence and BBTV’s growth, shareholders may be feeling a little queasy when they look into the company’s stock. Rafati took the TSX by storm in October 2020 when she took BBTV public. In doing so, she led the company to the largest TSX IPO by a sole female founder and CEO, adding her name to the long list of dudes named David. “Between 2016 and 2020, only two out of 43 companies that completed IPOs on the Toronto Stock Exchange were started or co-founded by women,” wrote Aleksandra Sagan of The Logic. “Only one—Vancouver-based BBTV Holdings’ Shahrzad Rafati—was still serving as CEO when the company went public,” Sagan found, prompting her to make the astute, David-based observation.
Still her pinned tweet, Rafati made history on that October day. BBTV stock opened at just over $12 and peaked around this time last year, reaching $14.49 on January 15, 2021. Since then, however, it’s been in a steady decline. Currently, it’s down almost 80 percent all-time. So, what exactly is going on here? I asked Rafati if the price alone tells the whole story. She was quick to reply that “it absolutely doesn’t.”
“We operate a really sound business that is leading the space in so many ways. Our job is to continue running BBTV as we always have: always growing, always innovating. We're confident that the market will actually see the light. We have all the fundamentals to increase shareholder value. We're more than a 90 percent discount to our competitors. We have 94 percent retention rates across our content creators, more than 90 percent adjusted gross margin, highly recurring revenue growth and we're making concerted efforts to see that in the shareholder value. We have eight analysts that are covering the story that are very positive about it. Consensus is $12 for this stock,” Rafati expands.
Her hunch is that BBTV is experiencing a similar shorting to what befell the stocks of Amazon and Tesla. According to Rafati, those businesses, once they went public, were being heavily shorted. She thinks the same is happening to BBTV. Further, she also notes a possible constraint within the TSX itself, thinking that the onus is placed on natural resources and other “defensive” industries. Despite this, Rafati says BBTV is going to double down.
“We're really doubling down on our vision, on our strategy, on our growth and delivering good results. Because the marketplace value doesn't really equate to the company's value. Having the strong support of institutional investors makes us very happy. The shorts are going to do what they do,” she says.
“We're not in it for a quick win. We're in it for the long game, and we're excited about our results now and also into the future.”
Additional concerns may arise when looking at some of BBTV’s changes at the executive level. After adding Ehab Samy as VP of product and engineering in November, BBTV saw two notable departures in Dan Gamble and Ali Adab. Gamble, formerly head of PR and corporate communications, left to start his own firm (and helped to organize my Zoom with Rafati) while Adab left his role of VP of content and partnerships for local sneaker startup SoleSavy. When asked, Rafati shared a sincere appreciation for the contributions they made, but also expressed the belief that sometimes fresh perspectives are actually a boon. When it comes to Gamble, Rafati noted the company was proud of his entrepreneurial endeavours and beamed when saying BBTV was his first client.
As she continued, she smartly reminded me of the longevity of her team. “I have a lot of respect for everybody that has worked at BBTV, they all have added unbelievable value. We're always going to be grateful for what they've done. But at the same time, if you look at it, our chief strategy officer, he's been with the business for 13-plus years. Our CFO, he's going to be celebrating his eight-year anniversary. Our general counsel, she's going to be celebrating her eight-year anniversary soon,” Rafati lists. Also nearing the eight-year mark is Mark Funston, who acquired Gamble’s duties and sat in on our call.
Just like when she discussed the company’s stock price, Rafati’s confidence shines through when sharing updates on her staff. She argues that her team—now 416 strong according to LinkedIn—is one of the pieces of BBTV that makes her the most confident. “The team at the helm here is the strongest that it has ever been. That gets me very excited. We have great people in great positions that are doing a great job running the different departments,” she shares. The space that team is working in and the spotlight being shone on it also has Rafati excited.
“Also, we're in a really good industry, honestly. I'm a techie, I'm a computer scientist. I've never been as excited as I am today. When it comes to the product pipeline that we have, it's probably going to be the strongest year we've had,” she notes.
Rafati seamlessly navigated my questions and concerns on all fronts. Her poise and confidence prompted me to ask her, if not those facets of her business, what does keep her up at night pacing in mental circles about BBTV?
“I’m a good sleeper,” she quips, returning serve. “A lot of companies are overvalued, that would keep you up at night. [BBTV] is truly an entrepreneurial team. When you look at what we’ve built in the last few years, the team is working just as hard and is just as passionate and excited. To me, that’s important, because you don't have a team that is stagnant. I'm excited about the growth across all the territories, geographies and platforms that we're making.”
As she remains steadfast in running BBTV, confident in its growth potential and stock rebound, I propose one, small change: order black coffee next time.
If Shahrzad spent half the time improving the company vs figuring out her next personal marketing angle maybe she wouldn't be underperforming the "David's" by 90%?
She literally buys revenue... even at 90% off peak, it's still an overvalued and doomed company.
Counting top line pass-through revenue as your own is shady and calling contractual obligations of clients 96% retention deceiving at best.
I predict within 2 years, BBTV doesn't exist.