As Q2 earnings season starts to wind down, investors often stop looking for interesting growth stories posting upside surprises. It’s almost as if people think the movie is over once all the Faang stocks have hit the wires. But there are still gems to find in the storm right now.
Already this week, we have seen big upside surprises and breakouts in Coursera Inc (NYSE:COUR), Ralph Lauren Corp (NYSE:RL), ZoomInfo Technologies Inc (NASDAQ:ZI), New York Times Co (NYSE:NYT), and Solaredge Technologies Inc (NASDAQ:SEDG).
But we want to focus on a stock that may have slipped under your radar: SFLMaven Corp (OTC US:SFLM), a premium provider of high-end luxury jewelry that has driven over $130 million in sales and received over 98,000 positive reviews since its inception.
SFLM owns and operates a globally top-rated eBay store and has become famous for its Thursday Night Auction events, which often bring in more than $250k in sales on a single night.
The stock broke out on massive volume yesterday after posting big numbers and a strong turn in its core narrative that’s worth appreciating.
Proof, Meet Pudding
SFLMaven Corp (OTC US:SFLM) dropped prelim results yesterday morning, including clear signs of top and bottom-line growth. That report helped spur the stock to double-digit percentage gains on 5x average volume. The key would appear to be in the data, but it may also have been in the management’s discussion included in the release.
As for the data, the company’s release actually covered the first six months of the year (the six months ended June 30), rather than just Q2.
During that period, SFLM posted total sales of nearly $5 million, which was up more than 14% on year-over-year basis. The company also noted that the month of June was its best month, with sales rising 125% y/y (ie, compared to June 30, 2020), which suggests continued momentum and accelerating growth.
But the good news wasn’t limited to the topline: Gross Profits for the six months ended June 30 came in at $608,423, up a monster 194% on year-over-year basis.
The balance sheet also improved substantially, with its inventory value posting at $770k, which is up 28% on year-over-year basis. The company’s total current assets also grew 17% compared to the year-ago data.
However, the numbers are only part of the story here.
Good Times Ahead?
Messaging about the future in the PR from SFLMaven Corp (OTC US:SFLM) was very interesting.
“We are seeing robust improvements in the core business both in terms of expanding overall sales and through operational efficiencies,” commented Joseph Ladin, CEO of SFLMaven. “We are also working to build out additional sales channels, as exemplified by the recent addition of our 1stDibs.com SFLMaven store.”
Management noted in the release that SFLM has implemented robust competitive bidding dynamics, refined ad campaigns, improved advertising efficiency, and scaled its quantity of listings, which are all supporting improvements to bottom-line cash flows from operations.
The upshot is coming profitability, according to the release.
In addition – and this may be the most important part – “SFLMaven has begun to expand its market reach by diversifying sales channels for the first time in Company history. Management believes the implementation of a multi-channel digital strategy holds the potential to dramatically widen the Company’s end-market customer footprint and market share in the high-end jewelry marketplace.”
In other words, this is a company that has grown over years to drive 8-figure sales. But all of that has happened within a single sales channel. Now, SFLM is actively expanding into new sales channels, which could open the company up to entirely new markets and audiences for its auction events.
Ladin added, “Accelerating top-line growth to close out Q2 extrapolates very favorably for the second half of the year, especially given macro tailwinds for the luxury goods sector from leading economic indicators, record household savings ratios, a strong credit environment, and a very accommodative policy backdrop.”