This time around, he’s trying to crack the $4.5 billion electronic music world built on the “rave” scene of previous generations. These dance parties are both lucrative and seasonal, picking up speed as the summer progresses and then peaking in the New Year extravaganzas in Miami and Las Vegas.
Last year, SFXE was just getting started but its revenue in the second half still came in at 500 times what it booked in the first six months of the year. If we apply anything like that math to the early 2013 numbers, this company could already be a powerhouse in its field.
Either way, Wall Street is as yet oblivious to the upside here, which can create an opportunity. The rewards of getting in ahead of the story can be almost as breathtaking as what insiders get when their companies go public. Look at the winners of the year so far: oncology drug developer Insys Therapeutics (INSY) went public in May and has quadrupled in value, while software publishers Textura (TXTR) and Marketo (MKTO) provide similar examples from the technology sector.
For those looking for sentiment over substance, veterinary drug developer Aratana Therapeutics (PETX) is actually less far along than SFXE in terms of monetizing its business, but the stock has performed beautifully since the company went public in June.
Speaking of monetizing the business, management has taken a company with no hope of ever translating a massive audience into cash and turned it into an engine that is already generating $4.40 per active U.S. user and increasingly rich revenue from a massive foreign market.
That simple truth has yet to really percolate into markets that still think this company has no pay-for-play component and will never be profitable. From what I’ve seen its Asian counterparts produce, Twitter is still in the very early stages of capturing a very large revenue opportunity.