One of the perennial issues with the small-cap end of the London stock market has been that if a company in question does not produce something which comes out of a hole in the ground, it is likely to get the cold shoulder.
Clearly, there are exceptions that prove the rule, but tech and pharma have been particularly frowned upon – exactly the opposite sentiment which has made the Nasdaq in the US, one of the greatest capitalist venues ever created.
However, it may be the case that in a post-Covid-19 environment some of these prejudices will change, as investors scramble for sectors and companies that may be immune to one of the most horrific Black Swans in history. We have already seen positive re-ratings for all things online, especially games and gaming, with software and technology of all kinds coming back into focus in a positive way.
The timing of this new appreciation could not be better for the likes of Dev Clever, who arguably has been behaving as if a tech/software as a service revival was going to be around the corner anyway. Indeed, since 2013 it has established a significant footprint not only online, but also in mobile and virtual reality. But perhaps as many of us in lockdown will appreciate currently, Home Schooling is all the rage.
While the focus of Dev Clever may be away from the nitty-gritty that marooned parents are currently grappling with on behalf of their children, EdTech via remote learning certainly is within its sphere. Given that Dev Clever has just signed a Heads of Terms Agreement with Lenovo, a world leader in EdTech, it could be argued that the UK company’s fundamentals are very much underpinned. Indeed, according to a new Vox Markets note, estimates are for revenues at in the education part of Dev Clever’s business to increase tenfold over the next three years from £2m to over £27m.
Given the way that online / tech is always scalable, this is something which is not hard to believe. A £100m plus market cap versus less than £20m currently – just multiplying by five rather than ten, does not seem excessive, even if the current (enforced) homeschooling/education ends over the next few months.
Over the next few years, Dev Clever’s multi-pronged strategy in immersive technologies, particularly VR, is likely to underpin the attraction of remote learning as well as the general agency services the group already provides such as career guidance. Set against such a background, it is not difficult to envisage a return for the share price to return towards the best levels of last year at 15p plus – later in 2020.
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