Viggle Inc (Nasdaq:VGGL) Still Struggling to Make Money

[[tagnumber 0]][[tagnumber 1]]Viggle Inc (Nasdaq:VGGL) is widely marketed as the world‘s first media rewards program to align the interests of advertisers, media content providers, and consumers. The latter earn fully redeemable bonus points for simply watching their favourite shows, videos, and ads. Once they have accumulated sufficient amount of points, they can exchange them for other stuff. Everyone‘s happy, you‘d think. Everyone, except for current stockholders.[[tagnumber 2]] [[tagnumber 0]]VGGL closed last week‘s trade at $2.27, down 2.58% from the day before, shifting a volume of 666 thousand, well below the 30–day average, and light years away from the record–breaking 40.57 million on earnings day (i.e May 11). Indeed, the most recent 10–Q showed some nice improvements both in terms of net users (which have doubled in the last year) and revenues (which have shot up 50%), so investors‘ enthusiasm which pushed the stock up 60% is fairly reasonable. [[tagnumber 4]]The report would have been even better had it not been for the net loss, this time in excess of $20 million[[tagnumber 5]]. By contrast, the revenue barely cracked the $5 million mark. As it is, a 50% increase may sound excellent, yet not enough to make Viggle profitable.[[tagnumber 2]] [[tagnumber 0]]To[[tagnumber 8]] a large extent, VGGL‘s shortage of cash explains the company‘s most recent equity financing through the public offering of some 3.6 million shares of common stock at $2.50 announced on May 22 and completed six days later. As a result of the transaction, Viggle got a net financial injection of $8.4 million to be used to offset outstanding payables and other debt obligations.[[tagnumber 2]] [[tagnumber 0]]If Viggle‘s idea to bring consumers, content providers, and advertisers together sounds too good to be true, it probably is, at least for the time being. The reason is clear and simple: to give consumers fully redeemable bonus points, Viggle must purchase the rewards from vendors first. However, the revenue stream is still not suffcient enough to cover these costs, which is why VGGL is losing rather than making money. As seen on a longer time span, this trend has inevitably affected VGGL‘s chart performance. The company‘s management even had to resort to a 1–for–80 reverse split in March 2014 after the stock price had dwindled to $0.40 per share. What is more, the stock has since lost another 93% in value and is currently traded around the $2.30 mark. Had it not been for the split, VGGL would probably now be traded on the OTC Bulletin Board.[[tagnumber 2]] [[tagnumber 0]]Were VGGL‘s overall chart trend to continue, we may see yet another reverse split along the way. On the other hand, if the company‘s next 10–Q reveals more customers and yet another revenue surge, this could be the silver lining VGGL‘s cloud might need to finally buck the trend.[[tagnumber 2]]