But one analyst issued a recent report urging investors to be wary of the company’s “hype.”
Clubhouse Media Group is not to be confused with the unrelated Clubhouse invite-only social audio app, although there has been plenty of confusion, as CNBC pointed out back in March.
Adding to the confusion, a third company, TheClubhouse, a social network for sport business pros, has sued for trademark infringement against the audio app.
In any event, Clubhouse Media claims its total aggregate global social media reach stood at just over 317 million, with over 207 million followers on TikTok, over 55 million subscribers on YouTube, nearly 50 million followers on Instagram, and nearly 5 million followers on Snapchat and Twitter combined.
Co-founder and president Chris Young said those reach figures represented a “tremendous milestone.” The company launched 15 months ago and went public last fall via a reverse merger.
At least one analyst is less than enthusiastic about the startup. Apex Research (via Seeking Alpha) issued a scathing report on the company in March titled “Clubhouse Media Group: Investors Joined The Wrong Club.” It said the company was “heavy on hype but lacking in substance” and that the then current stock price of $13.28 was “totally out of proportion to their tiny revenues, terrible balance sheet, and dubious prospects.”
Apex also reported that “Management has engaged in many related-party transactions, which enriched themselves at the expense of outside shareholders.”
The company’s stock has since fallen more than 50% and was trading today at $6.12.
In the release announcing the big reach numbers, Young stated “We have amassed this enormous reach in just over a year, and we hope to continue to drive it to new heights over the coming months and quarters as we begin to invest increasingly in monetization. The next steps are to monetize this following to funnel traffic to brands that engage us to market their products and services, and to engage in acquisitions that will expand our reach.”
Clubhouse Media says it has been busy forging content partnerships with many top global brands, including Sony Music Entertainment, Spotify, Champion, Fashion Nova, Hilton Hotel Group, CoverGirl, Honda Motors, and Revolve, among others.
The company also says it is working toward the development of its own consumer products that would be branded and sold via its aggregated social media influencer following.
So there you have it. The company says it has garnered huge reach and now is the time to monetize it. The analyst suggests the firm’s prospects won’t live up to its hype and that management has benefited from related-party transactions at the expense of outside shareholders.
If nothing else, there seems to be a lot of public information for investors to pore through before making their own informed choice.