[UPDATE - the club stop loss was triggered on November 20th at 172p. The Club sold for a loss]


Loopup (LON:LOOP) was pitched to the Stockopedia Staff Investment Club in early October and shares were purchased on Monday 12 October at 221p.

LoopUp has seen a big gap up in StockRank this past month, from 59 to 93. This jump in Ranks is driven by some eye-catching half-year results which show it has directly benefitted from accelerated work-from-home trends in the first half. This performance was covered in Paul's recent SCVR update, here.

The group generates around £50m of annual revenue but is targeting a multi-billion dollar market. This opportunity, coupled with recent strong trading, has led to impressive one-year relative strength of +301%.

There might be profit-taking along the way - Jupiter Asset Management has been selling shares - but if the group can translate its 'healthy new business pipeline' into additional H2 sales then there is a fair chance of further upside surprises.

This is not a given though. Analysts are being cautious and the company has disappointed in the past. It's a Highly Speculative software company benefitting from a once-in-a-lifetime opportunity, but can this temporary tailwind be converted into more lasting value?

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TLDR;

LoopUp's half-year results are striking - its best ever by some distance - so can the group use this as a springboard to future success, or is it just a flash in the pan?

  • Bull Points: LOOP is a covid beneficiary, it is targeting a growing c$2bn professional services remote communications market, and has an influx of lockdown cash being deployed into a potentially a Microsoft Teams opportunity that takes its total addressable market to an estimated $10bn by 2024.
  • Bear Points: The company has a patchy profitability record and there is the threat of technological obsolescence (for example, the rise of Zoom). The group's pivot to a recurring revenue model might reduce near-term revenue (but improve visibility). A COVID boost now might lead to moderating growth rates later. It is an illiquid, volatile small-cap, with a premium tech valuation. There may also be profit-taking after a recent strong run.

Profile

Loop Up is listed in the Technology sector and makes enterprise conference call software that integrates with Microsoft teams to provide straightforward and secure external…

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