The Mobile Streams Plc (LSE:MOS) share price has fallen over 63% in the past year. Needless to say, the stock performance has not been so excellent over the last 12 months.

That being said, the company recently released its interim result¹ for its 2022 fiscal year ending in December. And a quick glance at earnings reveals some encouraging signs of progress. Revenue significantly increased from £0.3m to £1.1m while cash & equivalents also increased from £1.4m to £1.6m.

So while the share price hasn’t delivered encouraging results, the underlying fundamentals paint a slightly different picture. What’s more, the primary driver of this growth stems from the firm’s partnership with International Gaming System.

Let’s take a closer look at what this company does and explore what could lie in store for the Mobile Streams share price.

What does Mobile Stream do? 

Mobile Streams Plc is a mobile content and data intelligence company based in the United Kingdom.

It specialises in next-generation content such as Gaming, Esports, and NFTs. The company partners with other multinationals for the sale of its mobile content and other data intelligence services. Moreover, the group also provides licensing and merchandising services to other similar companies through its access to world-class content.

The bull case for the Mobile Streams share price 

The Mobile Streams share price is on its track for a potential explosion. At least, that’s how it looks in my eyes. Let me explain why I think that.

The company recently announced several multi-year contracts to be the exclusive global producer and provider of NFTs for several prominent football teams and sports, delivered through their websites. In the recent financial report of the company, the sale of NFTs has been quite a lucrative one for the company.

Though NFT revenues began in October 2022, they exceeded £0.1m from October to December. On the grand scale of things, that’s obviously not a ground-breaking level of income generation. However, given the largely unexplored market of NFTs, this may be the start of a long growth story.

If the business can find success in this domain, the growth potential could be enormous. And, in turn, could send the share price well beyond its previous record highs. However, there’s no guarantee this will happen. And there are plenty of risks to consider.

A bear case for the Mobile Streams Share price 

Mobile Streams shares are currently bearish. And the current trend likely continues until a great force causes a turnaround.

While I anticipate that things can eventually be favourable, several risks and challenges could continue to drag the price downward, potentially permanently.

Mobile Streams’ primary strategy seems to focus mainly on licensing NFT brands. In fact, management expects this to be the principal source of growth in 2023.

The problem is the firm is seemingly placing all its eggs in one basket. To make matters worse, NFTs as an asset class, in general, remain unproven. And unless they eventually receive worldwide acceptance on some tangible scale, the company may simply be setting money on fire.

In its most recent fiscal year, losses surged to a record £2.76m. And with limited cash reserves or credit quality, the group will likely depend on issuing new shares just to stay afloat. I should note that the number of shares outstanding has increased by nearly 32 times in the last five years. Needless to say, that’s a lot of equity dilution.

Mobile Streams share price prediction

Despite the roughly 62% drop in market capitalisation over the last 12 months, some analysts following this business are still bullish. The Mobile Streams share price predictions currently range between 0.1p and 0.34p.

Assuming these target prices are accurate, that would suggest investors are potentially looking at a buying opportunity at today’s valuation. However, forecasts should always be taken with a pinch of salt, especially when looking at penny stocks.

Should I buy Mobile Streams shares today?

All things considered, I think Mobile Streams stock has potential. Having said that, I’m not in a rush to add them to my portfolio.

The firm has plenty of challenges that lie ahead that could take quite a toll on its balance sheet. And with further shareholder dilution appearing to be largely inevitable, this business is staying on my watchlist for now.

Article sources 

1. Mobile Streams Plc. “2023 Half-Year Report“

Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.