KeyStone’s Stock Talk Show, Episode 186

Great to be with you, albeit still fighting off this nasty virus that many of you have been getting over the past month – good times. We will kick of this week with a look at the FTX Bankruptcy fiasco in the crypto space over the past week giving you a timeline and some comments. We will also look at Elon’s mess at and on Twitter. Aaron is set to take you to school this week with a quick look at “earnings quality” when reviewing a stocks. I will look at our Star of the Week, a company clients should be well aware of in our US research, Bowman Consulting Group Ltd. (BWMN:NASDAQ) an organic and acquisition growth professional services firm delivering innovative engineering solutions including planning, construction management, commissioning, environmental consulting, geomatics, survey, land procurement and other technical services to customers operating in a diverse set of regulated end markets. The stock jumped 20% in the past 2 days after issuing strong Q3 earnings and increasing its guidance. Brennan hits the mailbag and answers a listener question on Fiverr International (FVRR:NYSE), which operates an online marketplace worldwide, enabling sellers to sell their services and buyers to buy them.

I welcome my cohosts – Aaron, and the Killer B’s – Brennan and Brett.


What happened to FTX?

These are the key points:

  • FTX is a cryptocurrency exchange founded by Sam Bankman-Fried in 2019, who served as CEO until Friday. The exchange issues its own token, FTT, and was the fourth-largest crypto exchange by volume as of Tuesday.
  • Bankman-Fried also founded a crypto trading firm called Alameda Research; CoinDesk reported on Alameda’s troubled balance sheet Nov. 2. Its largest assets, according to the report, are billions of dollars worth of FTT.
  • Changpeng Zhao, CEO of rival exchange Binance, tweeted Sunday that he was planning to sell off Binance’s stockpile of FTT because of “recent revelations that have came to light,” referring to the Nov. 2 CoinDesk report of FTX and Alameda’s blurred funds. He compared FTX’s situation to the crash of TerraUSD and LUNA this year that tanked the crypto market and cost investors billions of dollars. But typically, such moves aren’t announced publicly.
  • Zhao’s announcement led to a rapid decline in FTT’s value over the next day as suspicion grew that FTX didn’t have the liquidity needed to back transactions and stay afloat. The value of other coins — including BTC and ETH — declined as well, with Bitcoin dropping to a two-year low. Bankman-Fried said in a tweet Thursday that the platform saw $5 billion in withdrawals Sunday.
  • Zhao and Bankman-Fried struck a deal for Binance to acquire the non-U.S. branch of FTX. The exchange CEOs signed a nonbinding letter of intent Tuesday, essentially promising to bail out the failing exchange to prevent a larger market crash.
  • Binance withdrew from the deal. Within a day, Zhao posted on Twitter that Binance had completed its “corporate due diligence” and said it would not be acquiring FTX. Zhao tweeted that the news reports of “mishandled customer funds” and “alleged U.S. agency investigations” contributed to his decision. Bankman-Fried appeared to reference Zhao’s influence on FTX’s fall in a cryptic post on Twitter where he said, “Well played; you won.”
  • On Tuesday, FTX halted all non-fiat customer withdrawals. On Twitter, Bankman-Fried posted a string of apologies explaining FTX’s liquidity issues and promising more transparency.
  • Bankman-Fried told investors that Alameda owes FTX about $10 billion, which FTX loaned to Alameda using customer deposits, according to a recent report by The Wall Street Journal. But before making the loan, FTX had just $16 billion in assets, according to the report, meaning it lent out more than half of its assets.
  • On Thursday, FTX.US posted a warning on its website for users on the log-in screen, noting that trading “may be halted on FTX US in the next few days.” The message told users to close any positions they wanted to and that withdrawals would remain open.
  • On Friday, FTX announced that it had filed for voluntary Chapter 11 bankruptcy proceedings for FTX, FTX.US and Alameda. Chapter 11 bankruptcy allows businesses to restructure their debt and continue operations, unlike Chapter 7 bankruptcy, where assets are liquidated.
  • FTX.US also temporarily froze withdrawals on Friday, following the bankruptcy announcement, despite earlier reassurances that FTX.US was not affected by FTX’s liquidity troubles. Withdrawals were later reopened.
  • FTX and FTX.US wallets were emptied on Friday evening in an apparent hack. More than $600 million was drained from the wallets, CoinDesk reported. FTX posted about the hack on its support channel the instant-messaging service Telegram, saying, “FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.” Trojans are malware disguised as legitimate software.
  • FTX general counsel Ryne Miller posted on Twitter the same evening that the company would expedite moving remaining assets to cold storage — meaning offline — because of the “unauthorized transactions,” referring to the apparent hack

Comments on FTX

First-off, I would like to say that it is ironic that blockchain, the underlying technology behind cryptocurrencies is regarded as one of the best ways to rid the world of these type of ponzi or financial scams in general. Of course, FTX itself is not blockchain itself – it is just a crypto currency exchange which up until a week ago was the 4th largest in the world by volume. It was Founded in 2018 by Sam Bankman-Fried (SBF).

Who is SBF, if you have not heard, an MIT grad and former international ETF trader.

Somehow, this under 30 former trader was able to convince over a million clients, some of the wealthiest in the world to invest without a great deal of due diligence it turns out in and through his Bahamas-based cryptocurrency exchange which lacked a basic board of governers and really much oversight with any teeth. The exchange, also had a partner firm Alameda Research which is his trading company which had a significant portion of its assets in FTX’s native token FTT – is own crypto which basically had no value but people bought.

It appears that greed and FOMO drove the lack of basic due diligence into what in terms of the FTT coin and who was behind FTX and Almeda Research – led to over a million people investing via the platform. And it was not just joe and jane average investors…



Kevin Oleary – Mr. Wonderful pitched FTX as the one exchange you should have confidence in and celebrities such as Tom Brady and ex-wife Gisele Bundchen and NBA start Steph Curry all shamelessly promoted it. Olreay has since revealed his investment went to zero.

The CEO of Alameda which FTX was lending capital to float losses or trades was reportedly SBF’s 28-year-old girlfriend. Yes, she was an MIT grad and likely bright, but that is not a good look and there are many disturbing quotes from her in interviews including how “being comfortable with risk is very important” and giggling about it and then when asked about outlining a trade where she lost money, saying it was hard to recall one and then laughing that she should probably not go into specifics on that…haha.

Don’t always follow the heard. The smart money can also be really, really dumb money. If you do not understand something, do not invest – period.

Blockchain appears to be wonderful technology. The world is continuing to look for great use cases that may change the way we conduct business, but do not force it’s success on million of crap coins that promise the world and deliver zero or NFT’s that hold little intrinsic value, they are a recipe for fraud or just sad losses in your portfolio.

Stick to businesses you can understand that are regulated when investing your hard earnings dollars.

Bowman Consulting Group Ltd. (BWMN:NASDAQ)

Price: $18.10

Market Cap: $242.25 M

Gain: 20% in the past 2 days.

What do the do?  Bowman is an organic and acquisition growth professional services firm delivering innovative engineering solutions including planning, construction management, commissioning, environmental consulting, geomatics, survey, land procurement and other technical services to customers operating in a diverse set of regulated end markets.

Why the share price jump? Bowman Announced Record Third Quarter Results; Exceeded Consensus Estimates and Raised Guidance

Q3 2022

    • Gross revenue of $71.2 million, compared to $39.7 million, a 79% increase.
    • Year-over-year organic gross revenue growth of 23%.
    • Net income of $3.4 million $0.26 per share, compared to a net income of $0.4 million or $0.03 per share. That did include an income tax benefit, but on a normalized basis EPS was around $0.14 per share from a small loss in 2021.
    • Adjusted EBITDA margin, net of 14.8%, compared to 12.4%, a 240-basis point increase.
  • Gross backlog of $230 million, compared to $139 million, a 65% increase.


Bowman also increased it FY 2022 revenue and adjusted EBITDA guidance higher once again.  And introduced growth guidance for its full year 2023. All solid positives which have lead to the stock gaining 20% in the past few days, giving it the coveted status as Star of the Week.

Your Stock Our Take

Tyler – “If FVRR drops below $20 per share is it worth taking a shot at?” Specifically, he is wondering if massive job cuts from tech companies etc. could be a catalyst for the gig economy?


Fiver International Ltd. (FVRR:NYSE)

Price: $40.02

Market Cap: $1.53 Billion.

Company Description:

Fiverr International Ltd. operates an online marketplace worldwide, enabling sellers to sell their services and buyers to buy them. The company’s platform includes approximately 550 categories in nine verticals, including graphic and design, digital marketing, writing and translation, video and animation, music and audio, programming and technology, business, data, and lifestyle.

It also offers freelancers software solutions for invoicing, organizing workflow, learning & development offerings, and a subscription-based content marketing platform.

Key Points:

The stock IPOd in June 2019 at a price of $21.00 per share.

The stock had early success in the Covid fueled economy but is now down about 88% from its early 2021 highs.

The company just reported its Q3 2022 results on November 9th:

  • Revenue was up 11% to $82.5M
    • Active buyers grew 3% to 4.2 million.
    • Spend Per Buyer grew 12%.
    • Fiver’s take rate increased to 30% up from 28.4% for the same quarter last year.
  • Adj. EBITDA was down 10% to $6.6M
  • GAAP Net Loss was ($0.31) per share compared to ($0.39) for Q3 2021.
  • Adj. EPS was $0.23 per share up from $0.21 in Q3 2021….
    • But Aaron has covered companies like this before – the only reason that Fiver is posting Adj. Profitability is because of its large share-based compensation expense as it is adding back approximately $17.6M dollars or $0.47 per share in earnings… WHICH generally WE DON’T LIKE TO SEE as this is holding the company back from GAAP profit.

Looking forward Fiver anticipates FY 2022:

FY 2022Y/Y Growth
Adj. EBITDA$22.5M-2.0%

And keep in mind…. We have seen the company now reduce its initial FY 2022 revenue target by 10% and Adj. EBITDA by 25%…

The company does have a nice cash position on its balance sheet, but it still has a net debt position of just under $86.6M.

On a Fwd EV/Adj. EBITDA multiple, the stock trades at 72x which is not cheap. And even on a P/S basis we are looking at a multiple of about 4.6x. On a trailing basis it trades at about 54x adjusted earnings…. That’s all for a company which is growing revenue at about 13%, is not profitable on a GAAP basis (due to share comp.) and it appears growth is beginning to slow as in its last two quarters revenues were down sequentially – which is the first two quarters of declines experienced in the last 12 quarters.


The gig economy is an interesting space, as it allows people to become the makers of their own destiny – which is why many millennials are gravitating to this type of freelance work as it provides a bit of freedom and independence from an overbearing employer.

An overall Macroeconomic downturn and job cuts could help Fiver find more supply of skilled workers for its gig economy platform… but what would happen to the demand side of the equation? I would argue that demand for services would likely slow, potentially leading to lower revenue for Fiver.

I think at this point in time we would stay on the sidelines given its pricey valuations, guidance which has been revised much lower, and what appears to be slowing growth.

To answer your question Tyler, if the stock was below $20 – it would definitely be more appealing. As at that point the stock would be trading at 36x Adj. EBITDA and 27x adj. earnings. But again, even at those valuations, the low teen growth isn’t that appealing.


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