Bridgeline Digital Stock is a Meme Stock to Keep on Watch

Digital engagement company Bridgeline Digital (NASDAQ: BLIN) experienced a flood of buying followed by a cascade of selling as a meme stock momentum mover. The Company normally trades under 100,000 shares a day when it was trading in the $2s but experienced a powerful surge in both volume and price in a matter of days as shares surged to a high of $14.38 on nearly 99 million shares of volume on July 6, 2021. Shares have since been on a downward trajectory (as is the case of most meme stocks) with volume falling under one million shares steadily. A peek under the hood reveals some decent fundamentals as it has a number of large corporate clients including CVS Pharmacy NYSE: CVS,  United Parcel Service NYSE: UPS, AstraZeneca NYSE: AZN and 7-Eleven. The Company provides turnkey web solutions from SEO optimization, search and merchandising e-commerce, and content management tools. This is a crowded space to say the least, but it speaks volumes when they have some of the world’s largest brands as clients. High-risk speculators can watch for opportunistic pullback levels if looking for exposure in this meme stock play.

Fiscal Q1 2021 Earnings Release

On May 17, 2021, Bridgeline Digital released its fiscal second-quarter 2021 results for the quarter ended March 2021. The Company reported total revenue of $2.9 million, up from $2.7 million in the year-ago period. Subscription and licensing revenue rose 8% year-over-year (YoY) to $2 million. Subscription and licensing revenues increase 2% as a percentage of total sales to 69%, which was attributable to multi-year license renewals with Fortune 500 companies. The eCommerce 260 growth plan is to increase recurring subscription revenues with out-of-the-box apps requiring little to no service to implement. Gross profits rose 16% to $1.8 million for the quarter. Gross margins rose to 63%. The non-GAAP adjusted net loss for the quarter was (-$0.04) per share compared to the $0.33 per diluted share in Q1 2020. Bridgeline CFO Market Downey commented, “On March 31, 2021, the company had cashed a $3.5 million accounts receivable net of $717,000 as compared to September 30, 2020, with a copy of cash of 861,000, and accounts receivable net of 665,000. Total day sales outstanding for the quarter ended March 31, 2021 is 42.7 days as compared to 45.3 days for the same period in 2020. The primary reason for these improvements can be attributed to our exceptional strong customer relationships and consistent conversion of a accounts receivable into cash. On March 31, 2021, as a result of the Woorank acquisitions, we have a purchase price and contingent consideration payable of $2 million in debt of $2.12 million respectively. As of March 31, 2021, we have 5,391,548 shares of common stock and 350 shares of the series C convertible preferred stock when converted equals 38,889 shares of common stock. Our total assets are $17.9 million, and our total liabilities are $6.5 million.”

Conference Call Takeaways

Bridgeline CEO Ari Kahn set the tone, “It certainly is an exciting time for Bridgeline, our shareholders and our customers. After evaluating dozens of strategic opportunities, we've been fortunate to find two acquisitions that fit perfectly into our eCommerce360 strategy. At eCommerce360 we focus on helping our customers grow their online revenue with turnkey apps that drive traffic, boost conversion, and raise average order value. eCommerce360 leads us to develop and acquire complementary apps that help drive online revenue from these three dimensions.

Our intelligent dashboard powered by Woorank is being trained to understand which of our apps can make the biggest impact on your eCommerce360 revenue drivers and provide recommendations as to which of our products can make the greatest impact to your website. eCommerce360 apps are out of the box, enabling them to be sold with a touchless sales process for a fast sales cycle with low sales and marketing expenses. Our recommendation dashboard will further reduce sales cost by cross-selling the best apps at the right time to help our customers.” He noted that Woorank delivers 10 new customers per day and 1,500 qualified sales leads per month with strong gross margins. It will become a foundation to offer SEO packages. The Company also acquired HawkSearch which complements its site search capabilities, “Site search is our strongest segment in the marketing technology market winning a customer per week with our seller of those product lines. HawkSearch brings new capabilities to Bridgeline that will drive even more online revenue for our customers with enhanced merchandising capabilities, product recommendations, personalization, and data-rich search analytics.” He concluded, “HawkSearch brings hundreds of new customers and 1000s of new sites to the Bridgeline family, strong revenues and gross margins and excellent sales pipeline in great-great-great partnerships with world-class digital agencies as well as leading e-commerce and CMS vendors. It's really a great time for Bridgeline right now.”

BLIN Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for BLIN stock. This meme stock peaked near the $14.32 Fibonacci (fib) level. Keep in mind, this is a highly speculative and potentially illiquid stock. The weekly rifle chart uptrend stalled abruptly with a falling 5-period moving average (MA) resistance at $5.90 forming a channel tightening towards its 15-period MA near the $4.22 fib. The weekly stochastic reversed its mini pup attempt as it quickly crossed back down. The daily rifle chart formed a market structure high (MSH) sell trigger on the breakdown under $8.20 as it heads towards the daily lower Bollinger Bands at $4.62. The daily downtrend has a falling 5-period MA resistance at the $5.49 fib as the stochastic forms another bearish mini inverse pup under the 20-band. The daily market structure low (MSL) buy triggers above the $5.76 level. Keep an eye on the volume as it will take a large consistent rising volume to reverse the downtrend as bag holders desperately try to get out. High-risk speculators and seasoned traders can monitor for opportunistic pullback levels at the $4.22 fib, $3.71 fib, $3.32 fib, $2.79 fib, and the $2.44 fib. Upside trajectories range from the $6.96 fib level up to the $9.21 fib.