Small Cap Synacor Inc (SYNC): At Least the Slide Has Slowed (SKYY, IGV & SOCL)

Small cap Synacor Inc (NASDAQ: SYNC) says its "where Tech, Hollywood and Madison Avenue meet in the cloud" but its not exactly been a blockbuster for investors – meanings its worth taking a closer look at the stock along with the performance of potential benchmarks like the First Trust ISE Cloud Computing Index (NASDAQ: SKYY), iShares North American Tech-Software (NYSEARCA: IGV) and Global X Social Media Index ETF (NASDAQ: SOCL).

What is Synacor Inc?

Small cap Synacor Inc calls itself a "Tech company at the intersection of Hollywood and Madison Avenue" or "where Tech, Hollywood and Madison Avenue meet in the cloud." More specifically, Synacor Inc's white-label platform enables cable, satellite, telecom and consumer electronics companies to deliver TV Everywhere, digital entertainment, cloud-based services and apps to their end-consumers across multiple devices, strengthening those relationships while monetizing the engagement. The company says it's the leading provider of next-gen startpages, homescreens, award-winning TV Everywhere solutions and cloud-based Identity Management (IDM) services, across multiple devices for cable, satellite, telecom and consumer electronics companies in the US and abroad

As for potential performance benchmarks, the First Trust ISE Cloud Computing Index tracks the ISE Cloud Computing Index through 41 holdings; the iShares North American Tech-Software tracks the S&P North American Technology-Software Index through 61 holdings; and the Global X Social Media Index ETF tracks the Solactive Social Media Index through 21 holdings. 

What You Need to Know or Be Warned About Synacor Inc

Synacor Inc debuted in early 2012 at $5 (sharply below its original plans of debuting at $10 to $12 a share), but it appears that shares quickly got way ahead of themselves thanks to the activities of certain promoters or traders plus the company has long warned that a growing number of consumers are using mobile devices instead of computers and software applications other than Internet browsers to access the Internet – hurting its search-and-display advertising (the company has been developing solutions to address these trends). Shares have largely been flat at the $2.50 level since early 2013.

In early March, announced financial results for the fourth quarter and fiscal 2013 with fourth quarter revenue coming in at $29.4 million verses $32.2 million as search and display advertising revenue came in at $24.0 million verses $27.1 million while subscription-based revenue came in at $5.4 million verses $5.1 million. For fiscal 2013, total revenue came in at $111.8 million verses $122.0 million for fiscal 2012 as search and display advertising revenue came in at $90.4 million verses $101.6 million and subscription-based revenue came in at $21.4 million verses $20.4 million. For the fourth quarter of 2013, Synacor Inc's net income came in at $0.2 million verses net income of $0.8 million while for the full fiscal year, the company's net loss came in at $1.4 million verses net income of $3.8 million for 2012. The CEO commented:

"Throughout 2013 and most intensively in our fourth quarter, Synacor made significant progress developing new multi-device touchscreen and mobile products for use in domestic and international markets. We're particularly excited about our latest Android homescreen, TV Everywhere search & discovery interfaces, and authentication offerings. We plan to aggressively rollout these new products during the next two quarters of this year and we're encouraged by the early market reception."

For fiscal 2013, it should be mentioned that Synacor generated $5.2 million in cash from operating activities verses $14.7 million in fiscal 2012, but the company ended the year with $36.4 million in cash and cash equivalents verses $41.9 million at the end of fiscal 2012. In addition, the earnings report noted a CEO succession plan plus announced a stock repurchase program under which the company may repurchase up to $5 million of its outstanding common stock.

Aside from earnings, investors should be aware of a large number of insider sales in recent months that are documented on Yahoo! Finances Insider Transactions page for the stock:

Insider Transactions Reported - Last Two Years

DateInsiderSharesTypeTransactionValue*

Apr 17, 2014	CHAMOUN GEORGEOfficer	10,000	Direct	Option Exercise at $0.20 per share.	2,000
Apr 15, 2014	CHAMOUN GEORGEOfficer	5,000	Direct	Automatic Sale at $2.54 per share.	12,700
Apr 9, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.50 per share.	28,750
Mar 27, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.45 per share.	28,175
Mar 18, 2014	CHAMOUN GEORGEOfficer	10,000	Direct	Option Exercise at $0.20 per share.	2,000
Mar 17, 2014	CHAMOUN GEORGEOfficer	5,000	Direct	Automatic Sale at $2.57 per share.	12,850
Mar 13, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.62 per share.	30,129
Mar 11, 2014	CHAMOUN GEORGEOfficer	20,000	Direct	Option Exercise at $0.20 per share.	4,000
Mar 10, 2014	CHAMOUN GEORGEOfficer	5,000	Direct	Automatic Sale at $2.59 per share.	12,950
Feb 12, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.49 per share.	28,635
Jan 30, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.42 per share.	27,830
Jan 15, 2014	CHAMOUN GEORGEOfficer	10,000	Direct	Option Exercise at $0.20 per share.	2,000
Jan 15, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.60 per share.	29,899
Jan 15, 2014	CHAMOUN GEORGEOfficer	5,000	Direct	Automatic Sale at $2.60 per share.	13,000
Jan 2, 2014	FRANKEL RONALD NOfficer	11,500	Direct	Automatic Sale at $2.48 per share.	28,520

Hot Communications Equipment Companies To Own In Right Now

 

Otherwise, it should be noted that Synacor Inc will hold a conference call to discuss financial results for its first quarter 2014 on Tuesday, May 13, at 5pm Eastern Time.

Share Performance: Synacor Inc vs. SKYY, IGV & SOCL    

On Tuesday, small cap Synacor Inc fell 0.79% to $2.51 (SYNC has a 52 week trading range of $2.13 to $4.17 a share) for a market cap of $68.95 million plus the stock is up 2.45% since the start of the year, down 12.5% over the past year and down 52.2% since February 2012. Here is a look at the long term performance of Synacor Inc verses potential ETF benchmarks First Trust ISE Cloud Computing Index, iShares North American Tech-Software and Global X Social Media Index ETF:

As you can see from the above chart, Synacor Inc peaked in the middle of 2012 when it began sliding but that slide largely dissipated several months ago.

Finally, here is a look at the latest technical charts for Synacor Inc, First Trust ISE Cloud Computing Index, iShares North American Tech-Software and Global X Social Media Index ETF:

The Bottom Line. While small cap Synacor Inc is definitely not for conservative investors, traders and anyone with a stomach for some risk might want to take a closer look at the stock.