Alexander Green’s Top Small Cap IPO

When Netflix (Nasdaq: NFLX) launched its streaming service, it changed the way people watched TV forever. Now there’s no shortage of options in the market. Disney+, Amazon Prime Video… the list goes on.

But none of those services is as ubiquitous as Netflix. Streaming is what Netflix does, and it’s very good at it… to the point that it’s become a blue chip worth about $400 per share.

However, the market is ripe for niche challengers to the Los Gatos, California-based streaming giant… particularly when it comes to educational and enriching programs.

Netflix is great for when you want to switch off for a while and watch a sitcom or a blockbuster action film…

But sometimes, we want our entertainment to be educational. We want to think about what we’re watching…

Enter my top small cap, which had its initial public offering (IPO) in 2020: CuriosityStream (Nasdaq: CURI), the first pure-streaming challenger to Netflix.

The Thinking Man’s Netflix…

Back in the early 2000s, the Discovery Channel and History networks featured some of the best educational programming around. They offered hard-hitting, high-production-value documentaries on nature, science, history, etc…

But these days, they’re more likely to feature reality TV with a somewhat scientific or nature-based slant than anything really intellectually stimulating.

That could be why Discovery founder John Hendricks left the network and launched CuriosityStream back in 2015.

His goal was to continue the mission he began when he founded the Discovery Channel – to empower people around the world and unleash their curiosity.

Six years later, his service has become the premier place to watch documentaries on topics including nature, science, history, technology, sociology and more. It went public in mid-2020 and has grown exponentially since.

Hendricks is putting his money where his mouth is. In early 2021, he loaded up on more than 74,000 shares, worth a total of $999,000. He’s clearly confident in his company, and he has remained so – he hasn’t sold a single one of those shares.

One of those reasons is CEO Clint Stinchcomb, who has more than 25 years of experience in traditional and digital media.

Stinchcomb is particularly capable when it comes to niche networks like CuriosityStream. He made Poker Central into the world’s first global multimedia network dedicated to poker.

With a much larger niche to fill with CuriosityStream, Stinchcomb’s methods have proven to be remarkably successful. In 2019 alone, under his leadership, CuriosityStream achieved 10X growth.

It’s no wonder he bought 281,653 shares at the end of 2020. And just like Hendricks, he hasn’t sold a single share. Stinchcomb, more than anyone, knows CuriosityStream is going places.

CuriosityStream should be familiar to anyone who has used any of the myriad streaming services on the market today. For less than $20 a year, you can stream thousands of documentaries on demand through CuriosityStream.

It’s the world’s most distributed pure-play video streaming service to be publicly listed, aside from Netflix, of course. But until now, Netflix really hadn’t had a serious rival that used a similar business model.

CuriosityStream is priced competitively with its streaming peers too.

The company’s high-definition (HD) monthly subscription costs only $2.99. That’s $7 less per month than a basic Netflix account – which doesn’t offer HD at all – and about $5 cheaper than a comparable Disney+ account. The most popular CuriosityStream subscription is the $19.99 annual subscription.

The company reaches approximately 20 million subscribers in more than 175 countries. And it’s just getting started…

Hendricks has been in the media business since 1985 when he launched Discovery Channel. During his tenure there, the network expanded its reach to 220 countries and territories, 2.5 billion cumulative subscribers, 206 worldwide networks, and 49 network entertainment brands.

I see no reason CuriosityStream can’t achieve similar success. Even a cursory glance at its balance sheet shows its potential…

In 2020, revenue came in at $39.6 million, up 120% year over year. In the third quarter of 2021, CuriosityStream brought in $18.7 million in revenue, a 114% year-over-year increase.

Gross margin was an impressive 49% for the third quarter of 2021. The company’s subscriber count leapt 50% in 2020 from year-end 2019. 2021 saw that rapid growth continue as CuriosityStream’s subscriber count shot up by 50% in the third quarter.

The company also turned a quarterly profit for the first time in the third quarter of 2021, topping $830,000 in net income, compared with a $6.7 million loss in the third quarter of 2020.

This company has begun to hit its stride. It is growing incredibly fast and has huge potential going forward. It has a great leadership team with decades of experience in media and broadcasting as well as a very healthy balance sheet for such a young company.

CuriosityStream is already the thinking man’s Netflix. I think it has a very good chance of becoming a heavy hitter in the streaming marketplace, which is projected to be worth as much as $149.3 billion by 2026.

For a company that is primed to claim a slice of that market, CuriosityStream is a bargain at less than $5 per share.

***Action to Take***

Buy CuriosityStream (Nasdaq: CURI) at market. Set a 25% trailing stop to protect your principal and profits.

Have I Piqued Your Curiosity? 

Small cap stocks like CuriosityStream have more growth potential than most other stocks on the market. But they can be risky. Bargain stocks like this with small market caps are prone to volatile share price swings – both up and down.

You should size your position accordingly and never invest more than you can afford to lose in case things go wrong. But with an expert executive team and a healthy balance sheet, CuriosityStream punches well above its weight class.

It occupies a great spot for its size as well. The streaming market is dominated by a few key players offering broad-spectrum programming.

But CuriosityStream offers a specific type of programming for a specific audience. At the same time, its content has broader appeal than that of other niche streaming services.

There are sports streaming networks and studio-specific networks, but CuriosityStream is the only game in town for documentaries in every conceivable category.

You’ll want to take a look at this one… even if it’s only to satisfy your curiosity.