RealNetworks (NASDAQ: RNWK) Stock a Legacy Reemergence Play

Friday, February 5, 2021 | Jea Yu
RealNetworks (NASDAQ: RNWK) Stock a Legacy Reemergence PlayLegacy media and entertainment platform RealNetworks (NASDAQ: RNWK) stock has reversed its multi-year downtrend. The year 2021 has seen a resurgence of legacy momentum stocks and former high fliers rise from the ashes fueled by social media-driven short-squeezes. Stocks like Blackberry (NYSE: BB), which was formerly Research In Motion trading, used to trade at over $300 per share over two decades ago during the first-day trading mania. Long before streaming services like Netflix (NASDAQ: NFLX), Disney+ (NYSE: DIS) and platforms like Roku, Inc. (NASDAQ: ROKU), RealNetworks paved the way as a leading pioneer of video streaming technology with shares trading north of $100 almost two decades ago. Fast forward to 2021, RealNetworks is reemerging as mobile gaming and a biometric facial recognition play with its SAFR Computer Vision platform to enhance cybersecurity and physical identity authentication needs for commercial clients. Zero trust security protocols can be greatly enhanced with biometrics in light of the SolarWinds (NYSE: SWI) hacking disaster. Prudent investors seeking a relatively cheap entry into a legacy turnaround play in this space can monitor shares for opportunistic pullback levels to gain speculative exposure.

Q3 FY 2020 Earnings Release

On Nov. 3, 2020, RealNetworks released its fiscal third-quarter 2020 results for the quarter ending September 2020. The Company reported an earnings-per-share (EPS) loss of (-$0.08) on revenues of $16.6 million versus $17.7 million in the year ago period. The Company ended the quarter with $13.2 million in cash and cash equivalents. The Company signed a definitive agreement to sell Napster to MelodyVR for a total transaction value of $70 million. MelodyVR will assume approximately $44 million of Napster’s liabilities.

Conference Call Takeaways

RealNetworks CEO Rob Glaser provided color on the strategy consisting of the SAFR Computer Vision product and free-to-play casual mobile games. The Company is in the process of selling Napster. GameHouse mobile games division grew 60% YoY driven by success of Delicious World and Delicious Bed & Breakfast. Glaser remains confident that, “free-to-play games will continue to be our primary growth engine for our game business.”

SAFR

RealNetworks AI-powered biometric facial recognition platform SAFR works in real-time able to verify identities regardless of face masks and during live video. The computer vision platform is touted as 99.9% accurate in performing multiple facial recognition in the time it takes competitors to complete one. Remark Holdings (NASDAQ: MARK) is one such competitor. SAFR applications range from authentication, digital and physical security, healthcare to industrial uses. CEO Glaser updated new opportunities for its SAFR product, “For instance, the Tijuana International Airport Cross Border Xpress or CBX recently chose SAFR to track mask compliance and gather critical operations data within the terminal to optimize operations and improve passenger flow.” The Company continues to execute on two SBIR contracts awarded in Q2 by the U.S. Air Force.   

Completion of Napster Sale

On Jan. 5, 2021, RealNetworks announced the completion of the sale of Rhapsody International Inc. (aka Napster) to MelodyVR Group PLC. The value of the deal is $70.6 million comprised of $15 million in cash, $11.6 million in MelodyVR restricted stock and assumption of Napster liabilities of $44 million. CEO Rob Glaser stated, “The proceeds of the sale strengthen Real’s balance sheet and enable us to focus on even more deeply on our primary growth initiatives which consist of two machine-learning-based businesses, SAFR and Kontxt, and our GameHouse casual gaming business.  

RealNetworks (NASDAQ: RNWK) Stock a Legacy Reemergence Play

 RNWK Opportunistic Pullback Levels

Using the rifle charts on the monthly and weekly time frames enables a broader view of the playing field for RNWK stock. The monthly rifle chart has a double-barrel pup breakout comprised of the moving average (MA) pup breakout with a rising 5-period MA near the $1.60 Fibonacci (fib) level and a monthly stochastic mini pup. The mini pup targets the upper Bollinger Bands (BBs) at $2.36. The weekly rifle chart also has a double-barrel pup breakout triggered by the market structure low (MSL) above $1.43 with a rising 5-period MA at $1.84 driven by the weekly stochastic mini pup with upper BBs at $2.20. Since the BBs have been hit, prudent investors can look for opportunistic pullback levels at the $1.76 fib, $1.52 fib, $1.43 weekly MSL trigger, $1.33 fib, and the $1.14 fib.The upside trajectories range from the $3.38 up to the $5.20 fib levels. 

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7 Cloud Computing Stocks to Lift Your Portfolio to New Heights

Cloud computing sounds complicated, and it has become more sophisticated as it evolves. However, the basic idea behind the cloud is the same. The “cloud” is a euphemistic term for the delivery of different services via the internet. In its early days, the cloud was used exclusively for data storage. Here’s an easy example of why this was important.

Back when the internet was cutting its teeth, I worked in marketing communications. The need to comply with Total Quality Control Systems (TQCS) for our largest clients meant we had to save every version of our files. Every. Single. One. Now imagine that you’re producing a 120-page product catalog complete with photos and charts. Your hard drive is burning up just thinking about it. Yet that “data” had to be stored somewhere. And so we had a virtual server farm to try to warehouse all these graphic intensive (and memory sucking) files until we could archive them.

Other than the storage nightmare, consider that it was a pain to work remotely. You could copy a file from the server, but then were you working on the right file? I’m sure at least one person is reading this who remembers this pain.

The cloud takes that away. Cloud computing allows you to store files on a secure, remote server that everyone can access anywhere they have an internet connection. But it’s become so much more than that. Cloud computing now gives businesses a platform from which they can create applications and software. If that sounds confusing, I hope to simplify it in this presentation. To help you understand which cloud computing stocks, you may want to add to your portfolio, and we’ve created this special presentation. These are seven of the cloud computing stocks that will continue to grow with the sector.

View the "7 Cloud Computing Stocks to Lift Your Portfolio to New Heights".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
RealNetworks (RNWK)0.8$3.33+2.5%N/A-6.66N/AN/A
BlackBerry (BB)1.3$8.80+1.6%N/A-5.95Hold$7.50
Remark (MARK)1.2$2.02+8.6%N/A-3.88Buy$10.50
Netflix (NFLX)1.9$504.80-0.8%N/A81.42Buy$587.45
The Walt Disney (DIS)1.6$183.96+0.5%N/A-115.70Buy$191.64
SolarWinds (SWI)1.1$18.16+0.2%N/A151.35Hold$18.36
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