RDE, Inc. (OTCQB: RSTN) shares could be headed for a substantial rally. And the good news is that potentially huge gains are likely to happen sooner rather than later. Why? Because after more than a year of pandemic-related shutdowns, capacity modifications, and indoor dining restrictions, the restaurant and hospitality industry is nearing its day for service freedom. And RSTN is ready to capitalize on what is expected to be an historic surge in location dining. Momentum is building in its favor.
Already, a large number of states have eliminated in-house dining restrictions, and more are set to follow as the pace of vaccinations quickens. For RSTN, that's great news and could make its more than 175% year-to-date gains the launchpad for a massive move higher. And deservedly so.
Beyond its busy three months of partnership building in 2021, RSTN has strengthened its management team by adding Kevin Harrington (of shark tank fame) and Chef Fabio Viviani to its Board of Directors and Advisory Board, respectively. Those two add a tremendous amount of business and hospitality experience to RSTN and could help accelerate RSTN's mission to become the world's leading provider of digital dining deals and services. Restaurant.com is already the most prominent US dining deals brand. Global dominance would be better.
And they are making the moves to have that happen.
2021 Starts Strong For Restaurant.com
Since February, the company announced partnering with AMAC, the Association of Mature American Citizens, and its 2.3 million members that provide a targeted pathway for RSTN to reach the senior adult population. AMAC represents Americans 50 plus and is centered on American values, freedom of the individual, free speech, the exercise of religion, equality of opportunity, sanctity of life, and love of family, with benefits at all levels. The organization plays a vital role in helping build the services that will enrich the lives of America's seniors, and as a 501 (C)(4), advocates for issues important to its membership on Capitol Hill and locally through grassroots activism.
The partnership is a win-win deal. For AMAC, it extends RSTN's national restaurant-focused digital discounts to its 2.3 million members. And for RSTN, it adds an additional target audience that can drive revenues and enhance long-term shareholder value by sharing its digital deals and providing access to discounted deals at local and national restaurants.
Another deal made with MemberHub adds the largest and fastest-growing community engagement software company for K-12 parent groups, putting RSTN in an enviable position to target millions of customers through an array of digital deal offerings. MemberHub currently serves over 12,800 organizations that engage with more than 2.8 million K-12 parents.
A third deal this year brought RSTN together with Rosebud Restaurants to provide marketing services on its digital deals platform for their six Rosebud and two Carmine's locations across Chicagoland. The three agreements, especially in a healthy food service environment, will add substantial revenue-generating firepower to RSTN. And, additional deals are likely to follow. After all, the remainder of 2021 will be a crucial period for the restaurant industry to recover, and marketing should be a top priority for every business.
Taking Momentum From A Strong 2020 Performance
The great news is that beyond the partnerships that set up 2021 for success, its 2020 results were also impressive. In March, RDE, Inc. announced unaudited financial results for the year ending December 31st, 2020. According to the report, RSTN recorded revenue of $2.9 million with a net income of $332,000, or $0.06 in earnings per share. Those results compare to a loss per share of ($1.37) in 2019.
Notably, RDE said that the revenue figure reflects business recorded from March 1st, 2020, the effective date of RDE's acquisition of Restaurant.com, rather than the full year 2020. Thus, the twelve months revenue for Restaurant.com was $4.4 million. All financial results are subject to the audit.
Better still, if the audit puts the stamp of approval on the numbers, results could show RSTN swinging into a profit. Breaking the results down, the company reported income from operations of $531,000, showing substantial improvement compared with a loss of $2.1 million in 2019. On a per-share basis, RDE delivered EPS of $0.06 compared with a negative EPS of ($1.37) in 2019. The company noted that the 2020 net income and EPS include a positive non-cash change in derivative liability due to convertible notes' accounting.
Also bullish is that Shareholder's Equity for the year also had a significant turn for the positive. According to its March 2020 update, Equity jumped from a ($7.8 million) deficit to $1.1 million in Equity for the year. Further, with the removal of all institutional convertible debt, management expects balance sheet improvement and bottom-line growth to continue to demonstrate meaningful increases going forward.
That's the expectation for investors, too.
Taking Momentum Into 2021
Obviously liking what they see, investors have been bidding shares higher. Since the start of 2021, RSTN shares have increased by more than 175%, starting from $1.00 in January to a closing price of $2.75 on Tuesday. Volume has increased substantially as well. At the start of the year, trading was sporadic. Now investors exchange approximately 14K shares of stock per day, a more than 13,000% increase from the trading volume lows.
And with its bullish trend intact, coupled with investor's apparent hunger for shares, higher highs could follow. For sure, Restaurant.com is in the right sector at the right time. Although 2020 was perhaps the most challenging year on record for the industry, 2021 and 2022 could be massive years for the industry as consumers gear up to return toward normalcy. Moreover, pent-up demand and the country's willingness to support its hometown establishments should help the recovery happen sooner rather than later.
And with marketing being a critical ingredient to the comeback, Restaurant.com and RSTN stock could be prime beneficiaries to what could be the fastest snap-back industry rally of all time.
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