SurgePays Hit By Sharp Revenue Decline (Rating Downgrade)

Q2 2024 sales fell sharply to $15.1 million from $35.9 million, primarily due to ACP funding cuts.
Gross profit dropped to a -$3.4 million loss in Q2 from a $10 million profit in Q2 2023.
Transition to non-subsidized LinkUp Mobile raised costs to retain 280K subscribers, straining cash reserves and profit margins.
SG&A expenses surged 101% year-over-year in Q2, driven by stock compensation and consulting fees, worsening cash flow.
The announced $5 million stock buyback (~16.5% of market cap) signals management’s confidence, despite ongoing financial challenges.

Black_Kira

Investment Thesis

Given recent developments, we update our investment thesis for SurgePays (NASDAQ:SURG) to reflect heightened caution. Our previous buy rating was premised on network expansion, product diversification, and healthy margins; SurgePays has since encountered significant setbacks. The end of

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Our <a href=\"https://seekingalpha.com/article/4675291-surgepays-flies-under-the-radar\">previous buy rating</a> was premised on network expansion, product diversification, and healthy margins; SurgePays has since encountered significant setbacks. The end of</p></body></html>","htmlText":"<html><head></head><body><ul>\n <li>Q2 2024 sales fell sharply to $15.1 million from $35.9 million, primarily due to ACP funding cuts.</li>\n <li>Gross profit dropped to a -$3.4 million loss in Q2 from a $10 million profit in Q2 2023.</li>\n <li>Transition to non-subsidized LinkUp Mobile raised costs to retain 280K subscribers, straining cash reserves and profit margins.</li>\n <li>SG&amp;A expenses surged 101% year-over-year in Q2, driven by stock compensation and consulting fees, worsening cash flow.</li>\n <li>The announced $5 million stock buyback (~16.5% of market cap) signals management’s confidence, despite ongoing financial challenges.</li>\n</ul>\n<p></p><img src=\"https://static.tigerbbs.com/ed1de6b6192b53657d8659712223d1a6\">\n<p class=\"item-caption\"></p>\n<p class=\"item-credits\">Black_Kira</p>\n<p></p>\n<div class=\"inline_ad_placeholder\"></div>\n<h2>Investment Thesis</h2>\n<p>Given recent developments, we update our investment thesis for SurgePays (<span class=\"ticker-hover-wrapper\">NASDAQ:<a href=\"https://seekingalpha.com/symbol/SURG\">SURG</a></span>) to reflect heightened caution. Our <a href=\"https://seekingalpha.com/article/4675291-surgepays-flies-under-the-radar\">previous buy rating</a> was premised on network expansion, product diversification, and healthy margins; SurgePays has since encountered significant setbacks. The end of</p></body></html>","text":"Q2 2024 sales fell sharply to $15.1 million from $35.9 million, primarily due to ACP funding cuts. Gross profit dropped to a -$3.4 million loss in Q2 from a $10 million profit in Q2 2023. Transition to non-subsidized LinkUp Mobile raised costs to retain 280K subscribers, straining cash reserves and profit margins. SG&A expenses surged 101% year-over-year in Q2, driven by stock compensation and consulting fees, worsening cash flow. The announced $5 million stock buyback (~16.5% of market cap) signals management’s confidence, despite ongoing financial challenges. Black_Kira Investment Thesis Given recent developments, we update our investment thesis for SurgePays (NASDAQ:SURG) to reflect heightened caution. Our previous buy rating was premised on network expansion, product diversification, and healthy margins; SurgePays has since encountered significant setbacks. 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