Today QuePasa (QPSA) announced that its game, Wonderful City, is now available on Facebook. While I expected this news to come with a pop for the stock, at the end of the day the stock had settled back to nearly where it started the day before. At the start of the market’s trading day the stock did move up significantly, but this was short lived.
Why would this story not move the stock, but similar news a couple weeks ago cause the stock to ratchet up? I believe investor fear is still large enough in this specific stock to mitigate the good news in small stories like the one today. Keep in mind, this story said that the game is on Facebook, not that it is successful on Facebook. Such a new story discussing success is months away from happening.
Investor fear has gripped the stock because independent traffic sources show the main site, www.QuePasa.com, taking a hit in the number of users/visitors visiting the site in the month of June. Official numbers have yet to be released from the company for this month and won’t be until early July. Until then, sites like www.Alexa.com are the best indicator of traffic and the picture is negative rather than positive.
I am of the opinion that game success rather than social media platform success is where QPSA will thrive. QPSA is a small enough company that having a few successful games on different social media platforms could radically alter their sales figures. The social medial platform they have is important, but in the long-run the games could easily become the company’s bread and butter.
For the near-term I do not see the stock having any significant action on the up or down-side. This will change if positive news about a social media company releasing an IPO occurs or the company releases news that speak directly to results. Otherwise, the perception amongst most investors will remain the same, especially in the dicey market we’re in.
If you’re an investor considering a position in QPSA the market’s uncertainty will provide you with a window of opportunity to do the necessary research to evaluate the company for yourself.
Disclosure: Long QPSA