I have created a new thread as the other is a bit old and to put some charts on.

I'm told subscriptions are going very well.

Cannacord, the house broker, set a 10p target some weeks ago which looks to be a modest target.

I hold some but any views welcome

I hold some HEM--any advice on switching? Hem has risen well over the last few months.

Sorry Moneyplus dont follow HEM so no idea. There is an interview with the ADVFN CEO Clem Chambers this afternoon on ADVFN. Have a listen and decide

advfn tipped today on http://www.everyinvestor.co.uk

I am not normally a great fan of 'penny shares' but stock market services group, ADVFN, looks like an exciting exception to the rule. The business has taken off since the stock market recovery began in earnest with the subscriber base growing by 25 per cent in three months. More subscribers means more advertising revenue while costs dont change anything like in proportion. This means that a loss-making business can suddenly find itself very profitable indeed with a tidal wave of cash pouring into the coffers. Even though the shares are up from a low of 0.85p to 5.2p it should not be too late to buy. If a strong new bull market really has begun then ADVFN is a wonderful, highly leveraged, way to play the boom.

Market Data
EPIC Company Share Price Market Cap m PER Dividend Yield% 12-Month hi-lo Company Report
AFN ADVFN 5.20 21.12 n/a n/a 0.77-5.20 --

If ADVFN proves as successful as I expect this will be a remarkable achievement for managing director, Clement Chambers, who, at the darkest hour, invested 200,000 in new shares to save the group. This reflected timing rather than any weakness of the business. ADVFN was founded in 1999 and floated in early 2000, just four weeks before technology shares began to collapse. The group could not have picked a tougher time to build a stock market-related business. Inevitably it racked up losses and began haemorrhaging cash. On the plus side this ordeal by fire should serve the group well in the new more buoyant trading environment.

ADVFN runs a financial website. Revenue comes from subscriptions and advertising. The key is a large and growing subscriber base because that is what brings in the advertising. Very roughly Chambers reckons that there is a 3:1 balance between advertising and subscription revenue so a strongly-rising subscriber base, such as is now being enjoyed, has an electrifying impact on the group.

Big increase in proportion converting from free to paid-for service
The group offers varying levels of service at different prices. A basic service including delayed share prices, indices, share price charts and Europes largest bulletin board is free. This helps support advertising and pulls in registrations that can then be converted to paying subscribers. There has been a huge increase in the percentage converting from free to paid-for subscription services from say 2.5 per cent a year ago to 10-20 per cent currently.

Financial Data
Fiscal Year Proj Turnover m Pretax Profit Change % EPS Change % DPS Change
%
2003 2.26 L0.66 NA L0.10 NA 0 NA
2004 * 3.20 0.20 NA 0.10 NA 0 NA
2005 * 4.30 1.00 400% 0.20 100% 0 NA

EPS - Earnings per Share
DPS - Dividend per Share

The bronze service costs 5 a month and gives subscribers access to a premium bulletin board and extra tools for fundamental analysis. The silver service costs 11.75 a month and gives unlimited real time share prices and information on US stock markets. Beyond that there is 'Level 2' pricing, showing bids and offers on shares, which costs 40 to 100 a month and is proving attractive to wealthier and more active private investors.

One seeming problem for the business is very high levels of churn. Historically half the subscriber base has been lost every year. This may change in a bull market and as the group improves the functionality of its offering. It may also not matter that much if the group can generate virtually exponential growth in subscriber numbers. Many of those who leave may also only stop subscribing temporarily and come back at a later stage.

Overseas subscribers sign up in droves
Last but not least is the increasingly international reach of the business. ADVFN is becoming a global business offering its services on stock markets outside the UK. As a result it can attract overseas subscribers. A year ago 10 per cent of new subscribers came from outside the UK. The proportion has since grown to nearly 50 per cent.

What this barnstorming growth is going to do for sales and profits is hard to predict. Clement Chambers had been talking about sales for the year to 30 June 2004 topping 3m and running at a 4m - 5m rate by June 2005. However, as he pointed out, at the rate at which the business is currently growing, anything is possible. My guess is that there are going to be pleasant surprises from the group and that the shares still have the scope to move sharply higher.

On-Line offers cheap way into ADVFN
A possible cheap way into ADVFN is via On-Line at 58.50p. On-Line is capitalised at 4.47m but owns 28.2 per cent of ADVFN, worth 5.95m at present prices. One broker is forecasting that the ADVFN share price will reach 9.2p at which point On-Lines stake would be worth over 11m. Cash burn has been reduced from 461,000 last year to 129,000. In effect On-Line is an attractive cash shell with a highly liquid balance sheet. If it ever decided to do a deal the shares could move up very strongly.