SOBR Safe, Inc. (NASDAQ: SOBR) stock soared last week on heavy volume, ripping more than 84% higher and closing the period with its bullish trend intact despite weakening market sentiment. Still, while short-term rips can delight, there's potentially better news behind the move; the week's strength could be setting up $SOBR stock for a more appreciable gain. In fact, following the adage "volume precedes price," the trading pattern established last week may indicate something else- the impressive surge could be the precursor to more significant gains to come.
For good reasons. SOBR has developed an innovative non-invasive, quick, and easy-to-use method to identify potential alcohol issues with their employees or contractors. It's called SOBRcheck, and it's more than a genius product; it replaces a six-decade-old breathalyzer technology that, despite years of service, can't be classified as best in class. It does provide a means for alcohol detection. Still, with just 84% accuracy, it also provides a pathway for SOBR's 94% objective test to assume leadership in screening for alcohol impairment. It's also easy to use and implement.
SOBR's device is palm-sized and utilizes finger touch technology to detect the presence of alcohol in the body. It does this by taking the natural humidity in the skin and testing the natural vapor for alcohol components. It's indeed the next generation of alcohol screening technology and, better yet, fills the need in a transportation sector expected to be mandated to screen all employees by 2025.
Easy Implementation, Better Results
Best of all, it's an easy system for the thousands of companies needing it to implement. Best practices place the SOBRcheck system at entry points at facilities or driver centers, where employees simply place their hands or fingers on the device to verify and scan for alcohol. Seconds later, if no alcohol is detected, drivers get the keys to their particular motorized vehicle. No green light, no keys, and, more importantly, safe roads, warehouses, and work sites.
And unlike traditional breathalyzer tests, the SOBRcheck does not need blood, saliva, or breath-based components to perform its analysis. And more than hygienic, results are fast and reliable, with up to 180 employees able to be screened per hour. Speed and accuracy are impressive. It takes only about 20 seconds for the SOBR Safe system to analyze for alcohol detection and scores a dependability or accuracy rate of 97%, more than 13% higher than current point-of-action screening methods.
That difference matters, especially to potential clients needing what SOBR sells. But more than need it, those clients likely won't have a choice not to, with headlines last week indicating the NTSB will require alcohol screening for transportation sector companies by 2025. That's not to say many don't want to implement a system now, noting that alcohol-related driving accidents and workplace incidents often result in injury, death, and reputational harm.
A Mission To Keep Drivers SOBR
None of that needs to happen. And SOBR's scalable, patent-pending SOBRsafe™ hardware/software platform can help. Its non-invasive alcohol detection and identity verification device are an ideal solution to mitigate potential catastrophes, with broad applications and easy implementation in commercial vehicle fleets, manufacturing, and warehousing facilities driving client interest. But more than the commercial transportation market applications, others need SOBR, too.
DUI probation, construction, third-party alcohol testing, alcohol rehabilitation, and youth drivers markets are also in play, expanding the size of SOBR's revenue-generating shots on goal. But more than targeting massive market potential, the more excellent news from an investor's perspective is that SOBR is already seizing on those opportunities. In 2021, SOBR completed several pilot testing programs evaluating its SOBRsafe™ system with the SOBRcheck device, leading them to commercial production and the sales launch of SOBRcheck™ devices and software solutions to an initial fleet market centered around last-mile delivery.
And here's something else to note. The SOBRcheck system does more than facilitate entrance and enables employees to get a set of keys to operate a motor vehicle. Its devices also connect seamlessly to a robust cloud-based reporting and data management system, a distinction and advantage that aggregates data, helps client companies maintain compliance, and provides and consolidates safety management and incident reporting. That's not all of the benefits. Companies can see sharp decreases in insurance premiums with SOB's pro-active screening platform, putting another billion-dollar revenue-generating market in its crosshairs. It's an excellent group to target.
Partnerships with property & casualty insurers can lead to exponential revenue growth and expedite product development. Moreover, support from that industry can accelerate market penetration, which not only adds to the current value proposition but also makes it a near-term value driver.
Investors are taking notice. But it's important to note that while its SOBRcheck system is an industry game-changer and life-saver, there's more to support SOBR's case for investment consideration.
SOBRsure Strengthens Products Arsenal
A second device, also an innovation to a decades-old standard, is SOBRsure™, a wearable wristband utilizing the same SOBRsafe™ sensor technology and software platform validated during the SOBRcheck™ development process. This device complements its first, primarily intending use of the band for commercial fleet management and assisting managed care patients with an extension of the platform, potentially reaching into the young drivers market. The wearable band is already available to commercial clients and is expected to tap into the broader and more lucrative consumer markets in 2023. The target market in dollar terms is enormous.
Estimates put the combined addressable market for SOBR's devices and solutions at upwards of $30 billion. That accounts for opportunities mentioned, like last-mile delivery fleets, warehouses, manufacturing facilities, and construction sites. But those potential revenue estimates may be conservative when accounting for young drivers and alcohol-related rehabilitation markets. Considering that the cost of alcohol abuse in the U.S. alone is an approximately $250 billion liability and much higher globally, that may be the case.
And after raising net proceeds of $8.7 million from a recent public offering, with about $3.0 million helping reduce debt to only about $1.5 million, SOBR looks better positioned than ever to capitalize on and maximize its near-term market opportunities. That includes those from companies like Amazon (NASDAQ: AMZN) that often utilize last-mile delivery services.
SaaS-Based Subscription Business Provides Visibility
Revenues are expected to increase from a SaaS-based business model that does more than integrate quickly; it provides visibility. And with SOBR generally engaging in 60-month contracts, in addition to that income visibility, SOBR can benefit from less churn and economies of scale. Best of all, those evaluating the SOBR proposition need to know that SOBR is executing a strategy to secure those long-term deals and their benefits.
It's spearheaded by SOBR providing the SOBRcheck device for free to clients, receiving a $30 monthly user fee in return. The SOBRsure band will be marketed differently, selling outright for $299.95 and users paying $19.95 monthly for the cloud-based services. From a business perspective, gross margins of over 70% can be realized, allowing the revenues to fall faster to the bottom line.
And that's starting to happen. While minimal thus far, revenues are being generated. And with only about 10.9 million shares outstanding, any uptick can be quickly accretive to shareholders on a multiples basis. In fact, the trend is decidedly bullish, with partnerships and widening distribution channels providing a substantial foundation to expedite near-term growth. Couple that with a strengthened management team and impressive Board, the path of least resistance may be to the decided upside. Of course, business partnerships drive growth; SOBR has several.
Partnerships Driving Value
One is with third-party administrator Butterfield Onsite Drug Testing, which has launched SOBR's touch-based detection through their initial purchase of the SOBRcheck™ technology. Butterfield is no small player, and over the past 19 years, they have built a customer network reaching into national airlines to test pilots, flight attendants, and ground crew. Moreover, with Butterfield expected to have a dedicated sales team representing SOBRsafe solutions to this network, maximizing and monetizing the deal is a near-term proposition.
Other deals include a distribution agreement with Reconnect, a public benefit corporation committed to improving outcomes for participants in the justice space. Reconnect leverages technology to reduce incarceration, recidivism, and costs and sees value in deploying the SOBRcheck system as a critical pre-screening tool to meet that objective. SOBR also announced its partnership with rideshare company RubiRides, a membership-based service that delivers reliable transportation emphasizing ride safety for children through a network of vetted and dedicated drivers. That deal will supply RubiRides' growing pool of drivers with the SOBRsure wearable wristband, empowering RubiRides to manage its services with a centralized, real-time reporting and safety intelligence platform.
More deals were made with North-Star Care, an innovative virtual reality alcohol dependency treatment platform, Continental Services, a Michigan-based food distributor, and Virginia-based RecoveryTrek, a company providing innovative alcohol management solutions to clients nationwide in the behavioral health, judicial, workplace, and human services markets.
SOBR is receiving industry accolades as well. In August, SOBR announced that it was awarded the Occupational Health & Safety (OH&S) New Product of the Year in the Safety Monitoring Devices category for its SOBRcheck™ system. In this year's OH&S New Product Awards, only 26 companies were selected for the magazine's annual New Product of the Year award across 31 categories.
Thus, plenty of revenue-generating fuel and industry recognition should help increase shareholder value in the final months of 2022 and all of 2023.
A Sum Of Its Parts Consideration
That presumption is strengthened knowing that SOBRsafe is leveraging a leadership position in the alcohol policy management industry and can generate significant value by focusing on prevention instead of reactive processes. In fact, SOBR's sum of its parts may present a value proposition, even after its recent surge, that is too good to ignore.
Remember, with SOBR transforming into a revenue-generating company, supported by enhanced manufacturing, market development partnerships, a strengthened balance sheet, and a solid cash runway, creating value for its shareholders is more than a target- it's in the crosshairs. Factoring in companies acting quickly to implement alcohol detection systems ahead of the expected NTSB mandate, that value could increase exponentially.
Bottom Line: SOBR checks the right boxes at the right time. There's even an inherent bonus from them being in a recession-resistant business, which mitigates downside risk and keeps them in growth mode. In other words, by checking those bullish boxes and enhanced by a regulatory tailwind that puts millions of dollars of business within reach, SOBR Safe Inc. is more than a compelling proposition; it's timely.
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