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Frankly (Frankly Stock Quote, Chart, News: TSXV:TLK) is a highly speculative play, but investors with a tolerance for risk should take a look at it, says Cormark analyst Richard Tse. In a research report to clients this morning, Tse initiated coverage of Frankly with a "Buy" (Speculative) rating and a one-year target of $6.00. Tse says that while the messaging space is obviously populated by giants, Frankly's approach to the market and its technology are unique. The analyst thinks its white labeled platform is an interesting left turn in the space. In an interview on BNN in December, Frankly CEO Steve Chung explained that the company takes the opposite tack of the majority of messaging players in that its intention is not to drive users to its own platform, but to integrate chat functionality into existing business apps. He described Frankly as an “enterprise messaging” play. Tse says this distinction between Frankly and the WhatsApps of the world is an important one for investors to understand. "Fundamentally, we believe Frankly offers a unique value proposition where enterprise brands can increase engagement in their apps through messaging with the added benefit of capturing information/analytics on their subscribers," he said. The analyst points out that not only is Frankly's business approach to the messaging space different, its technology approach is as well. Unlike much of its competition, Frankly uses a short-term memory (RAM) architecture, which Tse points out has the benefit of speeding up message delivery and, because it does not require an added process of storing messages, will appeal to those who desire anonymity. Tse thinks Frankly's user base will expand from 37-million this year to 89-million next year. He likes the company's young but seasoned team, the fact that it owns all its intellectual property, and its cash balance, which he believes is approximately $32-million. He believes this is enough of a war chest for Frankly to execute on its initial growth phase.

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Frankly is speculative but compelling, says Cormark

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