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uCloudlink (NASDAQ:UCL) reported Q4 2021 closing out a year where revenues declined 18% to $74 million. In Q4 revenues were up 3% so we are hopeful we have come down to rock bottom and things should improve. When and at what rate are the keys to 2022. Certainly no one would have believed in 2020 we would still be reacting to the pandemic in 2022 and still restricting international travel. Here in the US people are traveling where allowed internationally but China continues to restrict travelers. uCloudlink still remains a key way to play reopening and is positioned to benefit. The company has put forth guidance for 2022 of revenues ranging from $85 million to $100 million. Since no one knows when travel will be allowed which will affect revenues greatly, we have chosen to start with a forecast of $81 million and look forward to raising numbers as results come in better than expected. In the past year the company has missed guidance or at best come in at the low end. In Q1 it expects revenues in the range of $14 million to $17 million, which on March 24th should doable given the quarter is already almost over.
One issue that has overhung the company is its structure as a VIE, an arrangement that has come under scrutiny by the Chinese and US governments. uCloudlink has moved to eliminate that structure and in March it dissolved the VIE contracts and transferred assets into uCloudlink. This should remove an obstacle for investors that have avoided VIEs completely due to regulatory uncertainty.
The stock has come down considerably and the company is now trading at an enterprise value of $45 million with expected revenues of $81 million to $100 million this year. That is only 0.6 times sales compared with peers that trade at 5.7 times.
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