SOBR Safe, Inc. (NASDAQ: SOBR) stock is in rally mode. Still, despite its more than 12% gain at press time Tuesday, it's fair to speculate that this gain is the precursor of more. In fact, from a competitive perspective, SOBR's current valuation leaves out the fact that the company has more inherent potential and product firepower than sector competitors valued at multiples higher. That shows several things. First, it exposes a valuation disconnect worth seizing. Second, investors are still learning about SOBR's innovative technology. And third, it demonstrates that ground-floor opportunities in potentially industry-redefining companies still exist.
But in addition to checking those three boxes, SOBR has two other things going for them: financial strength, a product of completing a $3.5 million convertible senior notes offering in March, and an increasing global distribution footprint after signing a potentially massive deal with Canadian distributor Alco Prevention Canada. On those merits alone, SOBR has deserved its rally. Financially speaking, the capital injection allows SOBR to expedite its mission to maximize the value inherent to its innovative and disruptive alcohol-screening technology. And the distribution agreement speaks for itself: it's a significant marketing win.
And it could help steepen the trajectory of SOBR shares. Market gyrations aside, and considering the company looks better positioned today than when it scored 52-week highs 320% higher, any share price weakness may be better viewed as an opportunity rather than a deterrent.
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Scoring A Massive Canadian Market Expansion
Plenty supports that thesis. But the news on Tuesday is a piece added to the growth puzzle that's a potential revenue game-changer in 2023. SOBR announced accelerating its international expansion, signing a deal with global distributor Alco Prevention Canada. Founded in 1989, Alco is a leading provider of preventative alcohol detection solutions, selling to more than 5,000 customers across 45 countries. The deal immediately contributes to new revenue streams inherent to Alco purchasing SOBRcheck™ inventory, executing a defined plan, and dedicating resources to launch SOBRsafe's ground-breaking touch-based technology in Canada. It's an earned deal.
According to Alco, the company performed nearly 100 tests on the device, proving it was easy to operate and highly accurate. Moreover, they acknowledge what many others already have: SOBRsafe has brought to market a unique and innovative tool and platform that serves a clear and addressable need. Better yet, guidance for sales is excellent, with Alco saying they foresee demand for this technology worldwide and feel fortunate to be the first company in Canada to get on board with SOBRsafe.
Still, there's much more driving the SOBR value proposition, and each measure, alone or in tandem, can generate appreciable shareholder value.
Game-Changing Alcohol Screening Technology
In fact, a list of tangibles in the public domain provides plenty of supporting evidence to appraise SOBR stock at significantly higher levels. And the better news is that they continue to show that SOBR is maintaining its aggressive pace of business plan execution.
Frankly, they are accelerating it. Prior to completing its capital raise, SOBR announced signing a software as a service (SaaS) agreement with a prominent Native American tribe, a Self-Governing Nation in the United States serving thousands of members. Terms call for initially implementing the SOBRcheck™ technology to ensure its transit fleet is 100% alcohol-free. Of course, a client making good use of SOBR’s unintrusive method of supporting safe operations is excellent news for all involved parties. However, the deal should be particularly compelling to investors because it can open the door to significantly more revenue-generating opportunities with the sovereign tribal nations.
In fact, assuming SOBRcheck produces the desired results, this initial deal could open pathways to additional implementations across other critical, safety-sensitive functions and potentially expedite SOBR earning further business from among the 574 tribal nations in the United States. While acquiring business from that market will likely be in play later in 2023, plenty is proving that SOBR is doing the right things at the right time to create sustainable shareholder value now.
In fact, a significant opportunity inherent to the manufacturing and telematics markets is a new billion-dollar target. Recent news indicates it's more than a target; it's in SOBR's crosshairs, which could steepen revenue growth faster than even the most ardent bulls expect.
SOBRcheck Is Leading The Value Proposition
That's speculative, but the bullish sentiment is warranted. SOBR continues to score meaningful deals to penetrate new markets. Moreover, SOBRcheck technology is earning major industry accolades, including Occupational Health & Safety 2022 New Product of the Year and Child Safety Networks Safe Family Seal of approval for Safety Monitoring Devices. Not only does that recognition look good on a resume, but it can also be rocket fuel to its 2023 mission by adding industry credibility that can accelerate market penetration and product adoption in multiple markets. And the excellent news is that opportunities extend well beyond the demand the private sector generates. With aggressive legislation in the works to protect businesses, schools, and highways from incidents and catastrophes related to intoxication, public sector interests are also in play.
Indeed, the attention to SOBR Safe and its technology is warranted, resulting from SOBR developing and bringing to market alcohol screening technologies that exponentially improve upon existing solutions. Its differences are its advantages. Foremost, unlike other detection systems, its flagship product and platform, SOBRcheck, measures alcohol presence through finger touch technology and requires no breath test or blood draw. Moreover, because of SOBRcheck's easy implementation and seamless integration into a company's cyber infrastructure, users can expeditiously provide safe and potentially life-saving measures compared to other screening systems. Just those two advantages have inspired new client interest and platform adoption, though many likely appreciate something more crucial: SOBRcheck is a device and platform that effectively screens drivers.
Often implemented at facility entry points, workers place a fingertip or palm on a device that generates a reading within 20 seconds. If the test detects alcohol, a report is generated that immediately flags the employee for management intervention, likely resulting in them not receiving the keys to a motorized vehicle, whether an 18-wheel truck or a forklift. This reporting functionality is a major component of the SOBRcheck platform and a key differentiator from competing screening devices.
That's because, besides managing employee entrances, the SOBRcheck platform interfaces client infrastructures by creating reports and aggregating data via real-time reporting and analytics, an advantage that SOBR believes can and will forever change how companies monitor and manage zero-tolerance compliance.
Besting Competing Screening Methods
Of course, for that to happen, the platform must be accurate, especially with life and livelihoods at stake. SOBRcheck meets that qualification, scoring an accuracy rate of 94% compared to low to mid 80% for current commercial breathalyzer technology. It draws its analysis by analyzing the natural humidity and vapor of the skin, a stark departure from the commonly used alcohol detection methods requiring breath, saliva, or blood. What's more, its uses can scale.
SOBR offers additional detection devices, including the SOBRsure™ wristband, which utilizes the same touch technology but as a wearable device. This feature provides a considerable competitive advantage because it allows for initial and ongoing employee management. Don't vilify that capability, by the way. SOBR's technologies are not designed to assist in the micromanagement of employees but rather to support companies in doing the right thing: keeping intoxicated drivers off the highways and equipment.
If SOBRcheck results in a single life saved, its value extends for generations. And considering its applications make it an ideal alcohol-screening tool for DUI management, school bus companies, ride-share companies, and last-mile fleet businesses, making the most of that value is a timely proposition.
Accretive Deals Strengthen Fundamentals And Reputation
Thankfully, adoption could happen quickly as a result of SOBR's deal with product development and manufacturing firm BGM Electronic Services, Inc., which plans to use SOBRcheck™ as its new front-line alcohol screening solution. From a business standpoint, it's a substantial agreement that should expeditite SOBR's further entry into the $4 billion U.S. manufacturing market. It could even help fast-track introductions and relationships with major auto manufacturers, including BGM clients Ford (NYSE: F), GM (NYSE: GM), and Stellantis (NYSE: STLA). Even through third-party relationships, the revenue-generating opportunity can be substantial through ties with BGM. During the height of the COVID pandemic, General Motors contracted BGM for the GM/Ventec/U.S. Government Ventilator Project, successfully delivering 390,000 electronic assemblies for 30,000 ventilators in just 150 days.
BGM's work was well received, as GM designated them its 2020 Supplier of the Year - Over Drive Achievement Award. That validation could help put businesses from logistics and defense manufacturing powerhouses like United Parcel Service (NYSE: UPS), FedEx (NYSE: FDX), and Lockheed Martin (NYSE: LMT) in SOBR's sights. Again, either directly related or through a third party, SOBR is a winner. There's more contributing to the SOBR appraisal.
An $8 Billion Telematics Market Opportunity In-Play
SOBR hired Chris Burton as Director of Commercial Development to pick up the pace of accelerating growth. He brings over 15 years of enterprise technology sales success and is well-connected to fast-track the introduction of SOBRsafe to the $8 billion U.S. telematics market through established industry relationships, including original equipment manufacturers (OEMs) Daimler, Freightliner, Continental, and Thomas Built Buses. Telematics is the "brain" inside a vehicle that provides real-time, remote reporting on driver behavior, performance, and fitness for duty.
Better still, his connections could help SOBR tap into deals put in play by state and federal legislation. In the case of safety, the voices for change are already loud, the most vociferous of which coming from the National Transportation Safety Board (NTSB). They are making clear they want the most effective technology to screen for alcohol implemented as quickly as possible. NTSB Chair Jennifer Homendy has not minced words about the urgency in making the agency's plan the law, recently saying, "We need to implement the technologies we have right here, right now, to save lives." Considering SOBR's practical measures for protecting the roads, workplaces, and people on and in them meet her legislative criteria, expect her to learn more about SOBRcheck. In fact, don't be surprised if she already has.
Indeed, SOBRsafe's passive alcohol detection platform, SOBRcheck™, can already meet, integrate, and expedite embedding the objectives the NTSB refers to. With deals to ensure driver safety for companies like Continental Services and its 1,800 employees across four states, SOBR has already demonstrated that commitment. And by providing a practical, easy-to-implement solution to proactively manage alcohol policy while complementing existing safety procedures, SOBR's technology is amenable to nearly any industry.
Incidentally, the potential in play from planned NTSB legislation is a near-term proposition. The NTSB wants drug and alcohol screening mandates met by 2025. Based on that timeline, expect companies to proactively meet deadlines, creating a potential tsunami of interest in SOBR technology.
Reaching Air, RideShare, And Child Safety Markets
The more excellent news is that SOBR can generate revenues through applications beyond companies that manage highway and industrial vehicles. Partner company Butterfield Onsite Drug Testing is broadening SOBR's reach into the airline industry by building a SOBRsafe sales team to represent the company to a potentially global audience. Additional working partnerships are further enhancing SOBR's marketing reach.
SOBR established a distribution deal with the public benefit corporation Reconnect, which aims to renovate outdated substance management systems. The SOBRsafe platform provides a centralized space for participants within the justice space to digitally record data and access management systems. Similar deals with North-Star Care, Continental Services, and RecoveryTrek also help members regulate test results, expanding SOBR's reach further. That's not all.
SOBR's partnership with the ride-share app RubiRides is another example of a practical solution to dangerous potential and liability. RubiRides specializes in trustworthy transportation for kids, creating a need for drivers to be reliably tested. SOBRcheck™ wristbands are the perfect tool to meet that challenge since they can continually monitor alcohol-free safety, upload data to the cloud in real time, and ensure sober driving. Additionally, as the calls for child safety intensify, SOBR's same wristband technology could earn adoption among school bus companies and their drivers without delay. Needless to say, the revenue-generating potential from that market opportunity could reach the billion-dollar-plus level. Again, that is just one market opportunity.
Multiple Markets, Massive Revenue-generating Potential
Multiple billion-dollar markets are in play. And whether valued singularly or packaged, current share prices lack the respect deserved for a company with a disruptive, best-in-class alcohol screening technology that could become the front line of defense against intoxicated employees and drivers. Undeniably, SOBR's sub-two-dollar share price exposes a considerable gap between intrinsic assets and inherent potential. More specifically, current share prices present a ground-floor investment opportunity that may have been exclusive to insiders and unicorn investors at one time.
In other words, market conditions that are not SOBR-specific may play a role in keeping SOBR stock lower. Whether that's a result of being an under-the-radar company or being part of a smallcap class getting indiscriminately bruised, lower prices today are not necessarily bad news from a growth stock investor perspective. After all, that strategy intends to buy low and sell high. Based on SOBR's agenda for 2023, strengthened from work completed last year, they fit perfectly into that model.
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