One of the most interesting breakouts to appear on the OTC radar so far this week is in shares of Tongji Healthcare Group, Inc. (OTCMKTS:TONJ). The stock has been seeing a jump in liquidity and trading volume in recent days and really took off on Wednesday in response to news that the company had signed a Share Exchange Agreement to acquire West of Hudson Group Inc (pending completion of the target’s financial audit process).
This is clearly a reverse merger vehicle to take WOHG onto the public markets. In other words, going forward, the ticker TONJ will represent access to ownership of WOHG, which is clearly a far more promising underlying business than was Tongji Healthcare, which owned a hospital.
The gist of the story here is an asset called “The Clubhouse”. This is what all the excitement is really about.
Welcome to the Clubhouse
So, Tongji Healthcare Group, Inc. (OTCMKTS:TONJ) is now WOHG, which is the sole and singular owner of the Clubhouse, a network of content creation mansions in Southern California housing a collection of some of the most widely followed and talented social media influencers on the planet. According to company materials, the Clubhouse provides residence to influencers who, in aggregate, boast a total base of over 70 million followers.
The real play here is that the Clubhouse also has an in-house talent agency, Doiyen, that effectively owns the rights to capitalize on those 70 million followers to ink lucrative branding and marketing deals with outside brands or to popularize in-house brands created by WOHG.
“The Clubhouse provides a picturesque living environment complete with inhouse photographers and videographers, so we can maximize the depth, breadth, and scale our influencers can build across popular social media platforms while having fun and just being themselves,” commented Amir Ben Yohanan, CEO at Tongji. “Cultivating a large and committed following and then pursuing the popularization of in-house brands has demonstrated stunning recent success as a model. We would point to Kylie Jenner’s Kylie Cosmetics, which was valued at nearly $1.2 billion when it sold a controlling stake to Coty, Inc. last November. That value was built by first cultivating a broad influencer following. With this acquisition, we will have that value to harness.”
The Kylie Jenner reference from the company here is particularly important to appreciating the deeper meaning of this strategy. The traditional model says: come up with a great product, and then figure out how to make people interested. This model, which could be far more powerful in today’s connected social media driven world – as demonstrated by Kylie Cosmetics’ lightning rise into the billion-dollar club – says: come up with an engine of interest and then figure out what to popularize.
In other words, TONJ is now a spectacular cart-before-the-horse consumer product platform story that has already achieved monstrous traction in its primary first-phase goal: the establishment of a huge and powerful social media following.
The Golden Goose
But it appears to be more than that because the Clubhouse isn’t just a collection of top influencers with a massive network of followers. It’s an engine for building influencers. The Clubhouse model means that new talent can be integrated into the mansions to learn from the best, gain traction in apprentice fashion through association, and grow their own brands by standing on the shoulders of giants.
This isn’t a golden egg. It’s the goose. That’s the real point of a share of TONJ stock at this point. A share of that goose. And that goose lives in some very fertile waters.
As noted in the company’s release, global social media ad spend is expected to jump 20% in 2020 to reach an estimated $84 billion. According to Zenith’s data, social media advertising will account for 13% of total global ad spend and rank as the third-largest advertising channel, behind TV and paid search. Social media ad spending surpassed print media ad spend last year for the first time ever, according to Zenith. That trend is almost universally expected to continue and even accelerate over coming years.
In that type of context, an aggressive growth-minded strategy that starts from a position of dominance could present speculators with a rich opportunity ahead in Tongji Healthcare Group, Inc. (OTCMKTS:TONJ).
Mr. Ben-Yohanan added, “We have immediate plans to expand The Clubhouse to additional locations, develop new influencers and create new intellectual property and in-house consumer brands. We look forward to discussing more related details with our shareholders soon.”