Quite often you find a large disconnect in the valuations of microcaps especially tech microcaps.
Indeed, a microcap's sp is largely dictated by presence of strong or weak market (mainly retail) sentiment towards the stock which is mainly predicated on perception of growth or lack thereof. And due to an absence of a large float, its sp is easily subjected to market manipulation to drive up or down the stock price on the short term and in part dictated by influences on the HC stock forum for the stock.
You have cases where the microcap generates seemingly strong revenue growth but having increasing losses, the likes of LVT. You have cases where the microcap doesn't measure up in revenue growth in the face of increasing cashflow deficit and losses, the likes of BUD and YOJ. Then you have cases where a stock like BIQ fails only on the profitability aspect with a decent revenue traction and growth and yet have a market cap considerably below BUD, YOJ and LVT. And you have cases like CM8 that had revenues for a social media company and was growing and that the market should have given an aye but no and the company's stock price continued to fall and when its revenues fell and losses widened, it fell even more by a third today , with a valuation now under$5m as it looks increasingly closing in to being a going concern case.
So what's the common denominator- they all have losses and cant seem to get out it. But their valuations and perceived prospects
are very different in the marketplace. It comes down to the robustness of the retail base- the willingness of the retail base to support their shares , buy more when they fall.
If people take a lesson from BIG and GSW, you'd know that at the end of the day, the fundamentals rule, no company can continue prospering with prolonging losses quarter on quarter, year on year, and in the meantime fooling all shareholders with announcements to perpetuate notion of strong potential and outlook. CM8 never had revenue issues, theirs was profit. But poor CM8 never had the luck of LVT and BUD and to some extent YOJ, they didn't have a strong retail base (to either invest or speculate). BIQ had more ticks on their books than most other microcaps but yet very much unloved- just look at their HC forum - like a ghost town. So yes, the stocks that have the strong retail base (a few millionaires willing to bet their entire chatels on a single stock) made the difference. But don't look down when that base craters due to a sudden shift and loss of faith- it happened to FGO.
