NEA (ASX) NEA going gangbusters

Originally posted by crystalblue ↑

Yes, it does feel like a pattern has developed with Nearmap announcements, however it is also worth noting that the price levels that these patterns are developing are all moving upwards.

Personally I believe these patterns develop because as more time goes by, more investors are expecting to see signs of a ‘breakeven’ situation developing.

It’s almost as if a lot of people are betting to the outcome of ONE question:

Will Nearmap run out of money before the US can sustain itself?

Like a lot of long term investors, I absolutely believe Nearmap will succeed in the long term.

However, before the US can indeed break even, are we likely to see another capital raising event & the risk of further shares dilution? And if so, will the price be lower or higher than current levels when that occurs?

That is why many investors will have a very strong focus on the expenditure figures when it comes out tomorrow. This is not to say that Nearmap is not a good long term investment, but to address if this is the right time to sell or buy more into the company.

For those who have a keen eye for detail, you will know that these patterns are developing around $0.15 - $0.20 away from each other. If this is true & history repeats itself, it means this time, the price might spike towards the mid to high 90s tomorrow and then settle back down into the mid to low 80s with absolute support around 70c.

I believe the CFO predicted that Nearmap will breakeven in around 2.5 years back in Nov 2017, so putting in some factors of safety I’ll be looking at tomorrow’s results and ask if they still have enough cash to last until Nov 2019. As the volatile share price would suggest, many investors might be undecided on this outcome and hence we are getting these patterns forming despite the good news.

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I think you've hit the nail on the head, CB. I’m guessing tomorrow results will be good for the long-term (clear evidence of strong growth and success in US market) and not so good for the short-term (expenditure will be high and the chance of a raise will increase.) Result: price will retrace in the short-term. Of course, if the cash burn is not too bad, it could spike.
I was considerably overweight in NEA so I sold half my stake today. I’ll buy it back if the price retraces more than I think is reasonable. If not, I’ll be happy to see the other half of my stake go gangbusters. I’m comfortable with my exposure now, and look forward to watching this company deliver on its considerable promise.
GLTAH.

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