Oh, ok. Thank you. No wonder I get confused. Haha! Anyway I'm...

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PinkDiamonds

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02/11/17

13:45

Post #: 28438581
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Originally posted by blister ↑

Short answer is it doesn't. The MC is a good indicator of undervalue and over valued when you can quantify the value. this is to say, that if a company had 100 million in assets, generating 200 million in revenue with an MC of 50 Million, you can bet its undervalued. the inverse is true too, little asset and no revenue and big MC... you're going to have a bad time, as the market always corrects.... eventually. There are however "earning multiples" factored into MC and thats where the disconnect can be difficult and they differ from sector to sector. So the MC of Woolworts might exceed their annual revenue, but people are prepared to pay a premium over and above the earnings to get access to it.

However, you're in the spec end of the market, so throw the rule book out of the window. Mining companies are brilliant examples as they may have a 100 Million dollars in the ground and people go mental scambling over each other to get a slice raising the MC to 200 Million..... but its in the ground, it'll cost $$ in capex and with that comes dilution and on and on. So MC gets hyper inflated and corrects right up until the DFS and then actual numbers are available... after the DFS they always retrace, until production.

Its a crap shoot is the lesson.

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Oh, ok. Thank you. No wonder I get confused. Haha!
Anyway I'm making money off my humble beginnings and that's all that counts in the end.

GMC Price at posting: 1.1¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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Oh, ok. Thank you. No wonder I get confused. Haha! Anyway I'm...

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