- I'm not a holder, but I've been watching these guys since before the RTO.
- First off, this (listed) company is not a business, at least not yet. A real business takes years to evolve (think good people, good process, good opportunity and real, measurable and improving results over time). Make sure management don't bamboozle you with TLA speak that you can't understand.
- This is an ultra-micro cap. You'd better be prepared for a good kicking or 5 if you're at this end of town. Saying all that, I think they have a strong business case - if you can last the distance.
- Revenue will drive the price (eventually), however currently they are burning about $500k a quarter. With ~$2.2m in the bank, they have less than a year to break even. This is very unlikely, but not impossible. More likely they will need to raise funding again within 12 months.
- The SP for these sort of paradigm-shift, ultra-micro cap, technology plays tend to go up and down in waves. The company is trying to create a new market (the "business"). This is very hard to do (and it doesn't matter how good the technology is). Have a look around on the internet; the average time for a technology stock to become an "overnight success" is 6~10 years.
- Meanwhile, after the initial surge of interest (with a lot of high-fives on HC), the SP will tend to drift down & stay down until the next "really news-worthy item" comes along (to generate another surge of interested newcomers hoping for the next "new" thing). You can wait a long time for this (think years between sets). After your initial buy-in you can get out on the next wave or, if you've decided to stick around, you're better of buying in very small chunks as you become more convinced of the narrative. I would keep my exposure, very, very small until I was utterly convinced that the direction for the SP was going to be UP (eventually). For a stock like this, I would prefer to average up as I became more significantly convinced, than to average down in doubt and hope for the best.
- Management are not buying on market, they are still busy awarding themselves free shares (I just had a quick look. What does it say in the prospectus?). Also, the top 20 only hold ~47%. The principal protagonists do not have a very strong hand. I consider any thing less that 65% for the top 20 to indicate the price will be driven by weak hands. This will not change until the top 20 get up to > 75% (this can take years). Ideally you would want > 80%. But this measure is just a form of assurance (although a very good one). Don't rely just on this figure. If you can keep track of the broker stats then (over time) you can tell if someone is accumulating and take advantage of this.
- There is a lot of negative/bearish sentiment around currently for IT/tech startups because of the fallout from companies like GSW/BIG et al.
I can name at least a handful of others who I think have a strong chance of following suit.
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