Tuesday, April 15, 2014 7:58:29 PM
New (sizeable) ADTM investor, here. In @ $0.115, today, though nearly got my $0.905 bid filled on that dump.
I have been doing DD on ad exchanges and programmatic ad tech companies like YUME, FUEL, CRTO, RUBI and IZEA (Native Social Ads), and was impressed with ADTM's annual compound growth of 500% (I estimate at least 50% over next 4 Qs) and the relatively cheap forward Price to Sales multiple given their growth.
The valuation metric that we commonly use for growth-phase tech companies is called the PSG (Price to Sales to Growth Ratio), and ADTM currently ranks #1 in my list with an astoundingly low 0.01 PSG.
PSG is a good indicator for potential, and any ratio under 0.1 is considered undervalued. The idea behind this is given a company's growth in revenue and GMs, one can estimate future EPS and PEG using industry comps.
Check out the list I have created:
The number given for ADTM is an estimate for 2014 based on their current growth. As you can see, even with the lower GMs, ADTM is the most underpriced in the group with a potential (based on 2014 estimates) PEG of just 0.11! And this assumes the company will only drop 8.77% to the bottom line. Extremely conservative given comps. With improved gross margins (which is to be expected as they mature), this PEG will be even lower (0.065 for 50% GM)!
I hope to encourage others here that they have invested at a great time. All start-ups go through growing pains and all growth companies require capital from outside sources. I would not be surprised to see ADTM go for more rounds of funding, but the good side is that dilution cannot really harm us down here at such a low valuation.
My long-term goal for this company is a market cap of at least $500M in 4 years. Given they double the share count over this period, that means a conservative PT of $1.09/share. Not a bad investment.
For disclosure purposes, I am also invested in YUME, FUEL (largest holding) and IZEA. :^)
I have been doing DD on ad exchanges and programmatic ad tech companies like YUME, FUEL, CRTO, RUBI and IZEA (Native Social Ads), and was impressed with ADTM's annual compound growth of 500% (I estimate at least 50% over next 4 Qs) and the relatively cheap forward Price to Sales multiple given their growth.
The valuation metric that we commonly use for growth-phase tech companies is called the PSG (Price to Sales to Growth Ratio), and ADTM currently ranks #1 in my list with an astoundingly low 0.01 PSG.
PSG is a good indicator for potential, and any ratio under 0.1 is considered undervalued. The idea behind this is given a company's growth in revenue and GMs, one can estimate future EPS and PEG using industry comps.
Check out the list I have created:
The number given for ADTM is an estimate for 2014 based on their current growth. As you can see, even with the lower GMs, ADTM is the most underpriced in the group with a potential (based on 2014 estimates) PEG of just 0.11! And this assumes the company will only drop 8.77% to the bottom line. Extremely conservative given comps. With improved gross margins (which is to be expected as they mature), this PEG will be even lower (0.065 for 50% GM)!
I hope to encourage others here that they have invested at a great time. All start-ups go through growing pains and all growth companies require capital from outside sources. I would not be surprised to see ADTM go for more rounds of funding, but the good side is that dilution cannot really harm us down here at such a low valuation.
My long-term goal for this company is a market cap of at least $500M in 4 years. Given they double the share count over this period, that means a conservative PT of $1.09/share. Not a bad investment.
For disclosure purposes, I am also invested in YUME, FUEL (largest holding) and IZEA. :^)
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