Update on The Vapor Group ($VPOR)
Fins are due this week!
Here are the expectations:
$VPOR Q1 Expectations
Revenue: $1.5M+
Gross Profit Margin: 70%+
Net Profit: $1+
Convertible Debt < $500k
SG&A < $750k
Guidance PR: ?
Recently the company executives have locked up their preferred shares until next year. This comes just days after the board has also confirmed that there will be NO reverse split this year. This is a huge step and shareholders are taking notice. $vpor is priming for a huge run.
Prior to this, the company recently provided a guidance letter, indicating their first quarter revenues will beat last year’s, and underscoring the fact that 2014 sales beat 2013 by a staggering 125%! Regarding outlook, revenue projections based on historical performance and industry estimates suggest that this company could bring in at least $8M USD for 2015. Reaching a cash flow positive state is possible this year as well, based on their significant 80%+ gross margin on sales. Looking to the future, industry experts expect the e-cig/vaping segment to mature around 2020, at which time they could easily be generating $50M+ in revenue. One could assume that big tobacco will try to aggressively enter/consolidate the space a few years from now, and mergers/acquisitions are to be expected. If they stay on this track, $VPOR shares could easily approach $0.04-$0.06 by the end of the year as market cap adjusts back to fair value.
The recent letter also acknowledged the balance sheet, and indicated that they have reduced their debt by 68% in the past three months, and the stated goal is to have zero convertible debt by June 30, 2015, as they are approaching a cash flow positive (profitable) state and do not need to rely on such predatory financing for growth. Conventional doors will soon open up! This balance sheet cleanup will apparently be done through payments and debt-to-equity conversions, and if it is on track there is approximately $450k in total debt left on the books. The industry and time The Vapor Group inhabits has placed them in a precarious position financially, but they have been able to grow and increase their market share, regardless of the headwinds.
At this point, the stock has been beaten into submission near par value by conversions, but it will rise again. Additional debt payments are expected in the coming weeks and strong earnings are due within a week. Anything under one penny will soon appear cheap, as the masses realize this company will soon be profitable and lean. I personally hold a core of this stock, and base my opinion on facts that have been given about the company and the industry. My one year price target is $0.05 per share.
Check it out if you haven't yet, as it is only trading at 1x revenues with peers trading at 30-50x.
Best of luck!
