Why would or could a payment of a $ 12.4 Mio bond into the treasury of DECN catapult the stock to 1 $ plus.
It is not the cash per share, which is equivalent to roughly $ 0.30 per share it is the cash as such, which would give DECN the momentum to refinance themselves without tapping the markets. This is the logic behind.
Cash in the field of production costs get’s a velocity formula between 6 and 12, depends on the paying terms. This would translate into roughly $ 75 Mio or $ 150 Mio cost of goods. If I take the margin left for the company this could translate into a profit between $ 15 Mio and $ 30 Mio. Now if we attach a P/E of 15 to this we are talking of $ 225 Mio to $ 450 Mio capitalisation. This would then translate into a stock price of $ 4.50 or $ 9.—(based on 50 Mio shs – versus presently roughly 42 Mio shs)
This kind of thinking would be the catalyst. But then some smarty,s could as well create another derivative thinking. As we know, the CEO never took a salary he got paid with shares. This alone speaks for an interest of the management to increase shareholder-value, unless Mr. K.B. would work in the field of charity.
So the thinking could be: If the stock would not react: Announce a re-purchase agreement of shares for 6 Mio $ and with the rest you finance production and if you need – based on the business momentum more funds, you go for a credit line. Believe me, a share-buy-back program would make sure, that DECN would move above $ 1.—quickly. Why: Very simple again: Depends on the average price of the repurchased shares, it would take shares out of the market in the range of 15 Mio to 8 Mio and less shares of course means higher stock value at the end of the day if divided by the capitalisation.
The debate here goes – besides what the bond would do – as well into a direction, which I call possible revenues. The sceptics see no future while the pros see a bright future. But then the sceptics would never have fought versus J&J as they would have said: Not chance to win against such a giant. Fortunately, the economy is in control of “makers and risk-takers” and not in control of “pessimists but knowing everything better.”
I am in the camp who gives the most credibility to J&J. When they started the infringement case, they had a “possible” Revenue model in front of their nose. J&J is not stupid and they knew, that DECN would grab enough market share from them, that the decision to fight them all the way, was or had to be justified. So what is or was justified based on their model should as well be justified for the Pros if one takes common sense into play.
When Nestle lost against the small producers of cheaper coffee capsules, the sceptics said, they will not grab any market share from this Giant. Well 1 year after it is already known, that these speedy-gonzales companies are already in control of 20 % and this within 1 year. One should never ever underestimate the consumer.
AI
