Yes AMZN Will always trade at an and astronomical I will never buy it PE. I'm not debating that growth companies can trade at high multiples.
Problem is AMZN has a balance sheet that can wait this out for them to turn on the profit spiget, now i question whether they ever really will, but there balance sheet can wait it out. NGHT Doesn't, they have a balance sheet which is distressed to a certain extent, and if they don't earn a profit it only gets more distressed. Sure q4 should be profitable but how much? If it less then 400k they lost money again for fy.
I get the idea of the high pe on growth stories, but that applies to listed stocks (Not OTC stocks penny stocks) Second of All those stories generally have waaaaaaaaaaaaaaaaaaaaay better balance sheets, NGHT balance sheet is poor. And the final nail in the coffin in this discussion is generally we don't see rapidly declining gross margins in a growth story high pe stock either. All of these conditions are present in NGHT.
Now one will say what has changed? They had a bad balance sheet when you invested. Ye but if they earned a 100k profit like I was suspect instead of a 230k loss, pretty much all of q4 would be consider net income for the year. Furthermore these lower GM make you question how good q4 is gonna be if they do say 2.7 million in revs and say 35% margin, 700k OE, and 50k IE.we are looking at less then 200k profits. Now that I feel revenue growth is slower then I expected, gm are probably gonna be lower then expected. I ask one this why own it?
I could be wrong. sure. It may run on and excellent q4 for all I know. Thing is in microcap land you have to quickly recognize your losers so you can mitigate them,the minute the story changes or the wholes have been blown in your thesis you need to sell.
What has changes GM expectations Lower, Rev growth Lower, Profits for year in question. Hence the story has changed in my opinion, and I take corrective action by selling. It is all about whether the story has changed here, it is not where you brought it, if you think this quarter is a blimp (I don't) then by no means sell. If you think this quarter is and indication that the business will not be as profitable or even profitable (like me) then you have to sell. I wish the NGHT longs the best of luck I hope I'm wrong for your sake. All is just my opinion, and I could always be wrong though.
