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Thursday, February 26, 2015 2:26:42 PM
http://www.investopedia.com/university/dcf/dcf4.asp
Ever heard of the show Shark Tank?
I have been tracking this company for a while now, and am not in this for a quick flip. While it's a penny stock, The Vapor Group is a real company and I look at it as more of a venture capital investment at this point. Need to think about this company in terms of if you were going to buy them out. Pretend you're a big tobacco company. The dilution will be over soon, and it is important to understand what the company is actually worth.
Revenue is increasing by roughly 20% per quarter, and costs are stabilizing, indicating the fact that profitability is within reach. Profitability indicates sustainability, and the CEO indicated for the time being that outside financing is no longer necessary.
Assuming they stay on the same revenue growth trajectory (which is conservative, given the explosive industry they operate within), I expect Q4 revenues to be 1.57 million dollars. It will be a coin toss as to whether they are in the black, but that is normal with a start-up venture. With a figure like this, I project total revenue in 2015 to be 10.1 million dollars with profitability at the bottom line.
Using a 12% discount rate, DCF Analysis suggests that this company is worth (10.1M / .12 ) = $84.2M. After conversion of notes ends, I expect the market cap to adjust towards this figure.
I will revisit this analysis each quarter.
Educated comments and thoughts are welcome.
Catalysts:
PPS should begin to ascend toward fair value without news once the artificial selling subsides. Expecting about 2.8B shares once complete, which supports a price at .03 minimum with current audited financial information. 100 dma is at .0068 for the time being and this will be the first major resistance over the next month.
Likely to see 1-2 development PRs in March.
Expecting annual report by March 31.
Expecting debt clearance by second week of April.
Expecting Q1 fins with additional revenue stream (VGR Media) included by May 15.
If all signs point to growth, it's going I be a beautiful year.
Best current valuation of shares: .0341.
Good luck!
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