I cribbed this from another document I came across; written by a chap named Sam Ro. Most of us know it already, but it reminds me of where we are here.
"Good businesses don’t necessarily make good stocks. Similarly, bad businesses don’t necessarily make bad stocks.
One of the biggest mistakes you can make in investing is to assume that the direction of a stock price will be dictated by your current personal assessment of a business. Thinking like this is an embarrassing mistake that is almost certain to come with money-losing consequences.
Stocks are discounting mechanisms, which means current prices come with two implications: 1) they account for expectations for the future of the company, and 2) those expectations are largely guesses, which mean they could be wrong.
If everyone you ask and all of the literature you read reflect this sad and bleak assessment of the business, then it’s not unreasonable to assume that this information is priced into the market. In other words, this information won’t make you any money.
Even worse, it’s possible that sentiment is so bad that the stock is pricing in a scenario that’s likely to be far worse than what is reasonable for a struggling company. In other words, the pendulum may have swung too far in the bearish direction.
To be clear, it is very difficult to truly know what is and isn’t priced into a stock at any given time. Furthermore, it is arguably impossible to know where a stock price is headed despite all the information you may have accumulated.
Investing is hard. The market often doesn’t make sense. Most professionals who try to beat the market, don’t. And of the few who do beat the market, almost all fail to beat it again.
The point: be careful and do your homework before investing. And importantly, don’t assume that a stock price will move in the same direction as an underlying business at the same time."
So basically the current realm of people aware of SGLB, who have established the current valuation of the company, have created the picture that there is low probability of any appreciable future revenue. This is the 'discounting' part of the stock price. The remaining part is the question of whether they are wrong about it.
SGLB has a product that claims to be a solution for arguably the most fundamental and key, core function, at the very heart of the manufacturing process for AM high tech production, that has been widely claimed to be the primary function necessary to allow true AM production to take off. It is proving to be a very intense and difficult thing to get full control over the whole AM metal process, and as a result things are moving cautiously and slowly across the entire world for metal AM development. There is an enormous amount of man-hours being expended on the development of metal AM across the world. So is it that SGLB's product really isn't a product that the metal AM needs and wants, or is it that big orders for PR3D are simply yet in the future?
Would a product that didn't really get the job of IPQA done for metal AM, as would have been experienced by GE and Honeywell during the initial evaluation years of PR3D, still spread to nearly a dozen other major national and international corporations, whose engineering departments are world class in themselves, for their own evaluation? Would GE and Honeywell have kept a perfect secret that PR3D didn't work; that they would have continued to include SGLB in DARPA and America Makes, and written white paper articles, including SGLB in the continuing development of the metal AM industry, in spite of the fact that PR3D didn't work? The clear answer to that is no. They wouldn't do that.
The world class engineering corporations of the world do not suffer fools. They do not commit hundreds of thousands of dollars for evaluating a technology without checking into it first. They are connected to the players of the world. They would have known whether PR3D was viable before buying product for evaluation.
So, in my opinion, the only conclusion is that the current discounting of the valuation of SGLB, with the expectation of little future revenue, is wrong. The current investors setting the price have got the picture wrong.
All the best,
Silversmith
AI
