Some back of the envelope doodling on this rainy afternoon in Texas:
With the VEND share price varying from the $2.50+ level a few months back when the major rollout of the yogurt machines was expected in the June/July period, to the recent low around $2.00 due to the delay until late August/September, it’s reasonable to ponder on what the share price might be 6-9 months from now if the rollout proceeds as currently scheduled.
While price/earnings is not a valid metric for a startup company that is not yet profitable, the revenue/share metric can provide some insight into the future share price. This is done by comparing the ratio of the price per share to the twelve-month revenue per share. This ratio varies from single digits or less for an early stage company that is not yet proven, to somewhere in the high teens or more for a fast growing company still in the early stages but with a proven revenue model (e.g. SNAP with a ratio of 14, GRUB at 15.5 or OKTA at 22.6), and finally settles into the single digits again as a company matures (e.g. 8 for MSFT, 5 for AMZN, 4 for AMD and 3 for DIS).
VEND currently has 64.6MM shares outstanding per Fidelity and anticipates $30MM of revenue between now and year end, or about $7.5MM per month as they roll out 750 units in the next 4 months, about 40+ per week (see their 8/28/18 PR). If that same rate of revenue growth continues into 2019 they will achieve a TTM of $7.5 x 10, or $75MM for the current fiscal year, or about $1.15 per share, assuming essentially zero revenue for the first two months of the year (July and August).
At a current share price of $2.07, the ratio relative to the anticipated revenue/share for the current fiscal year, is 1.8 ($2.07/$1.15). As VEND’s revenue model becomes more proven during the coming year, that ratio can be expected to continue to increase through the year. An increase from 1.8 to the range of 3-4 would result in a share price of approximately $3.50 - $4.50, which is a reasonable estimated range for the share price in early to mid-2019, in my opinion.
It is, of course, entirely dependent on Generation Next Franchise Brands executing their latest plan as in the PR of August 28. Any slowdown in the rollout will result in a lower share price, while continually increasing the units delivered per month (from 40/week currently) could substantially increase the share price above the range calculated above.
Bottom line, $3.50 - $4.50 is reasonable for some nine months from now but nothing is guaranteed. When their earlier goal was for 2200 units delivered by year end (March 2018) my estimate was ~ $5 at year end 2018, but that has now been delayed and depressed.
JMHO.
