The Value of the Line of Credit
Obviously, the selling is frustrating for the moment—I'm sure very much so for Anshu and Chris. It could be random noise, it could be some just simple portfolio rebalancing or other things. There were 2 days of moves up before the line of credit news came out (curious) and then markets seemed to be disappointed with the revolver. From my perspective, I do not believe it is in any way dilution. And this narrative about "short selling" is a never-ending nothing burger. There just are not enough shortable shares out there on exchanges that will even allow it to move the needle much.
What Matters to Me
Execution. Execution. Execution. While $500k for a revolver is admittedly small— ~1% of market cap—this, in my view, is a much more significant development for Verus than markets are giving credit for (pardon the pun). The terms were favorable, which gives them a great starting point, proximity to, and a developing business relationship with one bank, and it gives other lenders a view toward execution and payment history for their underwriting of additional and larger revolving lines of credit. Banks invest time up front with businesses and hope to expand the relationship as they get a comfort level and better understand the risk of the the borrower companies. So with reasonable execution and a little time, this can accelerate.
It is my opinion that Verus has turned a corner this year in general and securing this first step line of credit is a meaningful win, the significance of which is not at all yet being recognized. When I first accumulated my position it was admittedly speculative and couldn't easily be called "investment," as upside was contingent upon a number of critical and challenging things happening. This first line of credit is a material de-risking factor. I see Verus as an investment now and the Line of Credit's value is that it really is the beginning of a new chapter in the company's history.
Keep on executing, Anshu, and grow those revenues. Markets will figure it out in time.
