It really all comes down to marketing and sales. The product is in a niche market that has already attracted a small, but growing, fan base. Given their increase in spending on SEO and social media advertising, the organic growth will continue as the new products fall into the market.
As that growth happens on their top and bottom lines, we'll see the stock move out of this sideways trading pattern.
As I've stated here once before, with a forecast of $400K for Q4 - their Q3 top line just needs to come in at a value of $225K or more, to hit that $1M revenue rate for fiscal 2019. Let's also think about that further for a moment.
A $225K top line in Q3, would represent over a 10% increase from Q2- not too shabby, especially if they maintain profitability on the bottom line. Thereafter, if we assume they hit their $400K target in Q4, that'll be over a 75% growth rate from Q3. And by my estimates, if they bring in that $1M for fiscal 2019 - that'll be a 168% growth rate over fiscal 2018.
Keep in mind what's happened to date in 2019 - they've simplified / streamlined the business model by divesting 02 Breathe and becoming a pure CBD / Hemp beverage play. They launched their CBD RTD beverages. They've done their work in SEO and marketing. They've quadrupled their number of distributors and states carrying products. They are actively going through a label redesign and launching new flavors of all their existing products.
All in all, to date, 2019 has been a pretty transformative year for VATE and I think that all of their work to date is going to pay off by EOY and into 2020. Happy to sit back and let my investment ride.
