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VALUATION AND CONCLUSION
In our view, the current valuation for WCVC’s shares only reflect the core business revenue expectation for 2019.
Looking ahead, we believe that considering the growth on that side, a 50% increase in market cap could be supported, right off the bat, as typical valuations tend to be 0.3x – 0.7x next year’s revenue.
However, clearly the major rise in future valuation will be the CBD business. A quick review of other non-profitable publicly traded CBD companies selling CBD-infused beverages and other products, demonstrates that companies tend to be afforded roughly $5 million in valuation for every $1 million projected revenue over the next 12 months, or calendar year.
Those firms operating profitably can carry high Price/EBITDA valuations. Given these factors, if WCVC sells $2 million in CBD products in 2019, we proffer that the stock would be worth $10 million, or $0.13,
with the restaurant business at $7 million in sales worth $3.5 million (the midpoint of the valuation metric), or $0.04. Thus, our target price is $0.17. Separately, we note that the stock hit a recent high and we believe all-time volume day which bodes well for liquidity and favorable prices ahead.
This company has come a fur piece since that was written!
Ciao
