Couldn't agree more. I missed the first 10-12 minutes of the presentation, and this was certainly not their best show. I was disappointed to see their margins after recording fantastic revenue. I was concerned when I heard on the call that high operational expenses were due to payroll and stock compensation. At first glance it appears like an insiders enrichment scheme, but I don't believe it is.
This is a startup and there will be upfront costs (payroll/stock compensation) needed to create your team. I ran some numbers last night to see if their revenue number projections can support their costs, i.e. when will they be profitable.
Very basic math, however it looks like they generate $0.015 for every dollar of processing volume. Based on projected volume of $4.9 Billion in '22, that puts them in the area of $72.5 million in revenue next year. Their run rate for COGS is approximately 28.5%. That leaves them with a gross profit of almost $52 million. They have been averaging $8 million a quarter in Operating Expenses this year, so assuming they increase that by 25% due to any payroll they may bring on with upcoming acquisitions, that puts their operating costs at just over $36 million for the year, leaving them with a profit of $15.8 million.
If my numbers didn't come up like they did, I would have probably sold and perhaps looked at buying back in down the road. I have been holding this stock since early 2020. But I think this is an overreaction, much like we have seen with some other heavyweights in the market who had a miss on their earnings call. Disney just got hammered, but I think they will be just fine :)
Both Ben's did not execute well on the call. Ben Chung sounded like a nervous 12 year old reading his book report.
As opposed to selling, I will see how today goes and start buying when I think it has bottomed out.
Again, very quick and simple math, and all just my opinion on the matter. I would appreciate anyone else's thoughts on this.
