Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

The following is from a WSJ story from 12.21.21…

Since early November, the most speculative stocks have been crushed, even as the wider market reached new highs. Among those losing 20% or more: The “meme” stocks of GameStop and AMC Entertainment, electric-car maker Tesla, hydrogen darling Plug Power, bitcoin and a host of tiny unprofitable stocks. The businesses have little in common, but all have high valuations that rely on buyers willing to bet on a story—and have benefited from the surge in individuals trading stocks. No one buys GameStop, let alone bitcoin, because of a discounted cash flow model. Still, the value of speculative stocks and crypto depend on stories, not on reported earnings. It is about what is possible, even if not probable.

The WSJ article might explain why the call for Elite to be more "transparent" and offer more information for “investors” seems a deflection aimed more at speculating – a story that has nothing to do with business realities. As the article makes clear, a DCF done on meme stocks would be futile, they have no real growth to base a DCF upon, as the DCF calculation requires a projected growth rate over time. That AMC & GME, as businesses that are shuttering locations, terminating employees, and operating at a loss, are the antithesis of Elite is correct. We can do a DCF on Elite because it is profitable and its prospects for enhanced profitability are greater due to the recently engaged partnership with Dexcel, which poses an opportunity to commercialize its business globally (or at least in Israel and Western Europe, but investors will take that). Now that should be a story to base one’s investment decisions upon, as it lacks speculation and is embedded in a real investment narrative.