Aqua Power Systems Inc (APSI)

[Roofus]

Yeah, but ….

The average market cap of a company (Vanguard, all stocks combined in the entire market) is 6x annual revenue.

That is why you see valuation experts and enthusiasts plug in 5x and 7x equations (of annual revenue) for computing market caps.

So let’s say this company is an “average Joe” in terms of their profit margin (i.e. their level of profitability).

Let’s just use the generic 5x multiplier, as opposed to 6x or 7x.

If 2022 revenue didn’t even grow, and stays flat at $95 million (which was 2021 revenue).

$95 million * 5x multiplier = $475 million (market cap)

Let’s say O/S goes up to 27 million shares, “after” issuing the merging company with 10 million shares.

$475 million / 27 million OS = $17.59 per share.

And it’s basically $20 per share if using the true stock market average of 6x their annual revenue amount for a market cap calculation.

You’re correct on if this company is losing money, it could hurt the valuation.
But with doubling their revenue from 2021 to 2022, that is a very good sign.

Amazon operated on a “break even” model for years, without making a profit, and still achieved a Trillion+ dollar market cap while doing so.