zen88: I think the desire to reach B/E
is completely rational, as is the desire to reach profitability, and I agree that no current shareholder wants to see their position diluted. However the overriding desire of rational investors is to have share-price appreciation, and this, as we are all painfully aware, has not happened.
But I think that that is about to change.
As the company morphs into a real money generating enterprise from a developmental stage (concept) company I expect the way that the market values the company will change as well.
The way that the market has valued Wave to date has not had a rational measurable basis. If it did that 6k quarter should have sent us straight to oblivion, and it didn't. Even now we are trading at 23.3 times TTM sales. It could be easily argued that this isn't very rational. But as the revenue stream grows and becomes more visible the market will IMO price the company on a multiple of sales that is in line with historical norms for similar situations. (I would be glad to hear if anyone else can shed light on this.) I am thinking that for a small growth tech company that should be in the 12 - 15X range. So lets speculate that the next four quarters look something like this: $M2.25, 4.75, 7, 11. Pick your own numbers. But if we have $M25 sales and a TTM price to sales of 12 we would be valued at $M300 this time next year. That would represent around a 335% increase in share price without further dilution, or around $6 per share. I am going by the numbers at the CNBC site; M49.7 shares outstanding and a market cap of $M89.4 at ~ 1.80/share.
If Wave sold another 5 million shares in the next 3 - 6 months and raised say $M15 in the process, that would drop the projected share price to ~$5.50, all other things being equal.
For me this approach to funding growth is greatly preferable to the taking on of debt. I think there are still too many uncertainties to put the company at risk like that. I feel much safer about my investment knowing that there isn't any long term debt outstanding, and I hope that it stays that way.
I am not saying that I want to see anymore dilution. I don't!
But I am also saying I don't want to see any debt financing at this point either.
Dilution is the lesser of two evils as far as I am concerned, but I understand that others will feel differently.
I am betting that we are valued on a multiple of sales for some period of time before we are valued on the basis of PE.
Regards,
x-point
AI
