orda, I recommend ignoring
share price when considering dilution.
Rather than looking at share price, focus on market cap. Look at what you think Wave is, and what you think it will be. Decide what the fair market value or market cap of such a company is.
Case in point:
Imagine TCG compliant TPM products ship in 60 million devices next year.
Imagine Wave will be in 30 million of those devices.
Imagine that at that time Wave will be able to project ending up in an additional 60 million devices in the following 12 months (essentially 2006).
Then guess what Wave's presence will be worth ... call it a buck.
So, 30 million bucks next year, 60 million the year after (this is all nonsense obviously, but bear with me)
NOW: What is 30 million in revs next year and 60 million in revs the following worth?
Let’s say margin is 50% and it’s actually 15 million in profit next year and 30 million in profit the year after.
Pick a price to earnings: let’s say 50.
So next year the company might have a market value of 750 million and the next year 1.5 billion (e*PE=p). So what?
So here enters dilution! If that 1.5 billion is divided by 25 million shares outstanding (more or less where it was at when I invested that gives a share price of 60 dollars, but at the rate that Feeney and company are printing shares (DILUTION) the divisor will not be 25 million but more like 100 million shares outstanding giving a share price of 15 dollars INSTEAD of 60 dollars.
That my friend is dilution. Much of it is bonuses, options and other such gifts to senior management. It is not just their 750k salaries that they are paid, they are paid stock which dilutes your ownership if the check ever arrives.
Get it?
Regards,
Dig Space.
The above content is my opinion.
AI
