Thanks Chip for your down to Earth note.
Finally, the expected Aurora related PR came, but the price did not respond. At least the Volume did. What I liked about it was the fact that Phil is not pumping it at all. However, the PR could be a bit more detailed. Overall, not too bad!
After the PR, I expected some marginal move. For a company with: (i) good growth potential, (ii) in a low-risk sector, (iii) relatively small OS, and (iv) good (and increasing) revenue, at this point IMO the PPS should be much higher. W/o any intention to pump it, I believe GDVI is going to move much higher soon after the Q release. I won't be surprised it to start moving a bit higher even this week.
It looks like some people were shaken out today. This is a healthy necessity in order to move higher. Today the stock showed nice (and not unexpected) resilience with smart money buyers jumping on the Ask several times at .05.
With fewer weak hands, if the volume holds, the chance for a breakout north later this week seems very real to me. In any event, the Q as I understand it is only about 2 weeks away, and if the revenue is say north of 2MM, this should move upward quite nicely.
My calculation is very simple, and it's based on well known OTC:BB valuation rules. For growth companies, that aren't yet EPS positive (but the finances are getting closer to breakdown), the usual formula is:
PPS = [Revenue x (VF)]/OS, where VF is a valuation factor
PS: The VF for growth stocks is usually above 2; I saw over 50 for stocks (with EPS well into the negative territory) that are perceived to have high growth rates sometimes in the near future. For instance: GTEL (with over 1.06 Billion OS; this was the last call-in figure I knew, at the end of January), about the same revenue, a lot more debt, and no immediate chance to improve the finances, it's trading right now around $0.3/share. This means that the valuation factor (which at this point it’s at a high premium, based on the perceived future value) is: (0.3/0.05) x (1060/300), or more than 21 times as high as here (over 42 in absolute value, after reaching as high as 50 last week). {It was trading slightly above 0.06 2 months ago. Since then some perceived good news (true or not), and not improved finances moved the VF from around 8 to over 42 now.}
From what I remember (out of memory, I might be off) you said that the revenue for the last 6 months (or was it 9 months?) was about 6 MM? Assuming a revenue of only 8MM/year, and 300MM OS, and a VF of "2" (which is about the base for a growth stock), the PPS should be at least 0.0533, or about where we are today. From what I could gather about the growth potential here (and comparing it with that of other good growth potential stocks), the VF should not be below 2 (as it is now), but at least 4. Hence, right now, the EPS should be at least 0.1, IMO. If (as I hear) a revenue of 20MM/year can be achieved, then the PPS should move to over 0.13/share at today's low VF, or to at least 0.26 if the VF increases to above 4 (as it should, IMO). If additionally the Q shows either a more than say 2 MM revenue, and/or a good move toward a positive EPS (compared to the last Q's), then the VF should jump much higher.
PS: I don't trust pumping/bashing a certain stock on this or any other board has more than a marginal influence (contrary to what many believe) on the price. The PPS is decided by the organized "tribes," that include, but are not restricted to the MM's. Hence, this is not a "pump," but an attempt to explain what I perceive to be a much too low PPS at this point. And, of course, my rational above it’s open for discussion.
PPS: Chip, if you don’t mind, can you repost this over RB, please. For some reason I only can read, but not post there. May it be because I don’t have a Lycos E-mail address? Just curious to see the reaction of some of “our friends” over there.
Mike
