KBLB is an early stage biotech and of course has no revenues yet and pays no dividends. Both are entirely inappropriate when valuing this stock.
Of course the street does value such stocks, it just uses (and MUST use) different standards to do so than it does for companies that produce products and have revenues.
As far as my statement "Value tends to increase in increments with each additional piece of evidence but the difficulty comes with the interpretation and valuation of the evidence." which you claim to be "WRONG WRONG WRONG" because, according to you "
There is no 'interpretation' of the fundamentals. " :
of the five fundamentals you listed:
"CASH/ASSETS
DEBT
REVENUES/PROFITS/DEFICIT
YOY GROWTH
DIVIDEND YIELD "
three very clearly are not applicable to KBLB or any other early stage biotech in any way whatsoever.
The two that are, debt and cash/assets, are meaningful only when interpreted in the context of what the companies plan to reach profitability is, how long it appears it will take to get there and what the "burn" rate is and how it (the burn rate) is expected to change as the plan progresses.
So the only two fundamentals you listed that apply, apply only in the context of the company's technology and its prospects for success.
So I would submit that you are totally wrong and that the fundamentals (those few that apply) MUST be interpreted in the context of the company's technology and its anticipated value and chances of success. IMHO anyone who cannot grasp that simple and universally accepted concept should not be investing in high tech companies with no products on the market yet.
My point is that, because of the above, what value an investor (or the market) places on an early pre-product high tech company will be fundamentally based on the perceptions of the value of its technology if successful and the odds of its success. Each individual investor will arrive at a different conclusion depending on his/her background and understanding of the technology as well as they can understand it given the information that is available to them.
My point is that because of the very general poor level of understanding of the science this technology is based on, the markets current valuation is unlikely to be accurate because its estimation of the odds of success are, IMHO, inaccurate. In this case a good understanding of evolution is critical to a reasonable estimation of the odds of KBLB's success because the probability of silkworms being able to make silk from only spider silk proteins (it's already been demonstrated that they can from a mix of spider and worm silk proteins)is greatly affected by the degree of homology (common evolutionary pathways). Because of that, those with a good understanding of evolution will have a considerable advantage in estimating the odds of KBLBs success in exactly the same way that those with a good chemical background will have a better chance of a good estimation of the success of a new chemical product.
If you look at the share price history of any biotechnology company you will see that it increases in stages with an increase each new bit of evidence that the market perceives to increase the odds of success. (Of course you have to take external influences like recessions, etc into account!)
The key is market perception. When the market is largely ignorant of the technology it will be very very conservative in giving added value for evidence that it cannot understand. That is exactly where the buying opportunity comes in.
Because zinc fingers are such a new technology few really understand just how much they reduce the cost and time required to make the needed genetic modifications and especially how much they increase the odds of being able to make them (essentially from very long, expensive and very unlikely to succeed to cheap, very fast and almost certain to succeed. In a similar fashion, because of the poor level of understanding of evolution, the market does not appreciate that the GMs are very likely to accomplish the intended result (the production of pure (or very close to it) spider silk) and that, should the first attempt fail, there are still excellent chances that another attempt will because of understanding acquired from the manner of the failure in the previous one. Thus the odds are doubly miscalculated so that something with a very high chance of success is, IMHO, inappropriately valued as having a very low chance. This situation is because this is such a new field of development with such rapid advances and particularly because the massive importance and implications of the very very major advance in genetic modifications (zinc fingers) is not yet appreciated.
The ability to see such things BEFORE the market does is exactly how you can make the biggest gains in investing in technology. Miss that and you are only sweeping up the crumbs that others have left.
Frankly, given your valuation approach, I have more than a bit of difficulty understanding your interest in a cutting edge biotechnology stock as its valuation is remarkably resistant to your type of analysis.
