Replies to post #70346 on Muscle Pharm Corporation (MSLPQ)

[StocksAnonymous]

Update: Implications Of MusclePharm Buying Back Stock

It looks like Paulo Santos agrees with me...

Summary

-MusclePharm bought back 250,000 shares of its own stock.
-This has implications for my existing thesis that MusclePharm is evolving from a dilutive company to one that cares about dilution.
-In two different ways, this confirms MusclePharm's positive prospects going forward.

Today, MusclePharm (OTCQB:MSLP) announced it bought back 250,000 shares of its own stock for $10 a share. These shares are part of 600,000 shares which were held in escrow following the BioZone acquisition. The buyback was possible at $10 because of a pre-existing repurchase agreement at that price. This has two main implications for my existing thesis that MusclePharm is transitioning from a dilutive penny stock to a high-growth "decent" stock:

First, it highlights the new nature of MusclePharm: MusclePharm is now a regular company that tries to avoid dilution as much as possible, versus its former self that even paid suppliers with stock. This is evident both in the buyback, and in the way MusclePharm is now using regular financing for its financing needs, instead of issuing stock.
And second, this move also portrays confidence in near-term financial developments. It's hard to believe MusclePharm would commit $2.5 million of its own money to buy back stock unless it expected the stock to continue to perform well and that requires its operational performance to also keep up. This is probably helped both by the flurry of new products and the recent extension of distribution to Wal-Mart (NYSE:WMT). I roughly estimate that the Wal-Mart distribution alone is enough to provide for greater than 20% revenue growth year-on-year over the next year.

seekingalpha.com/article/2542845-update-implications-of-musclepharm-buying-back-stock