Replies to post #120930 on Kraig Biocraft Laboratories Inc (KBLB)

[bananarama]

Here's the thing. You guys are all looking at KBLB mathematically. While that is extremely important, no one is taking into account the speculation and anticipation factor of what KBLB has achieved, what they possess in so far as the silkworms and the lab, and what the magnitude will be of disrupting every industry. How does one put a price on these factors?

I mean we are looking at a company which will affect almost every aspect of life. How do you put a value on that? It is worth way more than .65. IMHO, we are worth around $2.50 to $3.00 a share right now, not counting the effects of the Army contract, the announcement of a second contract, and the start of full scale production in Vietnam. And that does not take into account an extension of that Army contract.

Once we take these aspects into account, along with the fact that KBLB's endless earnings trajectory will be just beginning, the company is worth way more than the mathematical analysis shows and more than my current PPS above.

When KBLB is bought it, it will be one hell of a lot more than anyone is thinking right now. JMHO

[DimesForShares]

Market cap computations ...

It is great to see people talk about different market cap and stock price projections. I've approached this from a different angle: If KBLB was considered a 'routine' company with a market cap of 1 billion, what earnings would it need?

I understand the argument that KBLB may benefit from speculators who see the potential of the company, so these projections will be on the low end.

On to my projections.
According to various sources, Vietnam produces about 450 metric tonnes of silk each year. Assume we convert all of their silk production to spider silk within the next 12 to 18 months.

Assume a price/earnings ratio of 25, the high end of an average range. Also assume the market cap is 500 million. That would imply earnings are 20 million. To earn 20 million with a production of 450 metric tonnes means the earnings per tonne would have to be 44,000+ per tonne. The average cost of silk per metric tonne is right about that level. ($44,877/tonne in May 2015 for grade 3A silk).

I have no idea how to estimate the cost of producing a metric tonne of silk. For the sake of argument, I assume that costs are 50% of the sale price. Therefore, normal silk costs $22k to produce and sells for $44k. Monster silk, costing $22k to produce and selling for $66k would imply a 50% higher price than normal silk.

To sustain a $500 million market cap at a 25 p/e ratio would require all of the silk production in Vietnam be converted to Monster Silk and a price 50% above normal silk.

To reach a market cap of 1 billion, I'm guessing the production in Vietnam would have to double. Simply producing the eggs for 900 metric tonnes would require nearly 5 billion silkworm eggs/year. That implies a breeding stock of 25 million silkworms.

If KBLB is selling at a p/e ratio of 50 (as befitting a company with a lot of promise for growth) the numbers work out a little better. But I still think KBLB will need to outgrow Vietnam in order to reach the > 1 Billion market cap range.

Having said all of this, I will be very happy if my projections turn out to be wildly conservative.