In writing this, I believe I failed to indicate why Gary's revenue projection may have been much lower than actually occurs. That reason might be not assuming growth in sales on the part of distributors, or in assuming an increase in the number of distributors.
Starting out as a new distributor, like D.E., you must assume no immediate sales, unless you already have customers waiting. You need to assume the business will be slow in building, so likewise, the company cannot assume major income coming in from new distributors.
If you allow for such assumptions, Gary's $4 million may be based on zero growth coming from distributors, a very conservative, but also very safe assumption. As more distributors are added, and as sales increase, the number could move up substantially. If this is how Gary made the estimate, the only fault I'd suggest is not stating the bases of the assumption.
It's impossible to justify a suggestion that the year end share price should be $1 or more with earnings as low as Gary stated and no reverse split planned. Clearly to achieve $1 or more the earnings must go up. If we go well above the P/E of 30, let's say we figure the O/S increases to 550,000,000 at a P/E of 50 we'd need to earn $11 million. At a P/E of 30 it would be $18.33 million. Neither of these numbers is impossible to reach, and who knows, perhaps a P/E of 100 could be justified for such a fast growing industry, but as growth stabilizes, I believe a P/E of 30 is about is big as is normal over a substantial period of time.
Gary
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