Ill just respond to some of your points, I am not using the same assumptions as you.
- It has been widely circulated that TKO will have $25 million in revenue this year. You are assuming $10 million, I think that is avery lowball number. My projections will show 25.
- The burn rate and costs are not factored into my valuation. I am not interested in how profitable they are right now. I am interested in growth.
- The fact that they spun off MSHI is almost irrelevent to me. Yes it is great that they basically sold off half of the current cash burn. And as far as I know MSHI added little revenue. All they are right now is an asset on the balance sheet.
So using a price/sales very simple valuation, comes out like this...70 mill float 25 million in revenue equates to .35 cents per share in sales. Using a conservative multiple of 5 yields 1.75 PPS. So that is the baseline I am looking at. Now you want to factor other misc things into the mix such as next years price/sales, current and future cash flow, debt, management effectiveness, pipeline opportunities, etc. I can see paying paying a 25% premium on this easily. That puts MY market value at about 2.25, thats what I would pay up to right now (assuming they do $25 million this year and at least that next year) Some would pay more, some think that this story is worth nothing (ThinkEquity).
Again, that is very simple way of valuing this stock. If you want to dig deeper and come up with a better valuation model, I think that is great. I personally think this stock is trading at a discount right now. If they really do 25 million this year, I can see a double at least from here. That number is only what I see being posted around these boards, I have no idea if they will get there. It would seem to me that with the current contracts and pipeline they have, insolvency would be very unlikely. Goverment agencies and Mega-cap companies dont typically get involved with companies who are not going to be around. All imo.
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