The above three stocks Livetiles (LVT), Livehire (LVH) and Brainchip (BRN) are examples of tech stocks with potential as they have promising solution offerings, collaborations that could possibly take them places and a growing revenue base mainly from subscriptions.
These companies seem to run like Nasdaq-style companies that focusses on growth with the notion that they have the confidence to raise capital when needed (either locally or via US investors) so they don’t need to be concerned as much with growing expenditures and increasing losses. You can almost see that they all downplay the excessive losses they generate year on year, drumming in to shareholder audience they are doing great on the top line.
The above table shows their revenues after stripping out grants. While they are excellent growth but they come off from a low base but more staggering is that their losses have widened by a growth factor close to their revenue growth too. The common reason provided is that they are still at their inception period of growth and therefore losses are to be expected to build the foundational platform for their eventual mass market growth.
But they are burning cash and very quickly – by hiring senior people in US as well as paying handsome share based remunerations (performance shares, rights, options etc).
But will they ever be profitable?
So far while the market is seemingly less concerned or is it because people have not been noticing closer than they should. No LVT quarterly announcements have given any indication that they could end up with an annual $22m loss, which is fairly sizeable. But IMO it is only a matter of time, this would be known and for that reason, a break below 61c for LVT is looking like a sell.
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