DW8 Growth, page-10050

Here is an example of an ASX growing tech stock & market pricing.

FY17 - $21M MC / $740k ARR = x28.4 multiple

FY18 - $59M MC / $2.55M ARR = x23.1 multiple (undervalued)

FY19 - $250M MC / $8.22M ARR = x30.4 multiple

FY20 - $235M MC / $16.1M ARR = x14.6 multiple (highly undervalued)

FY21 - $1.12B MC / $39M ARR = x28.7 multiple

It is evident that the historical trading multiple is around x28-30. Whenever the multiple got below this it rerated within the next year.

Buying the above stock in FY18 when it was undervalued resulted in about a x4 rerate & buying undervalued in FY20 resulted in near x5 rerate.

The key is identifying undervalued shares & being patient.

With DW8 it wouldn't surprise me if MC gets to $1B with about $20-25M revenue run rate.