I agree i'm not happy about the greed (excessive board payments + sell down of shares) and abuse of capital (repeat large cap raises) but i'm not entirely sure if this applies to future growth and return potential.
I want to understand why we don't have and debt options as an alternative for capital building as i'd prefer to take on at least some debt, in lieu of repeat dilution. That said, the lack of debt actually makes DRO more attractive as its downside risk is lesser.
Only a fool argues with lessons shared by those with battle scars but wisdom is knowing lessons learnt need to be applied judiciously and take heed that many are once bitten twice shy.
I learnt different lessons trading 2 stocks: 1. A2M taught me a good company yesterday can be a shit one tomorrow. If your risks materialize, look to reduce exposure even if management sing all smooth and if they bail out - sell and take the 25% loss. It's better than taking a 75% hit. Also take your damn losses and move on.
Applying this to DRO means I am cautious at this price level. However, what is the downside catalyst? What could occur that will knock us back, and sink us down? For me this is a failure to meet quarterly sales expectations. The capital raise means we have product on shelf, ready to go. I assume this is why Oleg has made this move and he was justified with last years capital raise due to the resulting sales growth - if not only vindicated in the last 6 months with SP support.
2. APT taught me that a good solution at a good time with momentum can crush. Z1P was a decent alternative but lacked the momentum both as a product and as an equity. As that momentum went stratospheric, I sold out. It was too much too fast, and my macro calculator said bad things are gonna come. This ended up
Applying this to DRO means while I'll take some profits off the table, I need to hold on if the story still makes sense. Even if I feel valuations are overblown, the price can continue to move multiples ahead where the market starts to price larger success for a longer period. Again, I'll keep my derisk hat on - but market conditions for Defense spending continue to drive market-driven growth for us. Despite management decisions there is a supportive shareholder based, both seen in the recent capital raise as well as the votes noted for board member retention and remuneration deals (even if i dont agree with them).
We have both AUS and US defense donations coming along which may give us a large boost.
Key risks/downsides 1. Sales don't materialize 2. R&D does not produce new product innovations 3. Tech developments render our product ineffective 4. Competitors could release a better, cheaper and more easily available solution 5. Repeat SP dilution due to cap raises
Key opportunities 1. Proven YoY revenue growth 2. We've built a team of some of the brightest proven AUS engineers 3. Overall market is growing significantly due to increased geo-political tensions
4. Australia is positioned well to trade with USA as a non-US defense contractor due to Australias favorable political position 5. No debt
DRO Price at posting:
89.0¢ Sentiment: Buy Disclosure: Held
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