Extremely hot relative to what we used to trade off on fundamentals (i.e our P/S ratio). This appears to be driven by large demand with a significant number of media posts and introduced coverage by Shaw and Partners, who participated in the recent book build.
I sold some on Friday only to get slapped with todays gain. No complaints as only sold small package of my holding.
As some have noted, due to the now 4x rise in price since last (2023) capital raise price this is a titanic holding relative to other holdings. Wisdom encourages some derisking here as we're pricing in very strong sales coming into the tail end of the year.
Should those sales fail to materialize in the next qtr then concerns may increase and price action reverse. You really have 2 options here:
- Keep holding/Buy more with the view we will meet market sales expectations (refer the Shaw and Partners update for some estimates)
- Reduce holding while optimism is high. If the positivity dies off, sales fail to materialize or market conditions change - we may resume our historic downtrend in price enabling a re-entry point sometime in the future
Both options need to be rated against your opportunity cost. In this case for many probably the 6-7% rate of your mortgage.
Personally, im of the view that were now right sizing from an attention perspective. The stakes are much higher (bigger downside) for us failing to deliver on sales and tech innovation however, historically performance since early 2021 suggests we are well position to deliver on both. Geo-Political tensions continue, and wont dramatically change in the short term, encouraging military spend and this is a boon for us. Will be hoping to see in the next 60 days a material sale from the $Bs ear market for Ukraine from the US. Growth in the EU sales (which have historically been hinted at but never materialized in a meaningful way) will be a big catalyst for support and pushing the SP onwards. We're pricing in somewhat those wins here, which is likely where we are seeing this accumulation. Smaller wins ($5-10m) will improve our baseline support while significant sales ($20m+) will see further upside. Should we see a non-pipeline based sale, which i believe the $30m sale last year was, i'd expect significant push towards $2.
As noted, price is speculative but thats not so irrational and is certainly not a bubble. To be clear, the potential sales we have on offer, if met, would more than justify the current SP. Hence the speculative value is not a bubble (in that it has actual substance). Should our potential fail to occur, that is not a bubble bursting perse.
Lastly on the topic of "not seeing our items in action in Ukraine" keep in mind that any military will seek to keep certain arms use very very confidential. Specifically, your AI/ML based anti-Drone solution would be something you keep as quiet as possible. Similar to how you use radar, it is a critical military secret. Don't focus on front news brand wins, focus on the revenue.
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