The key question everyone should be asking is: "What should the...

The key question everyone should be asking is: "What should the price of A2M be now?" Let's not talk about the next 12 months or beyond 12 months. Let's talk about what it should be now.

The reason for the recent falls has only to do with fundamentals. How much will you pay for a business if it's your own money? Will you spend $1 million to buy a business that is generating $16,600 profit for you next year? What about saying if profits double, and in FY17, the business will give you $32,000 for FY17? And maybe it will slow down in FY18, and it gives you $50,000 in FY18. Will you buy it now? I may be better off putting my money in bank which gives PE ratio of 33 that carries almost no risk (3% interest rate). A2M still has a lot of operational risk associated with USA and UK expansion, and the infant formula is not the saviour of everything that may go wrong with the business. That's essentially what we are talking about.

Let's just say that you are looking for any business to make a profit. I know for sure that a cafe or a Boost franchise or a Grill'd burger franchise won't be selling at a PE Ratio of 60. Very few businesses will sell at a PE Ratio of 60.

So, can someone help me understand what makes us think that A2M could justify such a high PE Ratio now? Nothing grows fast forever, and sales don't go up 100% or 200% forever.  Yes, A2M may grow to be a $2 or $3 share in the future, but it needs to live in the present now, not 2 or 3 years into the future. Therefore, let the cows come home now and rest in the present, they are doing a time travel back to 2016 and not remain in 2017 or beyond. Price target for now? PER of 40 will give you a share price of $1.20. And the professionals and instos are thinking about this in their mind...