Dear fellow BUD holders,
So, let’s look at those facts.
- I have never started a thread. However, the ongoing comments in this forum regarding the potential outcome of the OCT-DEC 2020 quarter are of great concern to me. Why? Quite simply, inflated expectations versus ordinary outcomes means a dive in share price.
- I believe that comments on this forum have many people expecting highly unrealistic results from the last quarter and such ill-informed comments need to be tempered in order to ensure that people have realistic expectations regarding the upcoming report. Others are simply saying (regularly) "lets wait to see what happens in the 4C" as if there is going to magically be some surge, simply so that they can say I told you so! The brutal facts are that there will not be.
- Throughout 2019 and 2020 BUD has been clear in the fact that their supply is an issue and they cannot meet demand. In January 2020 the CEO announced in a webinar that over $10 million worth of orders were unable to be filled in the OCT-DEC 2019 quarter. (This number was possibly even higher).
- The fact is, that due to COVID and the ridiculous manufacturing agreement, the supply issue (could possibly be even worse in 2020), hadcertainly not been fixed in the Oct-Dec 2020 quarter. Yes, there was $30 million worth of purchase orders, but anyone who thinks they had the capacity to fill these has not done their research and is going to be in for a big shock.
- Prior to the new finance agreement, it took 5 months from receiving a PO for BUD to deliver the globes and be paid. Any simple math will tell you from when that ANN was made, (16 September, 2020) was less than 4 months to end of Dec. Given the warehouse in China was and remains empty it is not possible for that $30 mill to have been filled in the OCT-DEC quarter. Certainly some will be have, but no chance all orders have been filled and no chance that revenue for this quarter will be in that vicinity.
- The company was in no better position (possibly worse due to COVID) in Oct-Dec 20202 in terms of their ability to meet supply than OCT-DEC 2019, so I clearly see no reason the numbers be will be significantly different…it’s just plain common sense…any rhetoric suggesting a huge jump in revenue in this period is misleading. They sold every globe they could make in Oct-Dec 2019 and the same for Oct-Dec 2020; but had no greatly increased ability to manufacture more globes.
LOOKING FORWARD
- First thing to note is the announcement today have addressed the ongoing supply issues mentioned above.
- HOWEVER, the awesome news is that the supply issue has now been solved. No more upfront payment required to the manufacturer, a second factory making bulbs and the factories can now scale up to 5 times 2020 production numbers. Chances are the warehouse will be stocked by April/May. So good news will come.
- So let’s be intelligent about predictions for this quarter, let’s be patient and wait for the sales figures from July 2021 and beyond when you will really see the outcomes of the recently signed finance deal and new terms.
- If the market is truly forward looking, the skies are looking blue for this company and mid 2021 we will see the fruits of their hard work throughout 2020.
- Note: So happy if I am proven wrong by BUD in terms of what they were able to supply in the Q but a market with low expectations means the SP will remain steady in the face of ordinary outcomes, a market with unrealistic expectations (being pushed here by several parties) will just lead to a slump in the face of ordinary outcomes and a market with low expectations which are exceeded will see an increased SP.
