4DS HC Tribes: Crystal ballIn the last 6 or so weeks, there has been a separation of forum members into distinct tribes based on expectations for the 4DS end game. We have 25c #/Desu at one end of the spectrum & the 4 Dollar per share tribe at the other. Hundreds of posts & no one changing tribes. Concurrently everyone could be right or wrong as the future is unknown. 4DS is either going to be sold / commercial transaction (success) or it will be liquidated (failure).
I seem to remember being taught at uni that the value of an investment is a function of discounted future cash flows.
No matter your tribe, the sharemarket today valued each share at 8.6c or the equivalent of receiving approx AUS129m cash (1.5b shares + options).
What reconciles the outcome for each tribe is the probability of success vs failure. Estimating the likelihood of success vs failure (aka risk) is not normally analyzed/discussed on HC beyond terms like "highly speculative". So I thought I would have a crack at trying to quantify it for each tribe using a simplified model.
Here is my crystal ball - no discounting, 1.5 billion shares. only 2 possible outcomes, share price today based on expected future cash flows.
| 4DSHC Tribes - success vs failure crystal ball |
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| Shares Issued + Options |
| 1,500,000,000 |
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| Current Share Price |
| $0.086 |
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| Current Enterprise Value (AUD million) | $129 |
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| Liquidation Enterprise Value(AUD million) | $30 |
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| Liquidation Value (Per Share) |
| $0.02 |
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| Implied Probability based on current share price |
| 4DS HC Tribe | Sale (after bonus) - AUD million | Share Price Equivelent | Success
= sale | Failure
= liqudation |
| # Desu Fan Club | 375 | $0.25 | 29% | 71% |
| Sale Bonus Poolers | 600 | $0.40 | 17% | 83% |
| "Must be at least a billion" | 1000 | $0.67 | 10% | 90% |
| $ per sharers -" JD's biggest deal ever!" | 1500 | $1.00 | 7% | 93% |
| 2250 | $1.50 | 4% | 96% |
| 3000 | $2.00 | 3% | 97% |
| Company called 4DS for a reason - Howie wink wink | 6000 | $4.00 | 2% | 98% |
As you would expect, the sale price has an inverse relationship to the probability of success. Even # only has a 29% chance of getting his 25c - perhaps Desu is just a risk-averse guy. If you are planning on buying a yacht to cruise to the $4/share after-party on Jasp's island, then you have a 1 in 50 chance of living the dream.
Sobering stuff.
"What a crock".... no hard feelings:Your reaction to my crystal ball might be to dismiss it as a crock of sh#t.
The easiest argument would be that today's share price does not accurately reflect the "true" value of 4DS. After all, ASX investors (
except me 
) don't understand tech, it did hit 28c & was 13c less than a month ago. I don't disagree, though I do chuckle when historic price levels are considered rational and the current share price is not.
What I would suggest is doing the calculation to determine what the current share price should be based on
your expected sale price & probability of success. The formula would be :
(($ success) X (% success-) + ($ failure ) X (% failure)) / 1.5 billion shares.
If it comes out significantly higher than the current share price then you should be backing up the truck - especially before the next batch of chips comes out of IMEC's oven. If you are not comfortable telling your wife your expected % for failure then maybe preparing to sell pre results announcement would help you sleep at night.
DYOR - only intended to prompt thinking. Looking forward to tribes uniting once more.
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