The entire BNPL industy is riddled with ' unprofitable ' scalable tech businesses, I would argue many of them are more likely to fail in the medium term due to huge scale required and competition .....
Whilst I think they are grossly overvalued (for many many reasons more not worth discussing) 'profitability' is a milestone that deserves a complete re-rate and I haven't seen anyone argue EN1 is currently worth a re-rate yet, just that is it undervalued as they have validated their ability to generate revenue on a scalable model and the demand for their service.
Let's not forget pre- covid they were about to achieve that milestone, their revenue trajectory quite clearly portrays that.
We are not trying to say EN1 is any different to the majority of tech companies with their revenue or potential, quite the opposite actually! EN1 is much closer to achieving EBITDA break even than many of those companies. That's the whole point of valuations, comparing across similar businesses. MSG is not a tech company, not scalable and in a dying industry, now that my friends is what we call not comparable
The reality is this stock price is down here is due to the perceptions of the directors treating this more like a lifestyle company rather than being overly ambitious. Those concerns are shared between holders and non-holders alike. An independent Chairman would see this company's value more intrinsically linked to their valuation and by their ability to generate pre-covid revenues and beyond. Whilst a new appointment seems like a longshot unfortunately, I am still speculating for revenue improvement to occur.
With the SP pretty much at it's shell value, there is nearly no further downside risk imo and many investors are clearly willing to invest with the notion 'as businesses continue to understand and move forward with COVID, demand for EN1 services should increase their revenue too'. The speculative question we all ask is, when will this be? I don't have the answer for that, signs of improvement could likely occur over the next month(s) but I am happy to sit on a short term 3-6 bagger in anticipation over the next quarter.
