Since the announcement about 4.6% of the register has turned...

Since the announcement about 4.6% of the register has turned over so hardly the stuff of big messages and instos walking on mass (in aggregate instos own 10s of millions of shares and won’t dump on market, think block trades and dark pools). Looks more to me a lot of jittery private holders who likely had expectations for QoQ progress set to exponentially. Also we worked out you don’t know much about what instos are doing so again refrain from commenting on such.

In another thread yesterday you were called out on your use of valuing the company based on an FY17 PE in isolation, in which case you used a 20x multiple rather than the 15x today (just amping the fearmongering or its sake?). This company will be judged based on multiple forward years of future growth rates which will be summed into a DCF. This is susceptible to assumed growth rates which no doubt will be downgraded, however, no one with some semblance of rational valuation capability will try and judge this stock on a one year forward PE in isolation nor be able to generate a DCF as low as 36cps or the 29cps you toted yesterday.

Also in that other thread, you were informed that, during a high growth phase, the company will burn cash even if they report positive NPAT because you have to fund your working capital for future sales growth upfront. The faster the company expects grow tomorrow, the more it pays in material costs toady (i.e. referred to as working capital), which in a cashflow statement this costs is marked against yesterday’s lower sales/cash receipt rate. This is called a working capital drain and is common for high growth manufacturing businesses.

The prior two quarters of positive CF was called out at those releases as an aberration as the company was not paying for much in the way of additional material costs as they were running down inventories to meet customer orders. In this case you get cash for sales without incurring costs for tomorrow’s higher level of sales. Essentially, if cash out for working capital (materials/production costs) are higher than receipts for the next year or two, meaning sustained cash burn, it means the company is growing faster each successive quarter than what it sold in the last quarter. It is in fact a positive signal for the company. However, at some point they will have to hit a scale level where current cash receipts cover the successive increases in additional working capital.

This is actually showing in the broker report which have negative working capital and cashflows out to FY18. The $32m raised by YOW is meant to fund this working capital drain until it becomes a self-sustaining cycle.

If peopled listened to your valuation and analysis, they'd be dumber for it than getting caught up in the hype as one QoQ period of no growth is not a signal it has broken down and is done for. Given the stagger sign up and roll out of customers, you will never know if there is a hype phase like there was here in the 90s. One thing for certain is that penetration is exceptionally low by any standard and growth can be strong for multiple quarters on average here on out.