For the first time, I am going to go with my emotions rather than my usual fact-based analysis.
This stinks! I have no doubt about the stunning future that NEA has over the next 5 years and beyond. By that time, NA Gross Profit Margin is very likely to have reached the ANZ level of about 91-92%. Ignoring any expansion into other territories, and going with my conservative growth levels covered in my previous post, total revenue should more than double every 3 years or less. Even if NA growth slows down to 30% or less, the relative size of NA will see total growth remain at around 2x every 3 years. This means that revenue by FY25 should easily exceed $300M and Gross Profit should exceed $270M. That goes to > $540M in FY28. These will be brought forward if NEA expands into other regions to take advantage of the efficiency of HyperCamera3 and their cloud based platform and IP.
I know that many of you will say "but NEA will just keep growing their expenses as fast as gross profit". I don't care; if they want to grow faster and higher, that's fine by me. If they want to keep expenses low and achieve profits and dividends, that's also fine by me if I am still a shareholder. Both strategies should see the share price reflect the growth and/or profit rates by the time it gets > $500M GP.
At the buyout price, NEA's market cap is just over $1B. IMO, that is nothing compared to what it will return to its owners within 5 years. I have had 10-gangers before, and this one feels very much like a 10-ganger to me.
Vote NO and if enough of us vote that way, we might just remain as owners of a great business.
NEA Price at posting:
$2.07 Sentiment: Buy Disclosure: Held
