My take on all this is that the litigation is that it's very unfortunate but all this does not warrant the SP dropping by a whopping 50% from December prices. If this company had no runs on the board, then yes, a 50% drop would be justified. But this company has hit an annualised revenue of 20M AUD back in the December, and very likely to be more in the March quarter, and then much more again in the June quarter with Angry Birds and and the Walgreens roll out.
Correct me if I'm wrong, but even in the worst case senario with all this litgation, sales are not really threatened. We just have the possibility of a financial leach on our back slowing us down. None of this will stop the long term success I believe.
Assuming 57 cent share price, my rough calculations show an enterprise value now of about 82 Million, therefore EV/Sales is now down to about 4.2 using the December quarter sales. If the June quarter annualised sales are double the December annualised sales, then at the current price we will be super close to the industry wide EV/Sales ratio at that point, which I calculated to about 1.85 using the average information in one of the earlier Hartleys reports. If we are still at 57 cents in 4 months with an EV/Sales ratio of 2.1 or thereabouts then I will be amazed, because I believe the growth profile will still be very very strong at that point to easily justify a much higher price.
I am super tempted to top up my holding.
YOW Price at posting:
57.0¢ Sentiment: None Disclosure: Held
