So I get its a pain in the ass and COE mgmt overpaid/incompetent...

So I get its a pain in the ass and COE mgmt overpaid/incompetent and should have bought a better crystal ball etc.,

but the impact of this update is this



Midpoint EBITDAX guidance lowered to $58M from $65M .... so $7M

Go back to any DCF valuation (or EBITDAX multiple) .... I made the changes implied in this announcement ....no change



There is no change in the 5YR DCF valuation

The stock closed prior to this announcement at $0.28 ... putting EV at about $697M & EV/EBITDAX multiple at $697/$65 = 10.7X
Low for today was $0.265 ... putting EV at about $667M & EV/EBITDAX multiple at $667/$58 = 11.5X

Now that is always an interesting multiple to discuss ... high number means "expensive" ... i.e. your the investor are paying a premium to buy the stock. Growth (in revenue) stocks typically have high EBITDAX multiples. So today the stock became cheaper to buy as numerator (EV) reduces as MC lowered PROPORTIONALLY more than the denominator

Meaning if 10.7X was to remain then EV needs to be 10.7 x 58 = $621 and MC ~ $500M or about $0.25/sh

Seems a little counter intuitive perhaps ... its all about risk v reward ... today's announcement could have pushed the share price to $0.25 if punters believed the revised EBITDAX carried the same risk. Note I say risk ... as in I own a fair few (US) tech stocks (some of which are EBITDAX negative so the number isn't meaningful) ... high EBITDAX multiples are EITHER high risk or signalling that lots of investors are willingly to pay a premium to own the stock .... case in point Tesla carries a forward FY'22 EBITDA multiple of 25X ...much higher than say VW or BMW both at around 10. Clearly in different places wrt to growth and product lineup ... but car makers nonetheless.

No real damage done IMO...