I think its just a mediocre value proposition and has been over-sold to investors. @James7821
Couldn't be more correct here James, caught up in the hype and relying on multiples of 40-50x revenue is ridiculous. I wouldn't say it needs to turn around given it hasn't stopped growing in the 3 years since this board starting taking control, the share price over-running into the teens and then a number of dilutive acquisitions which synergies not being realised yet are some of the reasons the share price itself is in the doldrums.
Overvalued? Still hard to put a point on that at the moment, I'd say its pretty fairly valued given its underlying business model, current revenues, goodwill with Kaddy, management team and execution so far. I would admit we are valued on our current quarter, not what is ahead towards the end of the year. A quiet quarter to begin the year is always the revenue model of DW8 given the influx of buying over the Nov-Dec holiday period.
Am I concerned about the cash burn? Ultimately, yes. Given the burn and LY's dilution there could be a possibility for a raise, but there seems to be plenty of other factors that will decrease the likelihood of a capital raise in the coming months that have been pointed out numerous times by DT and the team.
Are we still considered a growth company? Absolutely. Brands are being signed up left, right and centre. Revenue is increasing faster than costs and gross margins are increasing. Further revenue streams are currently being identified as well and there are various SaaS pathways that the company can accrue on top of these.
What are the macro environments pointing at for DW8? Well, increasing interest rates are so incredibly negatively correlated with interest rate increases that the nasdaq has been absolutely slaughtered since the possibility of interest rate increases has occurred.
It gets even worse when you are dealing with high-growth equities like many technology stocks.That’s because many tech stocks have rapid growth assumptions built into them.
Instead of cash flows that would always be $1 million a year, for example, many would have expectations of growing 10%, 20%, 30% or more.In this case, a rise in rates would eat into the present value of the investment even more.Let’s say that company is growing cash flow 10% a year for five years.
Assuming a 2% interest rate, the present value after five years would be about $6.30 million, but change the interest rate to 4% or 6% and the numbers go down:$5 million cash flow, 5 years(present value, 10% growth)
2% interest: $6.30 million
4% interest: $5.93 million
6% interest: $5.59 million
This is an even bigger decline, on a dollar and percentage basis, than when there was no growth in cash flow.
I'd expect that DW8 might find itself around this level, if not lower, by 30 June given the tax loss selling of retail investors on perhaps a blockbuster year for their portfolios in the materials sector. However, a solid 6-12month return is definitely on the cards from what I believe to be a well managed, disruptive, technology company.
(20min delay)