How much revenue do you expect to make on 1 million dollars from battery sales in a competitive market with a company that has never before sold batteries in Australia ? And how much of that revenue do you expect the middleman to capture? And then of that revenue how much do you expect to pay in overheads, exorbitant fees or "performance shares"? I don't think it's even possible to make any money from this venture (look at admin costs and you'll see why). I understand it is a test to ramp up to something bigger potentially, but even best case scenarios it's a long long way off, and you need a few CRs (particularly if they keep failing) to fund a big enough inventory and market presence to even potentially make money. This is not the saving grace for LIT because even with absolute best outcomes its such a long way from making money, and even then it will be a modest profit that couldn't support a huge SP (particularly not after further dilution).
let's say this report is right and global lithium battery market is 26 billion dollars by 2025. And Australia is 1% of that (we are only 0.3% of world population). This is generous given we dont mske electronics or cars. That's 260m dollar market per year. Lets say LIT can capture 20% of that, at 52m in sales. Incredibly generous given the diversitt and competitiveness of the market.
https://consumerreportsreview.com/lithium-ion-battery-materials-market-2019-2025-global-industry-growth-analysis-by-product-type-application-trends-demand-key-players-forecast/So at best 50% of that 52m sales revenue goes to LIT.
Leaving you 26m, but half the inventory you had to buy. If profit margin is 50% they cost you 13m.
Leaving you 13m
now you have administration, advertising and operational costs. Say that's 2m (25% of which is just the CEO, so im also being generous here). You have 11m assuming there is no debt. This supports a SP of around 110-150m. 4+ times the current MARKET CAP. But you NEED dilution to get here. You cannot buy that inventory without CRs. They need to be cheap to succeed and high volume for the funding. Not to mention dilution from options and performance shares. You re looking at dilution of 50%
easy by 2025 for this project alone. Just to afford the inventory I'm talking about let alone marketing and other operational costs. So you as the shareholder only get 2x your current value because the market cap increased by 4 fold but the SP by just 2. But it took you till 2026 to get here.
7 years and that's IF you're this lucky which is incredibly optimistic. 200% return over 7 years. A safe investment would get you around 80-90%. And you can say it's only part of the business, but LIT can't afford to pursue this and other things. Pursuing those other projects requires more dilution and more risk. This project at BEST could be a mild success over a safe investment for you, and under any other circumstance will break even or far more likely, flop and lose money.
GL
(20min delay)