Ann: SPP Early Closure Due To Excess Demand, page-16

@timbat

You might want to do a little maths on that assessment.If one takes the highest price (most optimistic assessment) before the CR the was $1.12, then allows for the massive dilution of 600M -> 800M shares, that gives $1.12*3/4 = $0.84 which is close to the current price.

To that the share price should be downgraded further because any given shareholding will now receive 75% of the future profits they would have before the dilution, and a further multiple to allow for the continued loose behaviour with capital by management.Usually, what happens after CRs is that it takes about a month for the share price to level out as the overhang of shares is absorbed by the market.

Based on history, and the information above, it seems most likely that despite today's bump in price over the demand for SPP shares, DRO is more likely than not to continue falling as investors rebalance after taking on more shares. Having said that, I don't claim to know the future of share prices, I am just doing a guess at the probabilities based on past experience (including that last time DRO did this, the price fell well below the CR price).

Sometimes it works out well when trying to catch a falling knife, but I prefer a more risk adverse approach and wait until the knife hits the floor and then decide whether buying stock makes sense.