[Spoiler alert: This is a long one aimed at those uncertain how...

[Spoiler alert: This is a long one aimed at those uncertain how to analyze the current lay of the land, offering some thoughts on how I interpret it. Read at your own peril.]



First of all, I do feel like probably every holder a bit disappointed with the current share price, especially considering the rollercoaster YTD. I may not have bought shares at or near the ATH, but I nevertheless believe I can empathize comparing my account value from mid-April 2021 to now. It's not apples to apples but it's my way of simply saying that 'I get it!'. But rather than giving in to an emotional response, I re-checked my original thesis (and time horizon) to determine whether recent events (not the SP!) warrant any adjustment of my thesis. Short answer: no, there's no change to my thesis and time frame itself but some of the risk factors and watchpoints weights had to be adjusted, which by itself is par for the course with every investment.

At a very basic level, one could reduce the rather complex investment decision framework to fundamentals (incl intrinsic value estimate) + technicals (including sentiment) + risks (including micro/macrostructure). Depending on your specific approach you may disagree and/or assign different weights to each category than I do, or add/omit categories, but this is how most of the truly successful investors structure their approach using a 10,000 ft up in the air view. I would advise against simplifying as more often than not oversimplification results in weaker conviction as the SP approaches turning points in the consistent cycle of emotions. And the list of investment errors committed due to emotions substantially outweigh logic-driven decisions. It's important to remember that, especially at/near peak/trough times of the emotional SP cycle. Anyone not already using a structured investment approach to form decisions and simply going off tips and what is written here or on other sites (especially those communicating in rocket emoji and money bags), now is the time to change that as otherwise the probability of making the wrong investment decision far outweighs the coin toss probability in my view.

Anyone using an approach that's not purely driven by technical factors ought to review the firm's fundamentals, including 4Cs, etc. irrespective of what story management tells. The numbers don't lie as many times has been said on this forum and I agree, the numbers don't lie and provide an accurate gauge on risks the firm is facing and progress it is making (note that I am referring to the firm, not the SP which in the short-term are usually not too closely related imho as March-April 2021 clearly demonstrates -- FOMO shouldn't drive an investment decision, nor should be a simply decreasing SP). Revenue continues to grow, operating costs are also up but operational efficiency has continued to improve (meaning it takes a lower dollar amount in costs to generate 1 dollar in revenue than in prior quarters) and I expect this trend to continue over the medium to long term. As the latest quarterly illustrated the synergy effects from the PWD acquisition are starting to flow through the financials but we are just at the beginning of how this will accrete to EBITDA in the long run, especially as the marketplace business grows.

I am a long-term investor seeking multi-bagger opportunities and as such measure investment time horizons in years -- not quarters -- as it takes time to build businesses in the real world and for earnings growth to flow through to SPs. As such I take quarterly results with a pinch of salt and in the context of the overall development vs. the strategy laid out by mgmt and the board and its execution. Going through the 4C and actually calculating metrics and changes yourself will allow you to get a much better handle on what is happening rather than having to rely on 2nd or 3rd party interpretations which may be accurate summaries or could be inflated arguments to support one's pro/cons view on the firm. It will also help contextualize a lot of the figures posted on HC (regardless if pro/con) to assess their viability or appropriateness relative to your understanding. Focus on the firm first, then consider the stock. Only once you do that will you be able to form an informed opinion on what valuation levels for example may appear appropriate on an absolute level (and that's without putting things into an overall market cycle context). Don't trust me or others, do the work and your conviction -- whichever way it goes -- will follow.

For example, in addition to the above and in absence of discounting (positive) earnings growth, consider various revenue-based valuations as proxies for market-based valuations assigned simply as gauge to get a sense where we are. Using TTM revenue and actual SOI (at each time referenced), the company is valued at a lower multiple at today's 5.3c (ask price) compared to the end of 1Q 2020 when the SP was 0.5c. Run the numbers yourself rather than trusting a 3rd party and let them sink in as you assess the context they provide. Even better, adjust them for what a full quarter of PWD contribution would have been and adjust post Kaddy SOI. The numbers are quite interesting imho. Cynics or those with a negative view of the firm will argue the firm's valuation is simply continuing to approach its true intrinsic value, which is of course their prerogative. I simply argue that we are already below that point (imho) although that doesn't necessarily mean the SP could not go lower as some holders progress through the capitulation, despondence, and depression phases that accompany SP cycles. This information may help provide reference points though that could prevent investors from making behavioral mistakes as they assign the wrong weights to psychological vs. fundamental (etc) factors. The fact that investors, again and again, continue to rush in to buy stocks that are rapidly going up (whilst the marginal expected return is decreasing) and tend to dump shares whose price is decreasing when the marginal expected return is actually increasing (IF the shares are at/below intrinsic value) speaks volumes about how psychology on average is our own worst enemy. And fundamentally the last 4C has given but a glimpse of what's transpiring at the firm in terms of 'sum of the parts' benefits. Also, consider the first couple of quarters of Market's performance vs. Kaddy's first couple of quarters and then consider the network effect of platforms to scenario out what each side brings. Nah, this is not a 'oh but look at the potential' pitch regardless of economic realities, this is exactly how institutional investors value assets and deals.

My broker shows there's (at least) one sell-side target at 10c on the stock which I think is reasonable if their model's assumptions play out over the next couple of years and considering the methodology applied to derive said target. Keep in mind those price targets adjust upward as new information arises that warrants adjustments, so 10c is the current value (atm) assessed for what the analyst knows now based on the last 4C figures and estimates to occur based on his/her current understanding. What is interesting is that since 2020 the firm has continued to deliver organic growth, with realized NTM revenue outperforming NTM (simplistic estimates based on 4x the last quarterly value) estimates meaningfully. I don't quite think the market is accurately assessing peer relative metrics yet (and overshot earlier this year, by a lot) and the sell-side target's assumption is conservative imho when considering reasonable comps from other platforms using similar GMV pricing and operating models etc., which for me reaffirms the downside risk. Note that I am not assessing anywhere near the valuation multiples we've seen in late March/mid April as appropriate proxies and that over time the appropriate proxies will vary and that I simply use them as reference points aka sanity checks rather than absolute arbiters of value. But they do provide valuable insight on how the market prices things at any given point that investors ought to at least consider.





Risk isn't a static factor and the cycle can be your best friend or your worst enemy. Do some basic analysis and overlay that with the chart above and you see how DW8 is playing out just like other stocks. Where are we now in this cycle? Well, as I mentioned I participated in the CR and added some on the market so that should tell you my view with regards to current SP vs. intrinsic value. I am also honest enough to admit that I (nor anyone else for that matter) can precisely quantify the remaining downside risk, except that it is IMHO substantially less than was the case at 7c and 6c, and thereby there's more upside than was at those points if my intrinsic value estimate is even remotely correct. If a comet hits earth tomorrow who knows what happens to the share price, which is why the saying 'well bought is half sold' remains a paramount guide that investors should live by. The future is fraught with risk which we must assume as investors, yet some risks are more manageable than others and I believe we are approaching (if we are not already) at one of the points where risk is at the highest, as is arguably the potential return.

I don't particularly care if you buy/hold/sell atm as in the long run (i.e. over the remainder of my time horizon) your immediate decision is going to be inconsequential to my expected return as I (like others) believe the market will eventually reflect the true value of the firm (and we may just differ on value and time frame). That doesn't mean emotionally it would be easy to deal with more downside but that's the risk I willingly assume based on my investment approach and assessment of risk/potential reward. That's different from those looking to scalp a 30%, 50%, or even 100% on a trade over a shorter period of time as their temporary margin of error/ability to assume risk is narrower, and I am ok with that. I focus on concentrated holdings deeply researched trying to minimize the number of decisions taken but trying to maximize the number of times I am right.

The fact that the shares are currently (using the last 4C and current SOI) trading at a lower TTM valuation than when I bought at 0.5c in early 2020 is providing some guidance affecting my conviction although for some this may be proof of something else. Only time will tell who is right and one thing is for certain: the cycle above will repeat, it's simply a question of time as on average investors repeat their behavioral mistakes. Whether you profit from that and how is down to you and no one else. I simply argue that to really own your decision you should put in a bit of time to do the work to have conviction. You might be surprised by what you find. I also know that only a small percentage of readers will eventually learn from their (typically behavioral) mistakes which means those with contrarian views and/or emotional control can profit from that. Anyway, good luck whatever your decision.