Alright cucks, today we are gonna talk about DW8. Get your wife’s boyfriend in the room cause you’re gonna need to borrow his wallet for this one.
I’ve seen a lot of misguided sentiment towards this company from you lot, mostly because people don’t understand the industry they provide too and how to interpret their successes so far. So grab yourself a greg or glass of vino cause you are in for a long thorough read.
For the record, I am not a Financial advisor and you shouldn’t buy this stock cause someone with too much time on his hands makes a post about it on the internet. ASIC don’t f* me in the shower. DYOR
SO, let me start with a rundown of what exactly this company is and what they plan to do.
The Business
Digital Wine Ventures (DW8) states “we invest in technology-driven businesses servicing the global wine and beverage industry.”
The global wine market is worth $300 Billion and growing.
In April 2019, Australian wine entrepreneur Dean Taylor vended his sweetest new startup company, Winedepot, to DW8 and became the substantial shareholder and CEO. Winedepot is now the cornerstone investment of Digital Wine Ventures
A brief lil background on ol mate Deano, cause it’s important.
Deano has been in the online wine/beverage industry since 1999 during which he has founded, managed 7 different wine/online related businesses. He sold his first company, Wine Ark, to ASX:NSR for $8.5 million. He also launched the Cellar Club. The Cellar Club was then sold to Cellarmasters and later acquired by Woolworths as part of a $340 million transaction.
He also launched My Wine Guy. A business that continues to grow at over 100 percent per annum. Just to name a few.
IN SUMMARY, bloke knows his shit when it comes to operating online businesses and has deep connections in the Australian wine industry.
SO ANYWAY, what is DW8’s golden child “WINEDEPOT”?
Winedepot is a cloud-based service platform designed to streamline wine distribution. (and is now also being used for other beverages like beer/cider/spirits)
The platform provides five key solutions relating to sales, logistics and payment and it generates revenue via transaction fees, storage fees, subscription fees etc.
They describe their point of difference as servicing producers for a fraction of the usual cost.
The next major step for Winedepot now, is launching their ‘Direct-To-Trade’ marketplace.
“For the first time ever, trade buyers will be able to purchase by the bottle from hundreds of wine and beverage producers all via one order, one invoice, one payment and one delivery.”
They claim this will allow them to provide substantially more brands and products than the largest three distributors in the country combined.
This is due to launch in march 2021 (next month!)
DW8 intends to solidify Winedepots presence in Australasia before expanding into other key markets for aussie vinos like the UK, North America, EU, Hong Kong and Singapore.
In September last year they established their presence in New Zealand and have been steadily building over there too. Some of the figures they tote show just why this service is so attractive to wineries. “Currently it costs at least AU$90 to ship a dozen bottles of wine between New Zealand and Australia. Using our platform, the shipping will be about AU$7.95 per case” - Deano
If that isn’t impressive, I don’t know what is.
The Financials
Now onto the sweaty financials, which admittedly is my weak point in understanding and I will happily be corrected if I make any incorrect assumptions below.
Market Cap - 72M
Current sp - 0.044 (as today's announcement it’s probably going to break 0.05)
For the quarter ending Dec 31st 2020, they stated a revenue of 712k for the quarter, up 78% on the last quarter. This is also only accounting for 1 month worth of sales from their newly acquired logistics provider WDA, which welcomed 180 wineries to the company last November. Though revenue has been increasing strongly, it is expected to have a massive uplift with the launch of the marketplace in March.
They have 700k debt.
Until the company becomes cash/flow positive, as of december 31 2020, the company had $6.8 million left of funding available, representing five quarters left of use if spending levels remain the same.
They also expect a significant proportion of the remaining 100M+ unlisted options to be converted before 23 February 2021, when they expire. In the last quarter the conversion of 45M options raised $1.35M.
IN SUMMARY, the company is growing incredibly fast with great organic growth and the release of their marketplace in March is poised to be a real chilli in the ass type booster for their sales.
Extra Reading
I also want to touch on a few points I’ve seen people throw around in this sub who clearly don’t understand some of the recent news affecting this company
I’ve seen people claim with the introduction of trade tariffs from China (a normally 1.2B revenue export for Aussie wineries) that DW8’s growth would be hampered, when in reality it's a positive. Let me explain. DW8 moved sharply by closing its Chinese subsidiary and instead re-focused its expansion efforts on other international markets. The tariffs now imposed by Winnie the Pooh will triple the price of some Australian wines, which will have a significant impact on their competitiveness in the Chinese Market. As a result, there’s going to be millions of litres of wine that will need to be sold in other markets. This will be extremely beneficial for Winedepot as the affected producers look for new routes to market. Along with the rapid switch to online buying due to COVID-19, this oversupply of inventory provides the perfect storm to launch their Direct-to-Trade marketplace. (March remember!)
For some background in alcohol sales, December is the busiest month of the year with a steep drop off in sales following, January being the quietest. It is a cycle that affects everyone in the industry and the dip in sales is in no way isolated to DW8.
In the latest company update for January, DW8 reported a 747% MoM increase in wine cases shipped vs last year. This set January 2021 (the quietest sales period for this year) up as the 2nd most successful month in the history of the company. This left DW8 feeling like the old Z1P, in that a positive market announcement somehow resulted in a falling sp. I believe this dip happened for 2 reasons. Firstly, people misinterpreted the fall in sales as poor growth. Secondly, people are cashing out now to take profits during the lower sales period, and will enter again later at a lower price point before the sales begin to spike up. Likely prior to the release of the new marketplace.
Just before posting this, DW8 released an announcement stating they have successfully partnered with Vivino, the world’s largest mobile wine app and online wine marketplace.
Today's Announcement
Vivino had $265M USD wine sales flow through their system last year with 50M+ users. They also operate in 17 countries.This is MASSIVE. It was outlined as one of the major focuses for the new marketplace during their AGM meeting last october. They also intend to partner with Ebay and Amazon in the near future, if they pull that off, hello moon!
There’s a lot of cake out of there and DW8 wants a slice.
TL;DR
This is a fast growing company with proven management, at a currently undervalued sp, set to moon in March and never come down. Get in while you can so you can finally buy a lambo or feed your kids for once.
If it matters, I hold 36,038 units at 0.055.Was hoping to get another parcel of $1k this morning at 0.44 but that announcement popped. Will likely still dip in again anyway, any price right now is undervalued from what they will be. Only up from here in the long run.
that’s a wallstreetsbets reddit if I have ever seen one.
(20min delay)