fundamentals of obj

Investopedia provides the following basic definition:

"Definition of 'Fundamentals'


The qualitative and quantitative information that contributes to the economic well-being and the subsequent financial valuation of a company, security or currency. Analysts and investors analyze these fundamentals to develop an estimate as to whether the underlying asset is considered a worthwhile investment.

For businesses, information such as revenue, earnings, assets, liabilities and growth are considered some of the fundamentals."

There have been plenty of posts about OBJ that have stated that holders are happy with the "fundamentals". However, as a holder, for me, this a one area of concern.

The current MC of $130 million clearly does not reflect the fundamentals of a company with no revenue (apart from "minimal" supplied for P&G for R&D), no profit, no tangible assets (except for $4.5 million in the bank), and no historical growth data.

Clearly the MC is based on "expectations" and "potential" but not "fundamentals". Even then, I question the current valuation based on "potential" given the official information to hand. Whilst there has been much speculation about the one product that we hope will be released soon by P&G, we have no idea what that product is, how many units it is likely to sell or how much revenue it will generate for P&G or OBJ, despite the constant dot-joining on HC. It might be a spectacular success, or it might be a dud. We simply do not know. What is clear is that the current MC has already factored in substantial sales and subsequent revenues for OBJ, if and when they eventuate.

Futhermore, I'm afraid that the non-deal roadshow provided little more information for potential sophisticated investors to get excited about. I agree with those posters on here who have stated that the information provided to diego10's broker is market sensitive and should therefore be released by the company for public consumption. For example,

"Jeff said that P and G counted their revenues in blocks of $100m and all 8 products were in the 10-20 block size (ie. $1-2 billion revenue range!)"

If a company has knowledge that such significant information exists, then the market should be informed. No "ifs" or "buts", the rules are very clear. So, how do we interpret the above statement? Is the company withholding vital information from its shareholders and the market? Is the broker "embellishing" the real content of the conversation (to put it politely)? Either way, if the statement is true, and it transpires that the company had withheld crucial market sensitive projections, then those people who have sold their shares recently would have reasonable grounds for crying "foul". Incidentally, those figures above (if confirmed true) do justify the current MC - in fact, it makes the current SP look very cheap.

However, since there are only 26 "Billion dollar Brands" held by P&G, it is highly unlikely (read "impossible") that 8 individual products would be capable of creating the revenue stated above. I doubt very much that P&G has even a single "product" that is capable of producing revenue even approaching $1 billion. It has been said before, do not confuse "products" with "brands" - the distinction can significantly alter calculations of potential revenues.

The other thing that keeps returning to my mind is why the directors sold their shares. It does not matter what spin is put on this event; whether they have more or less shares at the end of their allocation, whether they did it for tax reasons, whether they deserved a bit of extra income, whether they wanted to party, etc, etc.....the fact still remains that they offloaded a significant number of "potentially" valuable shares. If they were aware of an event that was to happen in the near future (like a product launch) then why sell shares that could be worth many times their value in a few weeks/months? I would love to have such a tax "problem"! Posters on here constantly (disparagingly) call sellers "traders", "weak hands", "manipulators", or even worse, but the directors were forgiven their opportunism.

At the end of the day we all buy, sell or hold our shares in any company for our own reasons. Logic, emotion and greed all enter the equation. TA and FA are commonly used tools. My argument here is that the present fundamentals of OBJ do not justify the current MC.

This is in no way investment advice and is just the rambling opinions of an "old" hand in the interest of presenting a balanced perspective.