I thought we could get a bit away from the negativity and look at the fundamentals of what we have here.
Capital expenditure
P 14 of the investor presentation suggests that the company will break even at 30,000 users. At $60 per user per year that comes to a capital expenditure of $1,800,000 per year
http://www.asx.com.au/asxpdf/20160226/pdf/435d54yz0gmn1n.pdf
I'm inclined to agree with this given that we had a negative cashflow of 1.3 million in 2016 according to the annual report. Obviously when the product ramps up there are going to start spending more.
Annual report also says that we have 3.2 million left in the bank which should be enough to hold us through to commercialisation. I have tried to find comparable companies and how much they spend per year but haven't really found anything yet. Any help?
Revenue
Based on the end target of 400,000 users the revenue of that would give us a eps of about 3 cents per share. Given the type of tech that we have and if we get that many paying users it think it would be undervalued even at a P/E ratio of 30 making the share price 90 cents. This is a bit iffy given that we don't know what the revenue model is because they seem to change it a bit.
Cap raise
If the launch actually happens and the product is good, I would expect to see a cap raise to further develop the chip and to pay for marketing costs. Think of that company Airtasker (that I don't think is listed) and the amount of cash they would have to spend to get their name out there. This could clearly never happen on the small amount we have left in the bank. If we get to that who really gives a damn anyway but just remember if it works and is a viable app it will happen.
What's difficult about Wangle is that we have no idea of the direction that they are going and they keep missing deadlines. All of this will be forgotten if they launch but it's hand to make projections on uncertainty. I was reading one of the many company updates that suggests Wangle is going into Hong Kong where users pay 35% more for data than in Australia. What happened to that!
Anyway let's be cautiously optimistic and hope that when they raise we are sitting at a 100-200 mil market cap
