GXY IS UNDERVALUED, page-75

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NewLogic

594 Posts.

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10/10/19

12:07

Post #: 40812745
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Originally posted by asb83: ↑

The problem with saying something is "undervalued" is that valuation is a moving object on a timeline. For example, people were saying GXY was "undervalued" at $2 last year. There's no way $2 is undervalued now. $2 would be deemed ridiculously expensive at the moment. The market is forward looking and the price of lithium is continuing to tank and shows no sign of abating any time soon. Most in the industry see the price of lithium being "soft" at best for the foreseeable future. So while you can argue that current valuation is "undervalued", in a few month's time current valuation of GXY may look expensive

Then you have to overlay this with the dynamics of the company itself. The company is splashing cash around like a lotto winner. Buying debt, buying into other companies at inflated prices, spending money on an asset (SDV) that for all intent purposes is pretty much worthless at the moment. Then they are selling spod at an insanely low price relative to its peers. So it either has a poor product and/or its offtake partners are struggling - take your pick.

The EV evolution is spluttering. There is no exponential growth. Growth is in an orderly fashion and the supply side has got the growth side covered. So there won't be any reversal in the price of lithium while this dynamic persists.

The next support line on the chart is around 84c and then 67c. 67c is around cash backing? It might be worth a punt around there. However, with GXY spending cash at a rate of knots, even that level may be risky.

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How can you claim 5m a qtr as spending at a rate of knots???

GXY Price at posting: 91.8¢ Sentiment: None Disclosure: Held
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0 Great analysis

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