It's very simple. If we are talking about micro/small-cap stocks, the market NEVER goes with the logic. Because people sell on good news and buy on pure hype in Australia. When a company generates no income, make huge loss yet sells a lot of hope, that's when people buy. "$30 million cash, no debt and a profitable Aus operation" only shows this company is not going to run out of cash or announce silly CR at unexpected times. Just have a look NEA's past 5-years. The only time NEA peaked to ~70cents was when the company is doing very good PR under Simon Crowther's management. NEA has almost never had any debts since they started making profit in the Aus market. But the key is sentiment, my friend, sentiment is the sole thing that drives the SP. Aus business has been profitable for the past 3 years, this company never had any debt in the past 5 years. Whenever they announce really positive announcements such as:
1) signing a deal with ESRI
2) Hyper camera 2 technology
3) introduction of Paywall
These were gold yet as I mentioned earlier people sell on good news and buy when there is only good PR and hype. Frankly, I think SP should easily go over $1 if you only think with logic by looking at facts. When NEA announced Aus profit was records high at $30M, people started to panic and sell last year. Because some thought Aus business is very small and US business is not developing fast enough yet it was burning cash etc... It's really funny but that's how people think. Plus this is still a small-cap. When a big broker decides to sell, you can't do anything but to watch how the SP plunges. See what Credit Suisse did to this stock last year as an example.
Of course I would buy NEA again, if it goes down to 35-40c. The SP is based on my experience and observations with this stock. This is why I'm expecting it to drop further.
NEA Price at posting:
53.0¢ Sentiment: Sell Disclosure: Not Held
