@Spekul8, it seems like you are telling people to sell Nearmap because in comparison to an oil & gas explorer or a retail company, you illude that the Nearmap share price has risen due to "sheer luck" and that at any second it will tumble back down so we should all take our profits?
Well, it is good that you have alerted us by raising various points from an interesting perspective.
In fact, your perspectives have made me ask myself 2 questions, that is:
1) Do I
CARE about the current Nearmap ebitda since I fully understand that they have made the brave decision to sacrifice all their profits from AUS in pursuit of a USA market that is 10x larger?
2) In comparison to other major companies in the Australian Technology Sector, is the current Nearmap share price at an unjustifiable level?
In answering question 1, I'm glad to say that the obvious answer is a firm,
NO !That is, I don't care if Nearmap's ebitda in 2018 is $4.66m or if it is ZERO, I'll still hold onto all of my Nearmap shares. Why ? As in my previous posts, the truthful answer is,
GROWTH !
I'm holding NEA because I'm happy with the recent 42%
GROWTH in group portfolio value.
I'm holding NEA because I'm happy with the recent 37%
GROWTH in customer subscribers.
I'm holding NEA because I'm happy with the recent 42%
GROWTH in existing customer upsell.
I'm holding NEA because I'm happy with the recent 117%
GROWTH in the Sales Team Contribution Ratio...
BUT MOST OF ALL, I'm
VERY happy with the
GROWTH of Nearmap's US portfolio increasing by
6 folds in the last 2 years !
And in answering question 2, I will use 5 of the
WAAAX stocks in the Australian Technology Sector to illustrate an approximate price projection for Nearmap and also determine if the current share price is unjustifiable.
Since we are currently in Nearmap's growth phase, as mentioned before, I
don'tcare about the ebitda, so I will focus my comparisons using revenues instead.
Now, the Price-sales ratio (P/S) of a company is calculated by its Market Cap / its Revenue.
WiseTech's P/S = $7.284 Billion / $221.6 Million = 32.87
AfterPay's P/S = $6.018 Billion / $142.3 Million = 42.29
Appen's P/S = $2.965 Billion / $250 Million = 11.86
Altium's P/S = $4.266 Billion / $195.65 Million = 21.80
Xero's P/S = $7.337 Billion / $383.81 Million = 19.12
In comparison, Nearmap's P/S = $1.44 Billion / $53.6 Million = 26.87
As shown above, Nearmap has a Price-sale ratio roughly in the middle of all of the WAAAX stocks. So from a pure revenue perspective, its price is actually better value in comparison to both WiseTech & Afterpay, although Nearmap is slightly more expensive than Appen, Altium, & Xero.
So despite the recent stellar rise in Nearmap's share price, in comparison to the other WAAAX peers, NEA's current share price is actually
NOT the most expensive in the technology sector.
In fact, if Nearmap was to trade at either WiseTech or Afterpay's P/S ratios then Nearmap's current share price of $3.23 should be around
$3.95 or
$5.08 !
