Hi @Just_a_guy You highlighted AD8 on another thread. I had a...

Hi @Just_a_guy

You highlighted AD8 on another thread. I had a quick look, but decided it was not my sort of thing. Two main reasons:

1. I struggle with the technology, what it does, and why I or anyone else needs it. Eg, I read the RH white paper from 2015, and while it made some interesting comments, I still didn't really "get" it. I understand that some people do want it, and are paying up, but didn't really understand who else would need it.

2. the valuation seems really high (maybe AD8 deserves a high valuation - but when like me you don't get the story/product - it is hard to justify paying up). In particular, I started with AD8's forecasts for 2018 (per page 21 of the May 2018 presentation). Even if I take AD8's forecast for 2018 and miraculously assume they somehow doubled revenues, with no increase in opex, I'd get an EBITDA of ~$13m. (I.e double current revenues of $18.5m = $37m, implying a gross margin of ~$28m at current gross margins, less ~$15m of opex gives EBITDA of ~$13m.) But I think the market cap is already ~$220m. Leaving aside the cash on hand (which is probably need to fund ongoing operations for a bit yet - and might not be enough even for that), that implies an EV/EBITDA multiple of something like 17x even if they could quickly achieve a doubling of revenues with no extra opex. Given the forecast rate of growth in market size (the AD8 presentation suggest market growth of 5% CAGR; page 6), and that opex has been increasing annually to achieve the growth that has been achieved, those assumptions all seems too aggressive for me.

I've added AD8 to my watchlist, just to keep watching for interest. Thanks again @Just_a_guy for the suggestion - always really good to look at new opportunities.

Finally, I wish AD8 holders all the best luck with their investment. AD8 sounds like a great home-grown story and I hope it succeeds.