Yes this is a real problem when talking to new investors. People look at how much the SP has risen and think that it must have overshot its true value and/or nothing can be this good. There are two major problems with this thinking.
1) The SP rise only looks so massive because it started from such a ridiculously low base. Even with the old NPP program the MC of RAC should never had gone below $50 million looking other ASX comparables. Given there were only 70 million shares on issue when I bought in, the SP should never have gone below 70c. Given this, the SP rise looks a lot more moderate.
2) RAC is a completely different company now than it was 18 months ago. The IP is different, the strategy is different, the management is different, the board is different, the shareholders are different. The only thing in common with the old RAC is the name and ticker - even the logo is different.
If you want to accurately value the new RAC you need to do it independently of what has happened with the old RAC. Look at it as if it IPOed on Monday and do your own valuation on the basis of what you know today.
RAC Price at posting:
$2.01 Sentiment: Buy Disclosure: Held
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