Some you lose, some you win, some you sell quickly to get into...

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beefarmer

17,638 Posts.

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31/03/18

19:47

Post #: 32153620
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Originally posted by 1ronnie ↑

On 8/3/18 I warned about stocks that have issued ‘over the top’ performance shares to management that contributed to significant share based expenses which were unwarranted relative to their financial performance.
https://hotcopper.com.au/threads/tech-stocks-compared-update.4062250/page-15?post_id=31632700#.Wr8cKE8UnIU

I did not at the time track this tech market darling MyFiziq (MYQ).

On 28/2/18, it reported a half yearly revenue results of $1.7m and a loss of $11.73m. It was trading at 81c at the time (after having fallen from a high of $1.65). Its revenues were quite decent (not great) in the microcap space but how did it result in such a great disproportionate loss? Well, if people care enough to look at the financial statements, of the $14m expenses, $11.75m relates to share based remuneration expenses!! So the entire loss was contributed by issuance of 30 m performance shares representing 38% of the 79m share base prior to its issuance.

MYQ was subsequently suspended and were required to answer and clarify ASX queries and upon release of suspension or reinstatement, its sp fell to 46c!

Punters were led to believe in this story in its strong run up from 20c in mid Nov 17 to its mid Jan 18 high of $1.65 , a 8x bagger. At its height, the mcap of MYQ was $180m and a Mcap/revenue ratio of 53x with a huge loss as stated above – it was always going to be unsustainable – and almost always, when the real truth is out with greater clarity (imposed by ASX queries) on its actual potential , you will see the hype squashed very quickly.

That’s why I said you don’t want to wait for that moment to arrive.

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Some you lose, some you win, some you sell quickly to get into others with the hope of recouping your losses. Good luck to those holders who believe the story after this weeks revelations.
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