Here's my quick analysis on the very short-term trends.
We've now reached a pivotal moment in the stock's short-term history, with the bears currently in control. Predictions of a drop below $1 have come true, and we're now trading at 97.5c. Several factors have contributed to this decline, including poor Q2 results, a shorting article, the recent capital raise, and the carry trade that occurred recently. Nonetheless, we are at 97.5c.
So, what’s next? In my opinion, tomorrow will be pivotal in determining whether the stock rebounds above $1 or dips below 90 cents. While U.S. futures are looking positive, they can change in the blink of an eye. It's worth noting that DRO tends to be unpredictable, despite a rebound in U.S. futures last night, we still saw a red finish today. In the morning, I’ll be checking how DRO performed on the Frankfurt Stock Exchange and under the U.S. listing (DRSHF).
Today was the first real test to understand where the market sees the bottom. We hit a low of 94.5c under relentless selling pressure, and if there was ever a day we might have dropped below 90c, it was today. However, this afternoon's buying activity suggests we could be nearing the bottom.
Starting around 12pm, the stock price began stabilising around 97c and made several attempts to break through $1. What stood out was the large influx of single orders between 90k and 150k, which helped prevent the stock from dropping below 96.5c for most of the day. This pattern suggests that potential buyers were likely watching the stock's performance in the morning and decided to step in during the afternoon as they saw some relative stability.
Looking at after-market trades, there are numerous buy orders between 50k and 100k, with some exceeding 100k, and the largest being 189k. This indicates that investors might be sensing we're near the bottom, or at a price (value) worth investing a relatively decent chunk in, especially considering the stock is now at a 15.22% discount from the capital raise price of $1.15. I acknowledge that some of these buy orders can also be day traders looking to make short term profits on swings.
So, what is fair value? Since the Q1 results shared in April, the company has experienced several developments:
- Completion of the NATO framework
- Securing an additional $7 million in revenue in Q2
- Pipeline growth of $500 billion
- $120 million capital raise for growing inventory (April)
- $120 million cap raise for R&D & Acquisitions (August)
It's clear that an SP of $2 is simply too high without substantial contracts to justify it.That said, is an SP of 97.5c fair value, considering its trading at the same level it was after the Q1 results, despite the progress made since then? That's a question each investor must answer for themselves. For example, Bell Potter seems to believe that $1.60 is fair value as of July 23, 2024.
(Click Here).The above is just my opinion, but as we know, opinions are just a fart in the wind.
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