Summarizing my very long-winded post.
- The Company's Base case of $100 million ARR by June 2021 would suggest a stock price of approx $1.50 by June 2021.
- The Downside case , where we looked at a slower growth rate and a forced sale of the company suggests 45 cents by June 2020 . A slow growth rate but better market sentiment (10 x EV/ARR) would suggest a stock price of 65 cents by June 2020). So call the "slow growth" scenario 45-65 cent range.
- Reversing the valuation process and asking what growth rate is priced in the current valuation ....we observe that the market is currently pricing in zero growth (at EV/ARR of 6x)......and even if we price the stock at a distressed EV/ARR of 4.5 by June 2020, then that is assuming the company can only add $1.3 m ARR per quarter. Thus we conclude that at this price, the market valuation is expecting the company to grow at less than 1.3m ARR and then be sold for 4.5 x Annualized Revenues.
Value buyers at 30 cents are expecting either something better than $1.3 million quarterly growth in ARR, or a better take out price than 4.5x ARR.
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