Value of MP1

Nonholder, but I do not short stocks.

Hoping we can keep the discussion civil and understand a lot of people are hurting buying this equity. Was looking at buying this on the previous cycle but never got my head around valuations.

Pros
1. Although, I don't completely understand the business, AWS and data are probably the future

2. Price has come down a lot

3. They have 88 million cash with 21 million debt and a current ratio of 3.11. Debt is easily serviceable and I don't anticipate any cap raise.

4. Terms of financing are favorable.

5. Almost all brokers have a higher valuation (GS 13.1)

Cons

1. Still this is very expensive. Even after coming down this hard, still has P/S of 12 and EV/Revenue of 11. No wonder I never got around to the valuations.

2. Cash flow negative (However don't have to raise capital and the cash burn is 14.7 million a quarter : they have stated cash being adequate for 16 quarters but only taken the cash burn for operational activities neglecting cash burn from investing activities)

3. Macro is terrible for companies with no earnings but horrendous for cash flow negative companies. Plus we are in a tightening environment and Fed has not even begun to reduce the balance sheet.

4. Directors dumping shares and no one is still buying. That points more downside

5. Technicals are firmly pointing down

6. Potentially growth is slowing which could be both company specific and Macro

7. GS valuation they assign growth of 33% and a multiple of 20X and both could be widely off the mark.

I am looking at PS close to 6 or EV/revenue of 6X [Australian companies demand premium and I have no idea why but REA which is probably one of the best growth company, ( has earnings) in ASX has a PS of 12 which I think is overvalued].

I have to think there is significant amount of pain ahead.

Good luck to holders.