Given the share price is only dictated by the last trade made, the market price is not a suitable mechanism for valuing RAP in a takeover scenario. Furthermore, the premium is something more suitable for an established business, not a speculative play beginning to commercialize. Net Present Value and Discounted Cashflow valuation methods are also unapplicable as future revenue is far too unpredictable - Note, if RAP continues at 44% quarter on quarter growth, a DCF valuation would value the company at multiple billions.
The only fair way to value the company, and in fact, the only way that the deal actually goes ahead is to calculate at what offer price gets 75% of the shareholder base to approve the offer. What everyone's acceptance price is, is determined by a mixture of modeling, guesses, and perceptions.
In order for Pfizer to 'discover' the optimal offer price, they need to first pitch the offer. Pfizer needs to apply a standard premium to signal its seriousness. They do not want to actually aim for what they believe an acceptance price is, as doing this would re-rate shareholders' expectations. This then opens up the opportunity to commence the price discovery stage via phone surveys. I would encourage everyone that gets the call to give an honest price. Being too greedy may sink the deal, being too skimp will cost us. I believe that the share price would be controlled, as a surging share price would increase perceptions of the company as well.
Once the acceptance price of the 75th percentile is calculated, Pfizer will reassess. If our perceptions are higher than Pfizer are willing to pay, it will either sink the deal or perhaps force Pfizer to pursue a partnership. If the price that achieves 75% is lower than what Pfizer is willing to pay, then the offer price increases to this. Anything lower and the deal sinks,and anything higher they are overpaying.
I believe
@TerribleTadpole 's planned communication is unlikely to stop the deal, but it will improve perception and sentiment and push the offer price higher.
What this means- Buy more RAP. I think that the share price won't move until the revised offer, but the revised offer should be anywhere from 30c to $1
- Be honest if receiving a call and be realistically bullish
- Support Terrible Tadpoles communications
