Thanks qqqq for the vote of confidence. Even if there are a few who read through with an open mind, than that's good enough for me. Unfortunately like you said 90% (or whatever it is) don't last and for aforementioned reasons. As you mentioned in a later post with your 'facebook' comparison, you're right there are 90% of the people who are waiting for a $1 and won't let go of a single share. Behavioural finance is an interesting area, I bet you the majority of those will cave out somewhere along the line (either on an erratic up or down in the share price). Everyone wants to hold out at $1, and sell out , then buy back in at the bottom price, but it just isn't possible.
With all due respect i see billion dollar market caps being thrown around, $1,share prices, $2, where do people get these from? It worries me when mums and dads, tradies, the plumber, the guy working in the corner shop suddenly proclaims we have a billion dollar tech stock in the making. I'm not putting down anyone from a non-finance background, but this is similar to me walking onto a building site, I'm not going to understand the briks and mortars and every nut and bolt that goes into a house, and most people don't but they go through their PCI, construction stages eyeballing things, without ever using a qualified building inspector (save money) and never realise the structural issues (BCA non compliance etc). Anyway without going off topic - how are people proclaiming billion dollar market caps?
We have NST, overvalued arguably at current prices (last i checked) but producing hundreds of thousands of oz of gold, profitably, at the magic billion dollar cap. Multiple mines, huge potential in the future for further resource growth. We have Xero (XRO) which also bubbled at one stage (i sold out early into the bubble, so i didn't read this well in hindsight) - similarly there were figures being thrown all ove rthe place. The 'potential' of a north america audience, the figures were inconceivably infinite, same as some are stating about XPE's chips.
Unfortunately things aren't as simple as telink produces 2 billion chips x $0.05 royalty - we should be wort a billion dollars.
Things go wrong along the way. And penetration doesn't alway eventuate (have a look at where xero is now). A company can do great, but you won't if you pay through the roof for outlandish potential 'premiums'. Technology is a hot spot - what if others don't take up XPE's platform as an universal language? You don't think other companies will want in on their own platforms, or some tech wiz's from MIT, Taiwan, or somewhere else are racing to develop some other competing technology? People copy and innovate technology all the time, it's happened from the mobile phone through to anything out there. It's a cut -throat place, and as Peter Lynch says one reason why he stays out of the hottest industries. Because someone is always scrambling to better it.
So keeping that in mind I just wanted to deflate some expectation bubbles. If things always went that rosy/great then this would be easier to make money than taking candy from a baby. I'd argue that no one can proclaim they won't sell to $1 - you have no idea what the future holds, and I'd argue buy and blindly hold doesn't work in this fast paced global environment.
Regarding the options - people are getting confused. No one is saying XPE needs to doa CR now, it was a comparison on the value differential you're getting. THink of it this way, if 1 billion options are exercised at 1.5c, your sharing your future profits and capital growth amongst 1.5 billion MORE equity holders, and at a cost of 1.5c to them . SHOULD the company have had to do a CR or raise moey at a higher cost down the road, you'd be sharing profits amongst those new holders at say 7c.
I am also aware that options are issued retrospectively (obviously) - and at the time they would have been reasonable. I am just merely stating how it's not that great of a thing IMHO to be having options converted at 1.5c when the share price is multiples of that. Everyone seems so happy to dilute their equity to holders getting it for a pittance under the reason that it's already issued - done and dusted, so it doesn't hurt. I just can't see the logic. Given the company doesn't need cash, we'd be far better off if those option holders 'forgot' to exercise the options. Happy otherwise for the 'long term' holders to explain how having more equity to divvy up their future gains is beneficial.
Expand
