Is it still too early in their history to invest?
What would you need to see from the company in order to be comfortable investing?
What would be an approximate price where you would consider investing?
Thanks!!
At only $240M market cap, and down 72% this year alone, risks remain extreme here. It has bounced slightly off its lows, but that is not unusual for beaten-up small caps. Tax loss year end selling could still be substantial. We have to look at financials here: while sales are expected to grow, right now they are minimal. It had $240M cash as of June 30, but cash flow remains very highly negative. It will need more capital soon. Losses are expected to continue for several more years. The sector has weakend and the company badly missed estimates last quarter. We think it is far too early and far too risky to invest. We would need to see an improvement in cash flow. Until cash flow turns positive, the company is likely to continue to either keep issuing new shares or adding debt, none of which are appealing to us. We don't want to set a buy price. IF fundamentals improve, the stock will be higher. But we would be fine paying 'more' if the total risks have been reduced. If we were to set a lower buy price at, say, $0.90, it is possible that nothing changes except cost of capital worsens for the company, making it even riskier in such a scenario.