Can you please explain how you came to the conclusion that earnings will be straight from hell?
What cracks are you referring to?
You said that REED has no intrinsic value - how so?
REED did $25m in RGB & Virgil branded sales in 2012. The private label was $5m revenue.
In 2013 they will do $30m in branded sales and $5m in K sales. I will ignore the Private label sales in coming up with a valuation for the company. At 2x sales for branded and 3x sales for K sales - the value for the company comes to $70m - about where the market is valuing the company.
Yes, bottom line has been a disaster for the previous two quarters - but that does not take away a fair value of $70m. Q1 2013 post revenue number release the stock popped from $4 to $5.5 even though they posted a 3c loss. So the market is valuing this company at $70m (after 2 quarters of losses) - which is fair value for what the company would get for 2x branded and 3x K 2013 sales.
So elaborate on 1. earnings from hell, 2. Cracks in the story and 3. No intrinsic value. Thank you.