doggydogworld -- IMO it's a value play despite high risk. A track bet at what look like attractive odds. Would I continue to hold my bet if "the market" offered to buy it back at twice today's share price? I'm not saying.
So what happens next at Metro One? Nobody knows, but here is a range of scenarios that seem convincing to me:
G. Gloomy Scenario
Assume that they eat all the cash and keel over dead, present value $0 per share. (Flavor of the month for the analysts, fwiw.)
M. Medium Scenario
Take the present working capital, $3.60 per share, as a value estimate. (Company has no debt.)
H. Happy Scenario
Assume that the company reverts to its three-year trailing owner earnings (roughly $0.60 per share). Using a risk-free discount rate of 6.5%, that's $10 per share present value of owner earnings, plus $2 cash = $12 per share.
The probabilities are anybody's guess. Not knowing any better, for my own purposes I guessed 1/3 probability of each scenario: ($0+$12+$3)/3 = $5 per share.
By the same math, the folks who sold today at $1.90/share seem to be betting that the probability of total collapse (to zero liquidation value) is about 75% [that is, ($12+$3)*12.5% ~ $1.90]. I'll take the other side of that bet.
I hasten to point out that I'm not an expert on Metro One's business. I don't know accurately what it's worth, but I can't arrive at today's prices by anything that looks (to me) like a balanced set of scenarios.
My only real "market" consideration is a vague feeling that there seem to be some naive shorts out there since the bursting of the Great Bubble. Short interest is 1/3 of MTON's float ....
Of course Prez, you realize that VSH was not my original idea...I copied offa someone else on this board, like I always do. FDC is B's long time pick. I've never had an original idea in my life......and proud of it! :)
<<I did apologize very explicitly to MarknMT for using two aliases. Again, sorry if you missed it.
I am very explicitly *not* apologizing for Ben and Prez's little circus of disapproval following my correction of Ben's incorrect post.
I don't care either to change my alias again (I thought that was supposed to be the WRONG thing to do ...), or to apologize at this late date for Ben's brief mistake in losing his temper and posting a couple of abusive and misleading messages three weeks ago. Ben is presumably an adult and doesn't need me to take responsibility for his behavior. Right?>>
I understand that you guys need to blame someone outside your peer group and that I'm the goat this time. Just have the balls to do that without asking for my help, ok? >>
You'll probably find that you'll eventually need to "Like" at least one of these guys in order to eventually survive and be taken seriously here. These guys are on the board of directors fer God Sake.
hehe, Or.......look at it this way, you can secretly hate their guts and pretend to like them while all the time making copious amounts of money on their smart picks.....then again ya hafta like guys that make ya rich, don't ya? Ifin you stick around here long enough and learn from guys like these, you'll get rich, and then Walla!! you'll like them and never question or disagree with anything any of them have to say, ever. See how easy that is!