RICK's intrinsic value; Wall Street's dirty little secret
Wall Street sells retail investors on growth stories in near worthless equities, while the Street looks at something else when they invest: "intrinsic value". As someone said:
"By 'intrinsic value' I’m referring to the worth of a business if it were to cease operating, with buyers offered the chance to purchase all or part of its assets. In barest terms, if you were to turn off the lights, is the company worth anything? "
No, it's worth about zero to negative when they close up every night.
"The processes to run the clubs;"- Nothing proprietary about it. Many clubs do the same thing with security cameras. Look at all the clubs in Las Vegas that run fine; RICK closed in Vegas, right?
"brand equity in the name;" - new clubs have "Vivid;" so Rick's may be showing some brand age and weakness - like it's for dirty old men..
"the cost of setting up the corporate structure;" - A NASDAQ listing is about $50,000; finding talented managers and employees might be difficult, but how many star managers does RICK have after the CEO. The CEO has a lot of experience and an employment contract, for sure, so that's an asset - but is he worth $700,000, planes, family cars, and stock options annually?
"the real estate deals;" - about half encumbered with debt per CC, right?. NY W. 33rd deal extended and questionable now - where's that $18M financing? - some dealmaking.
""the loyalty of the dancers" --- Something like 1700+ dancers bringing hybrid collective/class action in NY - some loyalty.
So let's add it up:
CEO has management experience - granted; CEO's decision making, such as overpaying on deals - questionable; Other RICK personnel and management depth - questionable.
Real estate - about $40M equity maybe, based on CC figures.
Goodwill on the balance sheet - questionable; could be impaired?
Liabilities: Debt/Some serious lawsuits.
Grand Total: Strip out the goodwill and it's pretty much -0-. There's your "intrinsic value."