The risk of I/E bank closure is mostly priced in now. Nearly $10 billion already taken off the market cap due assumption that I/E bank will be shut down. Very little downside left. Plenty of upside. Especially since most of Congress wants to re-authortize I/E bank. Tea party holdouts will be overun by lobbyists with wads of corporate cash in hand. Bank on that.
Sentiment: Strong Buy
His credibility will be legendary and his reputation stamped forever high among the gods.
However, if Matt is proven wrong, it will be a long road to recover any credibility.
The dichotomy couldn't be more clear and treacherous. What an amazing gamble on his part. He is currently sticking to his guns, so I have to root for him. The underdog. Poor fella.
"Is it not a great gamble for any analyst?"
No. Not when they are all together in a herd, like buffalo. Safety in numbers. That's how the street works for the most part. If they are all wrong, then no one individual can be wrong. Safety in numbers. That's why you see mostly all buy recs or mostly all sec recs on any given stock. It's never a normal bell distribution.
"...Analysts know nothing. They have now way of really knowing what ships."
Matt Margolis is an analyst. Does that mean he knows nothing too?
2014 Expectations – Full Year Ending December 31, 2014:
1) Non-GAAP revenues are expected to be between $155.0 million and $161.5 million.
2) Non-GAAP gross margin is expected to be approximately 67%.
3) Adjusted EBITDA is expected to range from $5.0 million to $6.7 million.
4) Cash at year-end will be $34.5 million
5) Fully diluted share count grows to 92.7 million shares
At the current share price of $4.00, this stock is currently valued at 55 times the upper range of expected FY'14 adjusted EBITDA. That is to say, 55 x $6.7 million, or $368 million. This is outrageous! Even if you factor in the $34.5 million cash on the balance sheet, this stock is still trading at 50 times FY'14 adjusted EBITDA. Who in their right mind would pay 50x adjusted EBITDA for any company? This is ridiculous. In this market, nobody even pays 50x EPS, let alone 50x adjusted EBITDA. And I was being generous by using management's high-end estimate for FY'14 adjusted EBITDA. If you use their low-end estimate, you get a current valuation of 74 times adjusted EBITDA.
To bring this stock into the range of reality, the valuation would have to come down to something like 20-25x forward adjusted EBITDA. And I'll even be generous and use management's high-end EBITDA estimate, and add their cash on top of that! The result is alarming:
Assuming 20x adjusted FY'14 EBITDA:
20 x $6.7 million + $34.5 million cash = $168.5 million market cap / 92.7mil fully diluted shares =
Assuming 25x adjusted FY'14 EBITDA:
25 x $6.7 million + $34.5 million cash = $202 million market cap / 92.7 mil fully diluted shares =
Avg target price = $2.00/share
Stocks generally don't crash 15% on a hold recommendation w/ a maintain PT. I think the street is reading between the lines, and interpretting the same way Karen Finnerman is. The street sees this as a tip that was generated from the horse's mouth. That's why the big crash today, I think.
Don't forget, Matt is not plugged into management like the mainline Wall St analysts are. He is not on line at the feeding trough, so he has to rely on gumshoe tactics. Usually it's better to just have straight access to the horse's mouth. It may not be fair, but that's Wall St. And btw, nobody can sue and win, because the analysts "predicted" this in plenty of time. Everyone had a chance to sell above $17, even after the analysts warned.
This is very positive news. Stock should be above $.30 right now. And then when TekFit sales numbers are confirmed, stock could hit $1.00 or more by mid 2015. This is the news we have been waiting for for years. It will be interesting to see how long it takes for the street to pick up on it. Those who have been following this stock for years get the early worm and know what this means.
That means the selling intensity is totally overpowering the buyers, and the true floor is lot lower than here. Be careful.
Yeah, it's Matt's rumours against all of Wall Street's rumors. Take your pick. Just remember who is plugged into management and who is not.
I will give him that, regardless of how this turns out.
Feel sorry for anyone who bought based on a YouTube video. This seems like another Himax P&D job. Round trip started just when all the good news was finally released. Google glass/Saphire Glass. These PTT snake oil merchants will latch on to anything new and shiny and take it for a ride all the way back to 1st Street.
Looks like the $0.20 support level is finally cracking. With a little more patience, I think we'll all be able to buy closer to the price where the insiders greedily stole a majority of shares, which was $.09. Unless of course the insiders start buying shares right here in the open market. But that's not going to happen. Why would they pay up by 100% when they just stole half the company for $.09 less than a year ago? Best to just sit tight and be patient. Let the stock come to you and buy in on the ground floor next to the insiders. Around .09 or .10. Maybe .12 if you're feeling generous. Seriously. No rush to buy here. There is no catalyst. No guidance in regard to Tek-Fit. Even a series of road shows couldn't keep the stock from collapsing. No reason to think it will gain strength on its own now. Although, If they announce a major deal for Tek-Fit with a large brand, that would be a buy signal. But that could take years. Lonnie has been kicking that can down the road for the past 5 years and more. I'm not holding my breath.
Wasn't being sarcastic. If the Saphire is currently a low-volume premium option test, that would explain the low demand from Apple this quarter, and thus the downgrades. Yes?
All these so-called victims deserved what happened to them if they never learned how to operate a motor vehicle safely in the first place. You know, before fuel injection was invented, cars would stall all the time on the road. Nobody was suing automakers for billions of dollars because their cars stalled. That's why the Cobalt ignition was never recalled. Stalling had always been an inconvenience issue. Now it has become a safety issue because Americans have become so pampered and dumbed down that they don't even have the basic knowledge of how to restart a stalled motor. This reminds me of that McDonald's lawsuit, where the woman sued for millions of dollars because her coffee was too hot. Give me a break. If you don't know how to use a product safely, then don't use it at all. Here's a clue: If your car stalls while driving, put the gear in neutral and start the engine. Takes 3 seconds. Duh......
GM should not be responsible for driver incompetence and/or illegal behaviour. If drivers can't maintain control of their vehicle while DWI, that is entirely their fault. Funny how 99.9% of Cobalt owners have no problem operating their vehicle safely, and most don't even bother wasting their time getting the ignition switch replaced. Maybe it's because they aren't drunk and speeding half the time?
It's good to see some insider buying at this level, but it's not enough. Need to see at least $100,000 purchases to attract serious interest. Also, the longer time it goes without news of a TekFit deal, the greater the chance that no deal will ever come. I think some investors have already given up and have tired of the hype, and they're not coming back. Still could go to $0.50, but not over $1.00 without news of TekFit. Don't forget, there are 95 milliion fully diluted shares now. Going to $1.00 now would be like going to $4.00 in the past.