The market is discounting based on past returns on cashExro has spent millions to get to where it is today.
Much of these expenditures were infrastructure investments that had absolutely no expectation of generating immediate returns at the time.
They were long-term investments .
The world class facility in Calgary wasn't cheap.
The result of these expenditures is that Exro has a distinctly negative return on both capital and assets.
The market is discounting the new cash as if to expect more of the same
There isn't going to be more of the same.
The capital-intensive heavy lifting has been done.
Exro is now in a position to allocate funds as it begins to report significant revenue gains.
The market will associate the company's use of cash with tangible Increases in revenue and cash flow improvements.
The market will stop thinking of the cash on hand as being dilutive.
Exro's price-to-book multiple will expand a few points.
An expansion of 4 points in the price/book would put the stock in New highs territory at $3.14.