TSXV:MCLD.H - Post by User
Post by
BCdudeon Aug 23, 2020 7:55pm
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Post# 31444047
Due Diligence
Due DiligenceI was pretty excited when I saw the share price had dropped below $2.50/share on Friday. Figured I would do some due diligence over the weekend and buy some shares on Monday. After looking deeper than the Q2 company press release, however, I was stunned to see the share dilution since January and with current cash burn rate they'll be no end in sight. It's almost as though the management has no idea about measured growth and no budgeting skills. One poster called them drunken sailors, which seems a decent analogy. I understand this industry is competitive and fast growth will be vital to ensure a fair piece of the pie. But I do worry the market will get so sick of dilution that it's shares will continue to sell off, and the much-promised listing on the Nasdaq may no longer be an option due to dropping below certain threshholds.
In any event, I'll continue to stay on the sidelines for now and wait to see if management can turn this cash-bleeding ship around.
For those who like this industry, but hate dilution, consider Kontrol Energy Corp (KNR). The management hates dilution, too, and has so far been succeeful at growing their business without resorting to much of it. Only 30 million shares outstanding (fully diluted), 44% inside ownership, and some major catalysts expected later this month with a large HVAC customer in Europe and postive results from lab tests for their new biocloud analyzer (fingers crossed). They've also been EBITDA positive, with a little more foresight on aquisitions rather than trying to buy everything in sight, like it seems mCloud has been doing.