SUPER SPEC chasingA multi Billion market... (Data Center Mining more or less)
Was just reflecting for a moment and trying to come up with a few questions and scenarios that would or could be likely outcome over the next 6-12 months.
I am just an investor and like trying to find companies that have a chance to generate multi Bagger returns.
Hopefully some of the loyal posters here (bull or bear) could help piece something together that might be realistic in terms of short term (6-12 mos) and longer term (1-3 years) potential results for the company. (Sales projections and customer base?)
So what we know is the only real short term play has turned into securing data center cable sales, as the other sectors VR-AR-Muxed reality aren’t going to keep the company afloat. Eventually the market will materialize for thes sectors, but not right now, agreed?
So what do we know about the Data Center Cable market as it relates to Spectra and their offering?
1. The market opportunity is oversized and their cable and proprietary chip line offers several features and benefits that have not existed prior to their technology. I think everyone here could agree and are familiar with their technology as it relates to the manufacturers and end users of the product.
2. They are still going through some sort of a sampling phase of their product and anticipate going to full production sometime on 4Q this year as we are told.
3. Product margins are north of 55% gross profit and since they are not manufacturing the products in house they have much lower capital requirements to fulfill orders once they start rolling in.
4. The company continues to raise additional funds for operating the company which in turn dilutes all of the shareholders. I guess the fact they can continue to raise the funds has to be a positive indicator. I believe on one of their previous funding efforts they retired a note that was secured by the patents on their products. I also believe the company has no significant long term debt, but not sure?
5. While only focusing on the data center market opportunity at this moment, what are or could be some reasonable expectations for sales in 4Q and maybe the Q1 & Q2 of 2019?
I have seen some numbers on this board of revenue per cable of $15-20 per each cable, I guess the length of the cable would affect the pricing to some degree.
So if I understand this correctly on a $15 cable sales the company would gross about $8.25 per data center cable .
From the press releases of the company it appears the Asian market is or may be the first to adopt the technology. So I guess for this exercise we could come up with say a mid size customer or 2 that might place a first production order in 4Q.
Since we have no factual information we can only speculate what the company might look like after 1 or 2 production orders from mid to say larger tier company wanting to outfit their new or existing data centers with Spectra cables.
This is wher I would like to hand off the baton to anyone interested in trying to help come up with some idea of potential number of cables required to supply 2 decent sized operations with their ACC Cables and chips?
Then maybe Q1 2019 possibly securing production orders for 3-4 mid to large tier Data Center customers.
Then we could compare the revenue model against their quarterly burn rate to see if we might be getting close to break even or cash flow positive. At this point I think any other sales from the Head set market would be a bonus.
It appears the whole ball game is riding on the cable sales in any meaningful way and return on time and money invested!
In closing, I very seldom post and have been invested for about 3 years now and never have any factual information to provide.
As I am sure like most of you here, this company has a very compelling story and technology to support the possibility of future gains. It’s been super super frustrating and disappointing as the head set market was premature and couldn’t support the company on its own.
Thanks for the contributions here and looking forward to building a short and mid term model with everyone for our use!