Per Sales forecast: Share price $ 1.50 ramping to $ 19.50 I apologize if some of my calculations are not accurate, I am trying my best with the information that is available.
The company has stated that in 2021 they will be cashflow positive. I verified their financial statements and the burn rate is $ 450,000 per quarter or, $ 1,800,000 per year. This company is a software company so the costs will remain in this range for years to come, which means higher sales go straight to the bottom line.
The company has set two goals:
(a) For year 2021 selling a total of 2,080 Mesh connectors
(b) For year 2022 selling a total of 13,500 Mesh connectors
Target market is 185,000 mesh connectors around the world.
The revenue will be RECURRING so it is a lucrative business model where you can build on it with other services as add ons.
Simple Math:
Total burn rate in 2021 of $ 1,800,000 DIVIDE BY 2,080 mesh connectors = $ 865 per mesh connector/year
We know two things: 2,080 comes from management and, at that rate they are cash flow positive.
So this means that each mesh connector brings in $ 72 per month or $ 865 per year.
In 2022, the company expects to sell 13,500 Mesh connectors.
This will bring in RECURRING REVENUE of $ 11,677,500 per year. If we remove cost of $ 1,800,000 which will be fixed, we arrive at a profit of $ 9,877,500 for the year.
With say 200 million shares, that amounts to 5 cents per share in earnings in 2022.
Software companies that have recurring income easily trade at multiples of 30 times earnings.
So this gives a stock price of $ 1.50/share (30 times * .05 cents per share earnings).
How big is this market?
It is 185,000 retailers * $ 865 per mesh connector giving Revenue of $ 160,025,000. Lets assume costs are higher by then at say $ 30 million per year and we have a profit of $ 130,025,000.
Divide that number $ 130,025,000 / 200 million shares = .65 cents per share earnings.
Take .65 cents per share eanings and times it by 30 times and you get a stock price of: $ 19.50 per share.
That is, if the company does not else.
Good Luck,
MPO