RE: NRI - Price & TheoriesHere is my thought on what is happening to the sp:
NRI has a lot of retail shareholders and the market crash up to March 2009 is the reminder that small caps can be devastated first and most severely when the general market crashes, and many are thinking that the market will crash once again.
This stock is not widely followed with only one or two analyst following. But that should change once sales start because there is no better advertisement than a good quarter.
Because there are so many retailers who have become somewhat sophisticated trading on low commissions and flat rates, it is very easy to trade for one or two pennies and make money. But imo, traders very seldom make good money long-term. That is why it is so hard to find more than one handful of rich traders.
imo, the price drop since approval is NOT the result of Shorters. Even if a brokerage had in its inventory millions of shares, most brokers would be very unlikely to lend out these penny stocks to anyone, or if they do, it would only be a small percentage of the overall holdings because lending out penny stocks is very risky for them. We have to wait for the short report to find out the short volume. Instead the price drop is the result of profit taking because there were millions of shares accumulated from $0.08 to the present.
But things are changing now. The last two trading days traded about 45 million shares which i believe to be LONG. This represents over 10% of the fully diluted share count.
As for valuations, some might use Book Value (NAVPS) as stated in some earlier posts, but this makes no sense to me at all. A company is worth what it makes and a multiple of this, not NAVPS. Doesn't the book value depend on accounting systems etc. If another company were to buy Nuvo, it will be based on a multiple of revenues because that is what they are buying, revenues. Let's say that a company sells $100 MM and has 50% doctors on side versus another company that sells $100 MM but only has 10% doctors on side... Which company is worth more? i'd say that the company that makes the $100 MM with 50% doctors on side is worth much much more because with the proper marketing plan, the market share will go up and the company will make even more money. So this company is worth a multiple of revenues and this is much better than using book value. Then, add to that, other assets and other drugs in the pipeline as well as the cash on hand to come up with a fair value. All imo.
Maybe Nuvo does not hype anything. At least i have not read any hype. But mark my words, in the very near future, we will hear about Pennsaid Plus, WF10, and increasing sales by Paladin and also from Greece, and when the first commercials come out on CNN and MSNBC, a lot of Americans will be looking at who makes this product and the rally will continue, imo.
For me only, and not investment advice, i am LONG. It will be very nice to hear the old timer longs complaining about the price at only $1.00 in 3 to 4 quarters.