PP vs Open MarketHey all, just crunching some numbers to get a grasp on the decision that investors will have infront of them if they so choose to support Pharmagap.
Here is a little bit of math.
My example below is if we fell to 13 cents (following the trend of the previous PP (5 cents below offering))
Let’s say someone wanted to buy 100,000 shares (therefore had $18,000)
PP (4 month hold)
1) One could buy 100,000 at an average cost of 18 cents, and have the warrants at 25 cents. By the time GAP reaches 25 cents, this is worth $25,000, plus you’ll gain $1,000 for each cent you move above 25 cents (warrants).
Or
Open Market
2) One could buy 138,000 ($18,000/.13) at an average cost of 13 cents, and that would appreciate to $24,800 by the time it reaches 18 cents, and would be worth $34,500 by the time it’s worth 25 cents. You have an extra 38,000 shares here, so that means that each cent above 25 you gain $380 (38,000 shares * .01). So the net gain for the first option is $620 ($1000-$380) for every cent above 25.
I guess it really depends how far we run after 25 cents, and how much you invest. Divide $9500 (34,500-25,000) by $620 and you get 15 cents. Meaning it would have to run to 40 cents for option “A” to be favorable, and it would have to do it in the first two years.
It does seem pretty clear cut if we hang around 15-16 cents. If we get somewhere near 13 then I think it becomes a real decision. We also need to keep in consideration of what if it never gets to 25 cents.
Feedback appreciated.
Have a good night