Is a decline in revenue expected?At .10 the P/S ratio is .98 which is fine and dandy if Transgaming was a water utility instead of a growth tech stock.
Correct me if I'm wrong but...
Since it's on the Venture exchange and a somewhat speculative tech stock, it could be valued by it's P/S ratio instead of it's P/E ratio because it dosen't have the earnings yet, it's working on that.
A good P/S ratio for a growth stock with mediocre prospects is no more than about 2.0, which would put Transgaming at .20. But Transgaming has good growth potential and should be trading at a 3.0 P/S ratio or more. Which would put it at .31 at a minumum, and more during run ups, which it has done when it hit the .50 range. The only way a P/S ratio of less than 1.0 is justified is if revenues are expected to decline and remain there for an undetermined period with only a slim chance of recovery.
I see that revenues for the last quarter were down. But this was explained as the price associated in gearing up to accelerate growth and revenues in the near future. Is acceleration in growth not expected? Does the market think that Transgaming is in trouble?