RE:RE:RE:RE:RE:Market Cap!!!I like this business. I think they have a great idea and can make a difference in how jewellery is valued.
BUT the company's valuation is worrisome to say the least.
Profit Q1 $700,000
Net Loss Q1 $1,100,000
net loss/profit = 1.57
So, they need to increase sales by 157% to break even.
Units of jewellery sold decreased from 2018 Q4 (9111 units) to 2019 Q1 (8182 units) by 929 units.
Which shows a ~10% decrease in sales.
And their gross margin decreased by 3% in regard to the same quarters.
They have 222 kg of gold which is valued at ~$13,000,000 but will only last another 5 quarters if sales remain constant though the company generates a loss at constant sales and would amount to net loss of $5.5 million with no gold reserves left.
They need to sell 110.5 kg of jewellery per quarter to break even which amounts to 2 quarters of gold on reserve.
Now the company is valued at $68 million if you only consider class B shares. That is not a healthy way to look at it and class A shares should also be valued which then values the company at $115 million. And a company valued at 10 times its assets that are shrinking daily while only generating a net loss is doomed.
They need a huge upswing in sales, sustainable sales. And sales went down this last quarter. Until sales hit the break even point, I would not invest in this company. And I think that is healthy approach.
I want this company to succeed but I am not gambling on this high of a risk. And to those that are invested and wish to remain invested, I hope that this company succeeds and you can gloat of your massive returns when I buy in and the stock is valued at $2/share. But I will be buying in when the company is sustainable and not when they are full of hot air.
T