De-riskedI don't think the market truly understands or has woken up to the significance of Eve's position with all of the guarantees of the German supply deals.
We don't know how much revenue (and earnings) per gram we will get from these... we can guess and debate until the cows come to Strathroy (i.e. what the actual financials will tell us at the end of future quarters or annuals)... but these deals essentially provide an almost tangible and material floor with respect to Eve's valuation for the next several years.
What I mean is, if Eve does nothing other than fulfill the minimum (guaranteed and binding) thresholds of the Germany contracts for the next couple / few years, then, +/- depending on your valuation (and valuation assumptions / expectations):
- Our current cap might be considered somewhere close to reasonable
- Or, might be considered undervalued
- Or, might be considered (still) overvalued
BUT, however you value these contracts and Eve... there is a floor, and it doesn't even account for any other opportunities that exist, that we know are tactically / strategically in-motion. We will (almost certainly) see revenue from other streams on-top of Germany... NL/MB, products 2.0, etc. etc. etc.
I hate to use other companies, but I keep going back to Hexo (only for this aspect, as an allegory)... these contracts with Germany are akin to Hexo's deal with Quebec, just on a smaller scale. It is like getting a job, and your new employer says "no matter what happens, I will pay you your salary for the next several years at the current level... and if you do really well your bonus on top of salary is unlimited (sky is the limit) based on your performance".
And think about this... these deals also ensure that, once Eve has the greenshouse expansion approved and running full-tilt, it will have its operations and repayment of debt (almost certainly) covered. I have to caveat this though, with a risk statement, that we all hope that Eve gets everything running (and revenue flowing) in short-order, so that no more debt (or dilution) needs to take place to keep things going... and furthermore (the elephant), everything is contingent on HC approval (there is little risk of this not happening, but to say this risk doesn't exist isn't true).
With a relatively high degree of confidence... Eve should remain profitable, and should see a really nice spike in the next year or so. I am guessing (hoping), but could be wrong, that this profitablity will be a catalyst to fuel our valuation and share price... time will tell.
Anyway... all of this is very, very good. Everything above serves to de-risk the company (and our investment). Short-term floor is set, and the sky is only limited by how well Eve executes.
Always the final caveat. Can Eve still falter or fall further? Sure... maybe MMCAP or shorts will continue to drown the price beyond investor interest, or maybe market sentiment just won't catch on to Eve... but a solid company that is a sound investment should eventually garner attention and arrive at its proper valuation (again, Eve just has to keep delivering). There is short-term noise, but the longer-term looks pretty good, so far.
Peace, long Eve... it's up to her to jump off the floor and hit the ceiling for us.