RE:RE:Investors Shouldn't Be Too Comfortable With Verde AgriTech's
canadianbear wrote: Have to disagree fully with this take on NPK. The writer does not know or understand the company IMO. Christiano V. and Board made the conscious decision to NOT issue any more shares, but to self fund development of the company. Naturally, free cash flow is affected as it is going into funding plant construction and corporate development. This is a great way to advance the company and to complain about FCF is a farce.
It's always good to take into account all thought through perspectives but I'd agree this analysis appears to be missing the forest for the trees, nitpicking one data point and not contextualizing why much of the cash being generated is rapidly being deployed into capacity expansion.
The biggest Achilles heal for Verde is a scenario where oil prices get out of hand while potash prices revert to the mean. Certainly an unlikely scenario but Cris did recently mention in such a "doomsday" scenario a shift in sales focus to only the closest states for delivery. I'd hope with that in mind their sales team is fixated first and foremost on the "close to home" farms. Also, Bio-rev is a very low cost high margin add on so if demand is exceptional this also adds a nice little margin buffer.