RE:Thank You!PennyPlays wrote: Thank you to all the dooms day predictors and also inpart because of the CEO selling anouncement, I was able to get in again at the ground floor. I was a shareholder before but sold it (no where near the top) but I am glad to be in again. Things I consider:
- This is a penny stock: so of course high risk.
- This is still close to profitable for a penny stock
- There is promise for exponential growth
- I do think the CEO is sincere. Dont know enogh about his capabilities - but he has brought the company to predictable production. How many penny stocks say that?
CEO selling:
- I dont think he publicly dislosed a price (could be in the $9 range that from what I remember he had said long time ago).
- It's ~10% over 36 MONTHS, and also would be orderly. People will forget this soon.
- He will still hold a lot of shares
I like the risk reward here :)
Ironically it wasn't the doom and gloom posters here that caused the last 50% haircut. It was Cris's 180K share sale right before the ASDP announcement dropped. Really poor optics and right before Q3 was closing out, suggesting results may be...not great.
The risk reward setup is debatable at this level because the onus is on the company to prove they can retain the customer base, let alone grow it. A 50% YoY drop off in sales volume for Q2 was a red flag to the entire growth story. Why are customers dropping off? And why are distributor sales barely 9%of overall sales after inking deals with Lavoro and Agrogalaxy last year?
Yes, they retained a small profit in Q2 but diesel prices spiked 25% for Q3 eroding that profitability. Based on my calcs, they need a minimum of about 150Kt sold in Q3 to be near break even. But the company cannot afford to eke along like this much longer with non current liabilities sitting at nearly $30M. At some point next year unless growth meaningfully accelerates, liquidity and working capital needs will be a concern.
Without a doubt, there is enormous earnings torque in a scaled up operation (even at only 3Mt sold this company can throw off a good amount of cash with current MOP and diesel prices) but investors are beginning to doubt the end user demand and growth prospects for this product. Is the stalled out sales due solely to all the reasons listed in the recent ER's or are they using those reasons to mask bigger issues like kforte has been trialed and deemed an inferior product by the many within the farming community? A very poor field sales team incapable of onboarding distributors? Tarnished reputational credibility after the Q3 22 delivery debacle? The problem is we are all uncertain and this uncertainty is exacerbated by Cris's propensity to prematurely release news before deals are done and dusted. Just tell investors when a deal is actually done.