Post by
Sujanstockpicks on Nov 08, 2016 6:25am
Valuation & outlook
At a $8M market cap, the company is valued at like a 4.5 price/sales multiple. That is not necessarily cheap for a growing but money losing and pretty moatless SaaS play. Ackroo for example, is in the same business but valued at a p/s multiple of only 2. For Rewardstream, it's a balancing act between investing in growth and keep the balance sheet healthy, since they only have $1M working capital according to my estimates. The next earnings report will shed some more color.
I like the business model though, management seems quite experienced and I noticed a few insider buys took place last week, always good to see.
However, the valuation is at a $0.20 stock price a little bit rich, so I only will buy shares when the price declines to 0.15 or lower. I also suspect they need to raise money within a few months to ramp up growth.
Comment by
Sujanstockpicks on Nov 08, 2016 6:44am
https://medium.com/sapphire-ventures-perspectives/what-s-happening-to-saas-valuations-3b063958d8b8#.d9ydf9efh According to this link, Rewardstream is not expensive, but not cheap either. But keep the limited moat in mind, that matters a lot. That actually warrants a discount to industry averages.