ACEY:
I thing the issue you raise is on of semantics. A source of cash, such as the sale of stock or debt, does not impact the value of a company, e.g. a company that is worth 300mm like prst (at best) is not worth a 10mm more if it borrows 10 mm.Its a wash. Cash flow can be defined many ways, but it is operating cash flow less necessary ongoing cap ex (capital expenditures) that is used in the valuation. Once valued, you subtract debt, and divide by the number of shares to get a per share value.(This may be simplistic, but adequate for this discussion).
Remember, a company is only worth the excess cash it will generate over its life span.
PRST is not a bad company. It is an overly hyped company, that small retail brokers like to hype because it has a story. The only problem is they ignore the realities of the market place, competition will enter, and margins will decrease. And this stock won't have a bottom.
The argument that major brokerage firms will finally discover the stock is ludicrous. All the firms know PRST, the company has a 1.2 bln market value and is constantly in the press. The problem they have is that PRST operates in small market, that is highly competitive, and they won't spend the time on a company they cannot reccomend. After all, when customers lose money, they leave.
This stock bounce up and down, but ultimately, it will fall to its true value. Under 20 |
