Seeing as this report reduces the chance of bankruptcy in the next six months, it will be taken as positive, IMO.
My simple model, where Psurv is the probability of survival, is
Enterprise value of company = 1 x Annual Sales x Psurv, or,
(#shares * StockPrice + LT Debt&Notes) = Annual Sales x Psurv
Stock Price = [(Annual Sales x Psurv) - Long Term Debt]/#shares
Annual revs are about 2,430M, LTD+Notes Payable is $1,408M
# shares is 161M
Based on that, investors, pre-earnings were assigning a probability of survival of 18%.
It doesn't take much of a change in that number to increase the stock price.
(You could quibble with the 1x factor. Perhaps memory companies in a recession are only worth 0.7xsales, which would mean they thought SPSN had a 1 in 4 chance of survival.)
Petz |
