Irrational exuberance.
I read the entire thread because a kind old pro asked me to take a look. Never even looked at a chart but presumably it looks something like RCNC. If that's true, the stock has cut through the 3 month uptrend and has a ways to go on the downside to fill the breakaway gap. That won't happen until after April Fool's Day.
Fundamentally, the company is not operating yet. It's in a formation period. Therefore it isn't even worth book value or cash value. These values aren't fixed in stone, but many on this thread have made that assumption. When you try to assess the per share evaluation, you run into problems of unclear quantities of paper and significant potential for watering. No, floodgating. Maybe you should compute the cash/authorized = $6/shr, assuming someone could actually identify $3 billion. Stocks can trade at a substantial discount to quick assets/shr.
Future expectations can't be built around financing resources. Assuming the n thousand mile system is all built and paid for, what will be its yield? I think a max of 10% per annum. The network doesn't provide added value, it's just a thing. Further, it's subject to technological obsolescence and tremendous competition if it's successful. Falling returns to scale. Can't expect stable operating earnings growth to exceed 10-15%/yr, so you can't expect high growth rate, just lots of up-front infrastructure costs that will eat $3 bill in no time. The goodwill in the stock is justified over a long time frame because even with the above negatives, it will have the stability of utility companies.
These considerations transcend what any management could do. If those buying the shares fully appreciate the risks, they should be able to weather the storm. |
