MVIS - Comments
John: Excellent points. I went back to my model and did some quick sensitivity runs to determine the direct effect of the equity component (MVE) on the MVIS Z-score. This is what I found...
Z (assuming current stock price, $13.00) = 4.81 = Strong
Z (if the stock price falls 15%, $11.05) = 2.96 = In Danger
Z (if the stock price falls 25%, $ 9.75) = 1.72 = Near Death
Z (if the stock price falls 40%, $ 5.20) = (0.14) = Near Death
Do you or Josef happen to know offhand what the cash burn rate is for this company?
<<It's a development stage company. And a story stock. As I've noted before, I think the Altman scheme is not suitable for analyzing development stage companies.>>
I don't really agree here, John. Sometimes it takes a little time for the Altman model to ID a declining trend, but once the trend is in place, it's often fatal. IMHO the trend in a company's Z-score is the key indicator, not an individual snapshot in time.
Take a look at the AIPN analysis (#reply-8483710). There's another former story stock and development stage company... no oil production on the upstream side, and a start-up asphalt refining operation on the downstream side, with a huge cash burn rate. Look at how the trend has deteriorated over the last 9 months alone. Sure the stock price decline has been a major component of that, but the fact is that four of the financial ratios (X1-X4) went south during that time period, and only one increased (X5). The question is: Can they recover? Altman's model would suggest that they probably cannot without great difficulty, given the magnitude of the trend.
Perhaps we should look at the trend analysis on MVIS? Josef, would you like to have the honor of doing this?
Razor |
