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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (57703)	8/7/2016 8:40:24 AM
From: Graham Osborn	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 78666

True - but the better part of those options were issued at strikes significantly higher than the current price. New option issuance will be a problem, but the old ones especially if they are not freely traded have limited value without price recovery. The company is losing money after SBC as you note. They need to either downsize their workforce or merge with a company that can get better margins on mobile ads and/ or use this as an extension service of existing offerings. I would not call this a long term hold due to the dilution factor, but I think there is a margin of safety holding over the next few Qs. You might call it a margin of safety with predictable erosion. IMO, the dilution factor on the balance sheet is more important than SBC/ Rev in this case because the amount being spent on R&D and S&M doesn't really bear any resemblance to what the company would spend if it were not investing for near-term growth. In other words, there is no operating margin of safety. You rather need to look at the net cash position, add whatever you think the product is worth, and decide on your comfort level.