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We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. In my view, the risk of a share price crash on disappointing or delayed revenues is relatively high.
#Cloudtag lse serial
Given CloudTag’s history as a serial misser on first revenues, I really don’t see this year’s news flow as compelling enough to merit such a valuation. Furthermore, partly because the company has issued so many new shares during the period, the valuation of the business has increased 14 times, from £4.5m to £62.8m. The share price has increased more than eightfold, from 2.13p prior to the 25 January announcement to 17.13p at yesterday’s close. I’m amazed at the enthusiasm with which investors have been piling into CloudTag. It’s to be hoped that no similarly disconcerting clarification is required to an August announcement of “Bbnding Heads of Terms Signed with US Partner … currently being drafted into a final form agreement.” It turns out that the minimum $5.2m sales by the end of the year isn’t guaranteed, but merely a “target,” which “the board is currently optimistic … will be achieved but there can be no certainty of this.” There have been no minimum quarterly orders placed, and last month CloudTag found it advisable to “clarify” the nature of the agreement. On 25 January this year, CloudTag announced a deal with a UK/EU distributor for “a minimum of $5.2m of device sales” by 31 December 2016, with the distributor obliged “to place minimum orders during each quarter in 2016.” First revenues?ĬloudTag joined the stock market in March 2013, with management expecting the company to launch its first product and “begin generating revenue in Q2 2014.” Q2 2014 came and went with no revenue generated. As such, I’d be looking for a lower entry point - and I’d be hopeful of getting it too, because historically ASOS’s overall growth trajectory has been punctuated by the odd setback and sharp price correction. This is high enough to persuade me that the price has outstripped value. However, at a current price of 5,150p, and based on company top-line growth and margin pointers, I calculate the PEG is now around 2.1. The forecast price-to-earnings growth (PEG) ratio for 2016/17 was 1.2, which I reckoned represented reasonable value for a company with a long ‘growth runway’ ahead. The last article I penned was in April when the shares were at 3,370p. Indeed, I’ve written about it positively several times in the past.
The shares have moved lower in early trading, which I put down to profit-taking after a very strong run in recent months.ĪSOS’s growth is entirely self-funded - cash on the balance sheet increased to £173m from £119m over the course of the year - and this is a business I very much like.
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