RE: Total disaster over 40% down11 Feb 2024 13:55
Jonas/bigruss you were warned all along about your over-enthusiasm here, perhaps being a bit too trusting of some twitter 'gurus'?
This has always been a high risk 'binary' share based on the timing of deals signed and progressed versus the cash from the raise.
As for should you average down/buy in LTB, that's an easy answer, only risk what you can AFFORD TO LOSE for a share like this.
What's actually going to unfold here?
My thoughts:
Very little big investor buy in at these levels (why should they when they will have first opportunity at a possible fund raise?)
Not sure about Directors, would be good to see but they may be limited by contract negotiation awareness or simply the above.
Dr Tolley is not interested in another fund raise. He's gone from 80% ownership to 3.59% and won't be wanting to lose more so at least we know he will be pushing hard.
We know that the cost reductions have gone to plan but the contract aquisition hasn't, so more of the fund raise has been spent earlier.
Relationships with repeat customers seem to be coming on well and growing (but will they be fast enough?).
How much in/left by year end (30th june) then ? Well worst case scenario (no money in) is £300k pcm burn x 5 months which would leave £600k cash.
They have stated that they expect the currrent signed deals to be processed by 30th June (£1.4m) plus a proportion of current pipeline stuff "through the laboratory before the end of the financial year" but they don't say 'finished, billed and paid for', so I'll stay on the sceptical side and keep to the £1.4m gross figure.
My best guess then is they have around a 60% margin which if set against the £1.4m would mean £840k net to offset against the £1.5m outgoings leaving a net burn of £660k i.e. a final cash balance of £1.44m.
So even without any massive contracts in the next few months they should 'survive' and, as they have stated, have sufficient cash to go well into FY25 by which time you would expect them to have nailed some better contracts that hopefully they can get a RCF for should they require it.
If they get a big contract in the meantime, well they're pretty much around the corner.
I personally am not averaging down more at the mo (AV 1.1) as I have no more 'high-risk ccash' at the moment, but I am hopeful inclined to think we'll see another contract RNS before the end of Feb.
If, buts and maybe's, never risk what you can't afford to lose.
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