RE: Superb MM effort today.14 Jun 2022 18:20
did anyone see the crap that Winifrith wrote?
As we marched on Saturday, the Rogue Bloggers discussed this and that. As he sobered up, even Lucian Miers joined in the conversation, and asked whether he should short Avacta (AVCT). The answer is yes, and here is why.
There is a funding crisis on the horizon. December 21 2021 Year-end cash was £26.2 million. Last year, the underlying cash burn was £22 million; there is no reason why, this year, that should change. There is a small disposal gain of £900,000 but, in the grander scheme of things, that makes no odds. By Q1 next year, Avacta will be running on fumes.
Natch, greedy brokers wanting a slug of the coke, and hookers funding commission on a fundraise, will talk up the stock with bonkers price targets. However, only the terminally naïve believe that ****e. In a bear market, a fundraise may be ugly, and it is coming down the track fast. Avacta will not leave this to the wire.
The valuation is insane. Pre Covid hype, the core biotech business was valued at £20 million by Mr. Market. Let’s be overly generous, and estimate it at three times as much, two years later. The covid testing business is, whatever Avacta says, worth absolutely nothing. Covid is yesterday’s story, and so is covid testing. Chuck in, say, £14 million of cash, and you get a sum-of-the-parts value at c. £74 million.
At 124.5p, the market cap is £317 million. Bearing in mind the imminent funding crisis, it is obvious why Avacta is a slam-dunk short. This stock could fall to 33p, and still would not be a bargain
Knob, comes to mind. Hope he gets crucified
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