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There seems to be a small handful of users with large volumes of posts looking to swallow reasonable discussions and questions with repeat positive articles and posts on this forum.
I suppose no serious investor with £100ks to put in is looking at these anyway, so just the small change gang getting fleeced.
Anyhow, if Myles or anyone above feels like engaging in my earlier post it would be much appreciated.
Hi Myles - thanks for the research notes, it's a nice change to see some analysis supporting peoples opinions.
The comparable company analysis given in your first note, Bioventix Plc has a market cap of £192m with £7m of PBT. Avacta is currently valued at c. £163m. 3 questions:
1. What do you see the current value of AVACTA to be excluding the COVID opportunities (i.e. what's our floor here if things fail)? - I'd believe somewhere in the 30-40p region.
2. Do you agree that to hit a £1bn market valuation from COVID, given the short term nature of the earnings, Avacta would need to be closer to £300m over a 12month period (vs a typical 5-10x earnings ratio at this stage).
3. If a typical royalty % for a biotech at this stage is single digit, are we talking of Avacta's partners needing £4-6bn of profit from the test kit to support this valuation?
Fag packet calcs - interested in your thoughts.
Couple you help me understand how you come up with a £2bn valuation?
I'm not too privy with the market and competitors, but it would at least (fag packet) require sustainable (i.e. 10 years) earnings of £200m per annum..
@Global I'm torn between biting the bullet and taking my share losses @ market rate now, or waiting to see if we land back in the high70s-80s next week.
I have every confidence in this company and it's opportunity, so either way I want to be in. I just want to be in with as much as possible ;)
I've invested £30k and made £20k profit. I'm currently out, but wanting to get back in with the entire £50k.
This share will break £1 on news. I'm not quite sure what's driving it up in the last 24 hrs from 66p to 93p though. It's easy to forget this is AIM, it's high risk, but high reward.
My advice to you - take out what you put in, leave the rest for the long run. There will be more ups and downs, but I believe we will see this move £1+ in the coming monhts. Posts of £5+ are living in la la land, so don't base your decision on that.
Hi guys
I purchased these a few years ago but now show as £0 on my Interactive Investor acccount.
What's happened here? Do I have some shares in Jubilee metal snow?
I think we all agree on what's happening, and miserably failed to articulate it.
Anyhow, I've been weighing up skimming a few extra shares off the top today, but I think given where this company is heading I'll sit tight. After all, who wants to be out of this over the weekend?
Think some people are getting confused between the maths in the theory and what's actually happening in reality. Maj is correct in saying the news is already out there and so it should be reflected in the share price.
The current market cap isn't the current market value of the business. The market should be efficient enough to adjust the share price to reflect actual market cap after shares are issued. i.e. the share price has already fallen because of the placing. Given the AGM was today, and this wasn't confirmed until today, it was fair to discuss what impact it might further have on the price.
The only risk I see tomorrow is a large sell off.
@Maj ofcourse the market cap is continually changing. For avoidance of doubt for readers, market cap = shares in issue x share price.
In an efficient market, all known information will already be reflected in the company valuation. If the market was perfectly efficient, and in the absence of a changing in market valuation of the business, the share price tomorrow would drop.
Tomorrow the shares in issue will increase, the ONLY way the share price is unchanged, if the market values the business higher. People are rightly questioning why they would value the business higher tomorrow in the absence of new information?
Now the AIM market is far from efficient, and so things are unlikely to play out the way the theory tells us ;)
"GLR - Thank god I have your posts to help provide some insight.
Today you own 1/176m of the company which is valued at £116m (Current SP of 66p)
Tomorrow you will own 1/208m of the company which will be valued at £137 (SP of 66p)
So your voting rights have gone down - FACT
The share price is only affected by standard market activity NOT and mathematic calculation."
This last line is incredibly miss-leading. The share price and market cap are perfectly correlated. Something that is FACT, is that the only way that the share price remains at 66p after the placing, is if the market value the business higher than before the placing.
Sorry for avoidance of dobut, market cap changes by the cash raised. This isn't sufficient to keep the share price at 66p ignoring all other factors.
I.e. Ignoring all other factors
- Shares issued at market rate = no change to share price
- Shares issued at a discount = theoretical reduction in share price
For all those arguing over the impact of a placing at a discount. Ignoring all factors (i.e. market expectation on future peformance), the share price would fall, because there's more shares in issue, and the market cap remains unchanged.
It's not partiuclarly complicated. It's up to you if you want to take a punt on selling now to get back in on the cheap tomorrow, but if you mis-judge market expectation, there may not be a way back in for you at current prices.
Nobody knows, if they try and offload them then the sp will ofcourse go down in the short term. Some people say it will rise because they've secured funding and extended the runway - I would agree with this if we were at 20p still. We could see a dip into the 40s, but ultimately we're waiting on news re Covid tests then medical trials later in the year. Onwards and upwards.
Ofcourse he believes he can do it (as I'm sure we're all hoping). But that's entirely different to successfully doing it. Let's not forget it's the CEOs job to be optimistic. Fingers crossed he's successful, just a word of caution.
Seems to be an ignorance on these boards to the fact that the reagents hasn't yet been successfully developed, something Alastair Smith reiterated in the Talk Radio interview. This is just as likely to halve as it is to double.