Sentiment MORE important than Fundamentals1 Mar 2021 13:20
The situation we face here quite simply is that sentiment as at today is MORE important than Fundamentals. We have concreate proof of this.
I don’t want to go into the whole LFT debate again so company names left out but it’s a really good example that a company on AIM can do sod all sales, can’t even win a contract without an approved product but will tell the market that contracts are pending (which is loosely true but could take many months) but has massive “Potential” currently has a higher market cap than Novacyt yet the later is proven and already supplying 150 countries and on course to exceed 173m EBITDA and have a war chest of 278m this year.
Another that may secure an order shortly is unlikely once it won to reach its market cap as it will not make enough EBITDA from said order to get even close to its current HYPED price.
Meanwhile, a snap poll of Twitter regarding which business will deliver the most upside first after 722 votes came out in favour of the two former businesses. Novacyt polled less than 20%.
Further and I mean no disrespect from this, we have a question earlier from Meza1 which is great as its good to share knowledge asking about market cap calculation etc, but it illustrates perfectly that the stock is accessed by numerous unsophisticated investors that are starting out. Therefore, HYPE matters, they are drawn into media speculation and follow like sheep. Many wont even look at the fundamental values they will see a share price at ÂŁ1 and assume its a cheaper stock than one at ÂŁ7 without even considering how many shares are in issue or how its value is calculated.
The good news is that it is now a matter of time before the market is completely levelled. Fundamentals WILL out. Contracts will land and companies will need to justify their current valuations.
HYPE alone will not be enough to sustain a share price and I put that timeline at about 6-8 weeks maximum.
In the meantime, yes, a material RNS, acquisition, stateside win, partner deal, DHSC etc etc will all help the Novacyt SP BUT it should not need to. They are delivering results as I write, and this is ultimately what will count.
GLA
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