If you read my blog on a regular basis then you'll know I'm not a fan of "story" stocks that have climbed to multi-million dollar valuations on the back of vast riches to come next year or perhaps the year after that or is it the year after that? Jam tomorrow companies. Let me say at this point I've occasionally invested in one or two in the past, but they rarely, if ever, turn out well. Why? Mainly because the figures just don't add up. Even if a company was the best thing since sliced bread, it doesn't make it a great investment if you pay too much for it. Let the financials be your guide to how much you should expect to pay. Read some books by the great investors such as Graham, Buffett, Lynch etc if you haven't already.
One story stock I'm not a fan of is OptiBiotix which I've written blog posts about before. Here's why I think it's a poor investment at it's current lofty market cap. My blog is written in response to an bulletin board avatar who said the following:-
https://uk.advfn.com/cmn/fbb/thread.php3?id=35291865
"Has it really gone up on hot air or numerous agreements across the world which will go straight to the bottom line. Strong fundamentals. Last time you spouted your saviour rubbish we didn’t have this pharma deal in place and the price shot up to £1.30. They’ll be injecting up to $50m. Pretty big investment for hot air don’t you think?.
Great opportunity to buy many stocks during this time of volatility."
My response:-
Your post is factually incorrect. Firstly, you have no evidence that these agreements will generate significant revenues which will go straight to the bottom line. Last reported interim revenues were £80,000 about the same as the previous year. Yet when you look through the RNS statements there were "agreements" between May 2017 and May 2018 into the double digits. If these were significant revenue generators then at least three or four should have ramped up revenues for the six months ending May 2018? Even just one would surely have improved revenues?
Something doesn't stack up does it? As I said this morning these agreements should be RNS Reach since they clearly mean diddly squat in terms of generating revenues. If the six months ending November 2018 still shows poor results then you'll know for sure that nothing significant is coming anytime soon.
Secondly, Opti doesn't have strong fundamentals. If you strip out intangibles and it's SBTX investment (which incidentally is pretty worthless since nobody would make an offer at it's current market cap. ) then tangible net asset value is about £2m and that's after a £1.5m fund raise at 62p at the end of May. Full year revenues last year were short of £200,000 and interims this year were £80,000. Needless to say that Opti is loss making and burning cash. Opti is valued at around £70m. It's laughable. Those fundamentals might support a £4m market cap at best.
The share price movements are immaterial unless you're a trader. If you're a LTBH investor then it's the end game you're looking at. Opti's share price is now below 80p again, so what's your £1.30 point?
A pharma "injecting up to $50m". Really? Point me to the RNS please. Besides even if this were true (please provide evidence) then it could fail the first hurdle. In fact, if it fails any hurdle then that's going to have a huge detrimental effect on the validity of Opti's claims for this Science. Everything they have tried to promote may then be regarded as "quackery"? I bet the bulls haven't even considered that eventuality. Pharma is a dangerous route to tread.
"Great opportunity to buy many stocks during this time of volatility."
On that we can agree, sadly Opti isn't one of them.
As ever dyor, these are just my thoughts and views and do not constitute buy or sell advice.
twitter: @michae1mouse
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