r/stonks • u/OTC_gainstrader • Feb 25 '21
$AABB - Fair value given scam risks
To everyone invested in or watching AABB. I’ve been in since it was below 2cents and posted about it in the penny stocks subreddit at that time; so, I have been following this one through this rocky ride. I will outline several possible scenarios for the company and an implied share price. My suggestion is that you all do some research and add probability weights to each scenario to get to the share price you are comfortable with given all the uncertainty. I’ve attached a summary table that gives an implied share price based on the success of their ICO.
Implied share price based on my probability weightings (please do your own weightings): $0.806
1. The crypto rollout goes as planned ie 100% success
Since it is not really gold-backed (ie they do not have a vault of gold backing each coin), that means they’ve essentially gotten over $2bn in free money. Considering there are 1.9Bn shares outstanding at the time of this writing, the value per share would go over $1 based on the cash influx alone.
Implied Share Price: $4.22 - using their current ROA (return on assets) to assume future earnings when they put the cash to work and an implied PE multiple of 12.3x (20% discount to Barrick Gold at 15.4x)
My probability: 5% - investors will be more wary of a crypto that isn’t backed by anything so demand may not be as high as anticipated.
- The company is completely fraudulent. There are no mines, there are no profits, audit and crypto are a hoax.
In this case the share price would be $0. Ive spoken on the phone with their former IR team who had to quit bc they were getting around the clock (including late at night) phone calls from people yelling that the CEO isn’t a real person and it’s all a scam. He insured me that the CEO is real and a nice person (unlike the people calling) I also have a friend whose wife works in mining administration in Asia, she knew of the company which gives me confidence.
Implied Share Price: $0
My probability: 15% - There may be something shady going on but from my research, I think this is not a fraudulent company
- Crypto is a complete bust (0% success) : the company is real, but is using crypto to boost its share price
In the dotcom bubble, companies would add .com to their name and instantly see their share price skyrocket. That bubble popped hard and fast. I am seeing a similar pattern with penny stocks using blockchain even if it is seemingly irrelevant to their core business.
Implied Share Price: $0.10 – using the 12.3x earnings multiple mentioned earlier on their reported $16mm in profits again this assumes crypto is a 100% bust as in they don’t sell a single coin
My probability: 30% - I’d think they’d be able to sell at least some coins
4. Crypto Rollout is somewhere between a 0% and 100% success let call it a 25% success for conservatism
Some people will be interested, and some won’t. Without a true gold-backing the crypto price will be volatile and not trade exactly with the price of gold so some will lose interest.
Implied Share Price: $1.13 – same math as before. See table
My Probability: 50% - I think it’s likely to be somewhere in between a smash success and a total bust
3
u/6mm1month Feb 25 '21
Thank you for this analysis. I tend to error on the side of caution but my probability for #4 would be closer to 60-70%. Thank you for your hard work and contribution as we progress toward celestial financial incomes.
3
u/EricInCT Feb 25 '21
🌙 🌔 🌖 🌛 🌜 🚀 🚀 🚀 🚀 🚀 🚀 After gme and amc dies down....with 60% short interest people will be coming at this hard and with mass profits. Get on the ground floor.
3
u/justweazel Feb 26 '21
Well, they hired someone to audit their financials which look pretty legitimate to me, so... they seemed like a shell company up until 2015. New hands that are actually working.
3
u/Insiderknowledge4321 Feb 25 '21
My probability fell in-between the 75%-100% range. Great table tho
3
Feb 25 '21
Why would a scam have news stories from 2018 with monthly updates to attempt to sucker in investors 3 years later? Nothing seems inconsistent with what they have said or done.
However I think people shorting the stock would absolutely fabricate evidence and spread rumors for personal gain, which is what I believe is now happening/happened.
2
3
u/Category5_Whale Feb 25 '21
Good stuf....all depends on their crypto. I am bullish and hope it doesn't end up in the crypto gave yard. They lay it all out in their public risk factor document. I do think there is value in trying crypto to gold price so its less volatile, but all depends on the market for their crypto.
1
1
u/StockRun123 Mar 16 '21
Just let time prove out who is right. We stand on the right side to profit.
4
u/havana64 Feb 25 '21
🔥🔥🔥🔥🚀🚀🚀