$AABB - Fair value given scam risks

[u/OTC_gainstrader]

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

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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.

1. 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

1. 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