This post made by a I hub poster. I wanted to sha
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Posted On: 03/02/2019 2:42:59 PM
This post made by a I hub poster. I wanted to share it with everyone here.
It depends on a lot of things, like growth, market potential, and industry. There are companies trading at 300x revenues and companies trading at significantly less than 1x revenue. Personally, I believe AMFE ought to maintain a very high revenue multiple as we become more well known.
1. Growth
AMFE's growth is stellar, at 100% or higher for the last 2 years, and that will almost undoubtedly also be the case for 2019. The 4 existing cafes + 4 cafes coming online by mid-year may generate roughly 15M$, distribution has been going at a little under 10M$ a year but with the growth PR'ed on that front and maybe some US expansion, I wouldn't be surprised to see 10-15M$ reached in 2019. That is already the potential for 100% growth over 2018's roughly 15M$ revenue expected, without factoring in Gro3, self-publishing, and NSI, all of which may begin to add good revenues through 2019 and beyond.
Whatever the exact specifics (which we can't forecast precisely anyway), we can definitely say growth is strong across the board. 100+% growth over several years and for the conceivable future is basically as good as you're going to get.
2. Market Potential
If AMFE's maximum potential (i.e. when it has saturated its markets) was very low, that would impose a hard cap on the revenue multiple serious investors would be willing to pay for the stock. Fortunately for us, AMFE operates within several sectors that each have a very high market potential. In other words, the scalability of AMFE's business model is extremely high.
This is easily demonstrated by looking at AMFE's segments:
- Board Game Cafes --> global cafe industry is worth 12 figures
- Board Game Publishing, Fulfillment, and Distribution --> 11 figure industry
- MJ industry --> still growing, expected to be worth 12 figures
In other words, AMFE has several distinct paths to multi-billion dollar valuation within separate, massive industries, so market potential is not a limiting factor here. Once AMFE cracks a certain amount of revenue and obtains a certain market share (demonstrates success), its model will be proven and it will acquire the funding required to reach saturation. Often the market cap will just default to multi-billion once this phase is reached, although AMFE still has some growing to do before it reaches that stage.
I'd also like to add that while the conventional wisdom in investing is that a conglomerate is worth less than the sum of its parts, my personal opinion on AMFE is that it has achieved such an incredibly unique degree of synergy between its subsidiary parts, that it is actually worth more. Things like NSI + board game distribution, board game distribution + Snakes cafes, infused drinks through NSI, etc, this business has the potential to integrate and consolidate entire industries, which is a rare thing.
3. Industry
This is a huge one without which you can't find a multiple. A software company and a plumbing company with the same revenue and growth rate are simply going to be in different worlds in terms of valuation.
AMFE is a conglomerate so this is a mixed bag. The retail cafe industry doesn't generally command the best multiples, but the MJ industry commands some of the most ludicrously high multiples in the entire stock market. When it comes to the board game industry, its growing at roughly 10% annually, so the growth is strong but not stellar.
I think AMFE is a unique enough company that, once we get to a legitimate exchange and the exposure is high, professional investors will see the potential and the multiple will be high. Not insane levels like Canopy Growth or some of the tech favorites, but in my opinion definitely on the very high side. This was the case with Shake Shack, which was worth billions with relatively few stores and low revenues, because the potential was so obvious--I think AMFE's story now is much more compelling than SHAK's was then (another high-end burger chain vs. AMFE? come on now).
Mitigating Factors and the Bad News
Obviously in life nothing is ever all good or perfect. AMFE is, in fact, trading at 2x revenues with little to no buying pressure, unfortunately, and I don't expect us to reach 1+BN$ valuation anytime soon. Some of its problems include being a pink sheet with the corresponding baggage and negative sentiments, low insider ownership, not a great share structure, non-existent PR/IR, and total lack of access to real financing because of no audit and OTC Pink status.
These are very real problems, but they can all be mitigated over time, so they don't change the long-term here, just the short-term. If AMFE had the benefit of trading on a major exchange like NYSE, proper PR/IR, good media/analyst coverage, etc., it will have the fundamentals by mid-to-end 2019 to trade at 1-3 B$ (2-6$ PPS at this OS), in my opinion. It's doubtful we'll have all the public company stuff in order by then though, so I don't expect that valuation to come until later.
The current situation of trading at 7 or 8 cents is so profoundly ridiculous that it drives me crazy. Ultimately, it doesn't matter, the institutions will just end up paying more later. If you're patient, it's fine.
It depends on a lot of things, like growth, market potential, and industry. There are companies trading at 300x revenues and companies trading at significantly less than 1x revenue. Personally, I believe AMFE ought to maintain a very high revenue multiple as we become more well known.
1. Growth
AMFE's growth is stellar, at 100% or higher for the last 2 years, and that will almost undoubtedly also be the case for 2019. The 4 existing cafes + 4 cafes coming online by mid-year may generate roughly 15M$, distribution has been going at a little under 10M$ a year but with the growth PR'ed on that front and maybe some US expansion, I wouldn't be surprised to see 10-15M$ reached in 2019. That is already the potential for 100% growth over 2018's roughly 15M$ revenue expected, without factoring in Gro3, self-publishing, and NSI, all of which may begin to add good revenues through 2019 and beyond.
Whatever the exact specifics (which we can't forecast precisely anyway), we can definitely say growth is strong across the board. 100+% growth over several years and for the conceivable future is basically as good as you're going to get.
2. Market Potential
If AMFE's maximum potential (i.e. when it has saturated its markets) was very low, that would impose a hard cap on the revenue multiple serious investors would be willing to pay for the stock. Fortunately for us, AMFE operates within several sectors that each have a very high market potential. In other words, the scalability of AMFE's business model is extremely high.
This is easily demonstrated by looking at AMFE's segments:
- Board Game Cafes --> global cafe industry is worth 12 figures
- Board Game Publishing, Fulfillment, and Distribution --> 11 figure industry
- MJ industry --> still growing, expected to be worth 12 figures
In other words, AMFE has several distinct paths to multi-billion dollar valuation within separate, massive industries, so market potential is not a limiting factor here. Once AMFE cracks a certain amount of revenue and obtains a certain market share (demonstrates success), its model will be proven and it will acquire the funding required to reach saturation. Often the market cap will just default to multi-billion once this phase is reached, although AMFE still has some growing to do before it reaches that stage.
I'd also like to add that while the conventional wisdom in investing is that a conglomerate is worth less than the sum of its parts, my personal opinion on AMFE is that it has achieved such an incredibly unique degree of synergy between its subsidiary parts, that it is actually worth more. Things like NSI + board game distribution, board game distribution + Snakes cafes, infused drinks through NSI, etc, this business has the potential to integrate and consolidate entire industries, which is a rare thing.
3. Industry
This is a huge one without which you can't find a multiple. A software company and a plumbing company with the same revenue and growth rate are simply going to be in different worlds in terms of valuation.
AMFE is a conglomerate so this is a mixed bag. The retail cafe industry doesn't generally command the best multiples, but the MJ industry commands some of the most ludicrously high multiples in the entire stock market. When it comes to the board game industry, its growing at roughly 10% annually, so the growth is strong but not stellar.
I think AMFE is a unique enough company that, once we get to a legitimate exchange and the exposure is high, professional investors will see the potential and the multiple will be high. Not insane levels like Canopy Growth or some of the tech favorites, but in my opinion definitely on the very high side. This was the case with Shake Shack, which was worth billions with relatively few stores and low revenues, because the potential was so obvious--I think AMFE's story now is much more compelling than SHAK's was then (another high-end burger chain vs. AMFE? come on now).
Mitigating Factors and the Bad News
Obviously in life nothing is ever all good or perfect. AMFE is, in fact, trading at 2x revenues with little to no buying pressure, unfortunately, and I don't expect us to reach 1+BN$ valuation anytime soon. Some of its problems include being a pink sheet with the corresponding baggage and negative sentiments, low insider ownership, not a great share structure, non-existent PR/IR, and total lack of access to real financing because of no audit and OTC Pink status.
These are very real problems, but they can all be mitigated over time, so they don't change the long-term here, just the short-term. If AMFE had the benefit of trading on a major exchange like NYSE, proper PR/IR, good media/analyst coverage, etc., it will have the fundamentals by mid-to-end 2019 to trade at 1-3 B$ (2-6$ PPS at this OS), in my opinion. It's doubtful we'll have all the public company stuff in order by then though, so I don't expect that valuation to come until later.
The current situation of trading at 7 or 8 cents is so profoundly ridiculous that it drives me crazy. Ultimately, it doesn't matter, the institutions will just end up paying more later. If you're patient, it's fine.
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