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23-05-2020, 09:52 AM
#3511
Originally Posted by Brain
Applying DCF to Plexure at this stage is total nonsense. Future cash flow prediction will be influenced by the bias of person doing the prediction. DCF is only useful when a company has a history of cash flow either stable declining or increasing. Even with reliable data the result will still be effected by the judgement or bias of the analyst.
Your brain keeps telling you crap that isn’t true. (Different brain to you Brain)
Donald Rumsfeld once said -
There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.
”When investors are euphoric, they are incapable of recognising euphoria itself “
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23-05-2020, 10:05 AM
#3512
Go master winner! Tell Brain what Donald knows and what he does not know!
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23-05-2020, 11:45 AM
#3513
Originally Posted by winner69
Your brain keeps telling you crap that isn’t true. (Different brain to you Brain)
Donald Rumsfeld once said -
There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.
I would tend to agree with Brain a little here. For a growth company like Plexure, using DCF could get you a valuation anywhere between maybe 40c and $5. It's really valuing the assumptions of the modeller rather than the value of the company.
I wouldn't say that DCF is nonsense but when pricing in exponential growth, small changes in the assumptions will create large changes in the value. And with the large changes in the SP this week I don't think the market can even agree on a value for PLX.
For me personally, I'm not sure if their growth is going to dry up tomorrow or if they will grow 40% next year. How do you value that?
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23-05-2020, 12:26 PM
#3514
Yes I would never say that DCF is nonsense it is just that it needs to be applied using good data. Garbage in garbage out.
I will never loose any sleep over the unknown unknowns.
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23-05-2020, 01:36 PM
#3515
Rod Drury was always proud of his crocodile chart - didn’t have real data in it but it was a chart that had the revenue line steeply rising before flattening out and the expenses line only increasing slightly.
He told us it looked like a crocodile mouth and the wider it became the more Xero’s profits were going to be ...cool eh
Rod no longer there but the crocodile’s mouth never got as wide as Rods chart implied it be.
Maybe Craig needs a chart like Rods....currently down at neck level but surely the mouth must be opening big soon.
”When investors are euphoric, they are incapable of recognising euphoria itself “
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23-05-2020, 01:38 PM
#3516
Originally Posted by Brain
Yes I would never say that DCF is nonsense it is just that it needs to be applied using good data. Garbage in garbage out.
I will never loose any sleep over the unknown unknowns.
Even revenue multiples as a basis for valuation needs good data ....otherwise even that way is nonsense.
”When investors are euphoric, they are incapable of recognising euphoria itself “
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23-05-2020, 03:03 PM
#3517
Many posters here sound like Ogcc....when PPh founders...Chris n Elliot sold down their shares ...saying the company was crap....
Look at Pph now ..all fundies flocking in and buy..buy ..buy
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23-05-2020, 09:11 PM
#3518
Originally Posted by winner69
Even revenue multiples as a basis for valuation needs good data ....otherwise even that way is nonsense.
true but at least revenue is something that is quantifiable and we are looking at current revenue and not trying to guess what it will be in 5 years or so time. The real art in this though is assessing the ability of the board and management. Are they up to the task and also does the product or service have legs? These are the tricky questions and I wish there were simple answers to this. The answers to those questions in my opinion is more important than the balance sheets unless of course a company is loaded with debt, and goodwill and is bleeding cash.
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23-05-2020, 09:33 PM
#3519
Originally Posted by King1212
Many posters here sound like Ogcc....when PPh founders...Chris n Elliot sold down their shares ...saying the company was crap....
Look at Pph now ..all fundies flocking in and buy..buy ..buy
I am not highly critical of PLX . I have sold a fair few and It is still about 18 % of my portfolio. I have done well out of PLX and to some extent it has been a Covid antidote. My attitude is that PLX is not a done deal. 180 m users and they are not making a significant profit. There has been a lot of criticism of Balances views which I believe are just that - his views No Ulterior motives. I welcome the views of those for and against. Balance may well be right but in the short term people could make money. It is for individual investors to decide how they play the game. Personally I hope PLX goes from strength to strength and we all make money but there are significant risks involved. As winner would remind us - many known unknowns.
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24-05-2020, 02:12 PM
#3520
Member
Originally Posted by Brain
I am not highly critical of PLX . I have sold a fair few and It is still about 18 % of my portfolio. I have done well out of PLX and to some extent it has been a Covid antidote. My attitude is that PLX is not a done deal. 180 m users and they are not making a significant profit. There has been a lot of criticism of Balances views which I believe are just that - his views No Ulterior motives. I welcome the views of those for and against. Balance may well be right but in the short term people could make money. It is for individual investors to decide how they play the game. Personally I hope PLX goes from strength to strength and we all make money but there are significant risks involved. As winner would remind us - many known unknowns.
As Craig outlined last week, many of PLX contracts come from 2014 days when the platform was licensed based on the number of stores, not users.
This is the difference between the old management and the new management.... the ability to pivot those contracts towards more profitability. I just hope when the old contracts come up to be renewed, that they are happy to pay increase costs for the platform.
To be honest the new management team have taken this company from strength to strength. I'm happy to hold.
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