rgupta
Regular
What a calculation and no one can make a fault out of that.$3 SP = $5.4B MC. At a high PE100 will require $54M NPAT / 0.7 ATO = $77.14M EBITDA / 0.65 = $118.68M revenue.
To maintain around $3 SP with hot PE100 requires circa $120M revenue.
$5.4B MC / $120M revenue = x45 revenue multiple.
A Nasdaq listing could result in PE150 similar to Nvidia & would require $36M NPAT & $79.12M revenue.
$5.4B MC / $80M revenue = x67.5 revenue multiple.
PE100 & PE150 are quite high so would require high growth rate & high forward looking revenue.
So the question becomes, how long until BRN can generate $80-120M revenue?
Could be quite fast such as via 50c royalty from Qualcomm x 200M smart phones = $100M revenue.
Or slower such as via Mercedes with premium cars having about 70 MCU's x 15% AI equipped = 10 x 2M cars pa = 20M x $1 royalty = $20M revenue. If 50% of the 70 MCU's are AI equipped in future due to extra sensors/Lidar etc = 35 x 2M cars pa = 70M x $1 royalty = $70M revenue.
I allowed higher royalty for Mercedes as their products are more expensive & royalty was going to be higher for more expensive products.
Then there will also be washing machine, dryer, air conditioner etc applications for MCU's as well. Will take a few years for mass adoption & there will be hundreds of millions units per year. May start with 25-50M units first year x 50c royalty = $12.5-25M revenue & within 2-3 years reach $100M revenue.
Combination of the above should result in about $100M revenue by end of next year including more license agreements. Thus SP should maintain around $3 SP towards the end of 2024. But it will need to be at a high PE100-150.
However, BRN SP tends to spike due to market excitement so it would not surprise me to see SP at $3 on the back of a couple of big name license agreements. If Qualcomm were to be announced it would create a frenzy & the $100M revenue will get priced in within 3-4 months of the announcement. 50c SP x 6 run to $3 SP would be highly likely as we had 39c SP x 6 run to $2.34 intraday peak when Mercedes was announced without any revenue.
So $3 SP could come as early as next 6 months or as late as end of 2024. The earlier it gets to $3 SP without revenue the higher the probability of a 50% retrace to $1.50.
Happy Easter to all.
On the other hand everyone including me is so excited to see share price can bounce very quickly.
One thing I want to add is this price drop is mainly because of shorter's activity and if we keep our faith in the technology and keep holding the stock until positive news start flowing, I assume $3 is not that far either.
To me the main things to look out are
1.Technology is real and everyone start talking on same.
2. We have a growing list of partners are we are definitely passed that stage where everyone will ask had they heard about brainchip?
3. Qualcomm is promoting a similarly technology which means even if they are competitors( only if but most probably a friend) there is a market and we can sell our product quickly enough.
And next mile stones for me are
1. Getting break even ( expenses and income equal)
2. Announcement of licence agreement by one or two EAP partners.
3. Start of 1st royality income.
4. Company can start projecting forward looking statements.
5. One of major broker start coverage on brn.
So to me until those things are start getting covered we may keep on getting same fluctuations based on assumptions.
On top a nasdaq listing could be an icing on cake.