CTV 0.00% 0.8¢ colortv limited

I can see your reasoning, however it was all premised on EN1...

  1. 203 Posts.
    lightbulb Created with Sketch. 236
    I can see your reasoning, however it was all premised on EN1 making a profit, which was the entire point of my post.

    I didn't say people shouldn't entirely care about revenue, I wrote it was meaningless in valuing a company when it based entirely on debt-driven expenditures.

    "At the expense of short term cash profit" - what do you classify as short term?

    "Of course at any stage he can turn off the tap on growth with such a model and be making a massive NPAT." - Are you sure about that? At ANY stage? I believe it is tremendously hard for a company to suddenly change its approach to make a sudden NPAT. Look at UBER - it has never made a profit. It listed, as no one other than subscribers were willing to give it cash, and the investment bankers which backed it wanted to trick people into believing in the hype whilst earning a nice fee for running the IPO. Now, UBER, like NETFLIX, have been caught up with by other companies in the segment, and will never be able to make a profit, but continue to convince people they need more debt to "capture market share". You can't have a number of debt-fueled years, and then suddenly expect there to be an NPAT. What happens when the music stops? When your competitors catch up to you at a faster rate than you expected, i.e. when the music stops? Wouldn't you rather a company that didn't issue dividends but instead reinvested its profits into the business, along with debt in line with its debt exposure covenants, rather than a company that hasn't ever made a profit, but promises increasing revenues and ever expanding market share?

    I understand your point about trying to capture market share, but at the end of the day, after all the hype has gone, show me the money - what is the point of a loss-making company expanding to capture more market share with a business model that is loss-making?

    When EN1 issues its first audited quarterly statement showing a NPAT, with a plan to re-invest its profits into expansion, I'll be satisfied. When did it ever becoming OK for people to accept as the status quo for a company to use debt to finance its expansion without actually showing that the underlying business is making a profit? Your reply seems to indicate that you are perfectly happy with a loss-making company to continue to get into higher debt as long as it captures market share. Hmm.. a bit risky no?

    Regardless, thanks for the detailed response.


 
watchlist Created with Sketch. Add CTV (ASX) to my watchlist

Currently unlisted public company.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.