Originally Posted by
SparkyTheClown
I'd make a few points thus:
- PEB is out to make a profit from the moment they are commercialised (EG, later this year)- they have the margins which means if the product sells sufficiently, they will make money. Conversely XRO's product is sold at a loss on purpose in order to grow marketshare. They do not yet have a timeframe for profitability, though they are clearly comfortable about buying marketshare for the time being.
- Markets do not inexplicably crash. They crash because share price valuations bear no relationship to earnings potential, and because people have been speculating on a large number of share prices going up, rather than investing in those companies' ability to earn in relation to their shareprice. They crash because people who do understand the correlation between price and value sell out, triggering panic amongst those who don't understand.
- In my opinion, it would be risky to hold both XRO and PEB, since they both have share prices that do not reflect actual earnings, but rather, the potential for future earnings. In the case of Xero, this means pushing up prices and reducing their cost structure, in the case of PEB, the ability for their product to foot it against older but more established diagnostic tests in key markets like USA and Europe. Holding both these stocks in large numbers would suggest you have an enormous appetite for risk!
- The time to be nervous about PEB is not now, but in around 6-9 months. It is then that PEB will need to have given indications as to whether US based urologists are going to use CxBladder or whether they are struggling with take-up. As mentioned above, someone who bought in around 20c should be feeling very comfortable. Someone who bought in at 45c would be considering the quick 50% paper profits in selling now, and someone who is buying at today's prices has the most to lose with the likelihood of maybe only doubling their money versus 75% losses over the next 12 months, and would either be someone very certain about PEBs prospects, or very clueless about the risk, or is curing their horse racing addiction with a speculative stock habit.