Originally Posted by
turmeric
Above is a clippet from a post from Snoopy on the RYM thread. Since posting there has been at least 1 person to 100% agree. My question is, can this statement be reconciled with reality now? I just can't see it. If so, how? I would love to know. Or is this simply stubborn and arguably even ignorant opinion? I can for sure see how people might have thought XRO was a bubble at $5 nearly two years ago, how that theory can be still held now and reconciled with todays reality is what I struggle with. Would love to hear some thoughts on that.
The last statement almost seems self defeating to me. If "Bubbles are always obvious with hindsight" then surely 2 years after the SP hit $5 and the SP is now $45 it is about time to admit you at least, might have been wrong?? How long does the SPO need to hold above $5 before the one admits they were completely wrong?
One detail to support where I'm coming from here; the C.S/FNZC report on XRO using the "US fail" scenario has a DCF valuation of $13.50 a Rev multiple value of $10.11 and a $12.14 composite valuation. Of course the details of these valuations could be argued but one point I would make would be to say that even if the "bubble" popped now, a SP of $10 or so is probably realistic. For $5 to be a bubble would we not be looking at a SP of well below $5, maybe even as low as $1 or so? No doubt someone could throw together a valuation model that supports that but I suspect if would have to make some pretty dubious assumptions.
Anyway, the debate is not particularly important IMHO, just thought it might instigate some interesting discussion :)