SCTY: Bottom or bust?On an absolute level, the price of SCTY -0.61% has declined to around 80% of its all time high. The question then becomes: is company's equity price going to stabilize at this level or is this the calm before the storm (a path to zero)? The company has a great story and in the eyes of many a visionary founder and ceo at the helm. The proposed merger may be partially attributable to the downward slide in the price of its equity . I believe in what they are doing and have confidence in the net benefit to all stakeholders - even shareholders for pushing forward with this vision of the future. However,this should not detract from the problems the company may or may not be facing and understanding if there is a value from purchasing equity at current price levels.
I intend to answer this question from both a fundamental and chart perspective. On a fundamental valuation, I will stick to the process Prof. Damodaran (NYU Stern) uses in determining value. The intent of this analysis will be to determin a view on trading/investing in this company for a long term holding (+6 month). If both views show a basis agreement, it would be prudent on my part to put my capital to work on those findings.
From a chart perspective, my opinion is a sell - and that has been the case for the past couple of months when looking at a weekly price trend. However, a monthly price chart will reveal the share price has been knocked down to relative lows and nearing ranges not since it IPO'ed. From that view it would be time to start considering opportunities, if they present themselves to go long, and seeing if the trend manages to reverse. Initiating shorts may less fruitful now given that the price drop has panned out in terms of magnitude and time.
I will update this in some time to include the valuation based on the fundamentals.
Damodaran
SCTY: Nearing bottom or bustOn an absolute level, the price of SCTY has declined to around 80% of its all time high. The question then becomes: is the company's equity price going to stabilize at this level or is this the calm before the storm (a path to zero)? The company has a great story and in the eyes of many a visionary founder and CEO 1.38% at the helm. The proposed merger may be partially attributable to the downward slide in the price of its equity . I believe in what they are doing and have confidence in the net benefit to all stakeholders - even shareholders for pushing forward with this vision of the future. However,this should not detract from the problems the company may or may not be facing and understanding if there is a value from purchasing equity at current price levels.
I intend to answer this question from both a fundamental and chart perspective. On a fundamental valuation, I will stick to the process Prof. Damodaran (NYU Stern) uses in determining value. The intent of this analysis will be to determin a view on trading/investing in this company for a long term holding (+6 month). If both views show a basis agreement, it would be prudent on my part to put my capital to work on those findings.
From a chart perspective, my opinion is a sell - and that has been the case for the past couple of months when looking at a weekly price trend. However, a monthly price chart will reveal the share price has been knocked down to relative lows and nearing ranges not since it IPO'ed. From that view it would be time to start considering opportunities, if they present themselves to go long, and seeing if the trend manages to reverse. Initiating shorts may less fruitful now given that the price drop has panned out in terms of magnitude and time.
I will update this in some time to include the valuation based on the fundamentals.
