How To Tell FUD vs Actual Bear Thesis
In the early days of PLTR I made a similar post because we were having the same problem this board is. People spamming / trolling and then claiming they were "making a bear case".
They are not. So I'm going to give you people a good example of what stupid reddit FUD looks like and what an actual bear thesis looks like
FUD:
"oh my god! The stock went from .25 to .22 on no news!!! hows it feel?!?!?" - this is a low volume penny stock. One guy selling or one guy buying will cause big moves.
"Bag holders!" - this means nothing. Its a term used by people who don't know how to read a balance sheet
"$5M bonus!!!!!!!" - Meaningless. Nasrat has 220 million shares. Ultimately he'll make far far more money getting the stock up then he will skimming off quarterly profit. This is the only "fud" that has some credence if it keeps happening or that number rises. But I've been invested in this for 2-3 years Nasrat has for 29. He can take some cash off the table. But his ultimate incentive won't be cash it'll be the 200 million shares he owns. This is an attempt to get an emotional response and pretty much anything attempting to manipulate your emotions if FUD.
"Look at this chart with the dates I've selectively decided!!!!" - About as meaningful as me using the chart pre-vyvanese to claim this is a great investment. Chart investing is for suckers. If your an active employee at Jane Street its great but 99% of people who attempt to invest on technical analysis will lose all their money and burn out.
"oNe bIlIOn sHaReS" - meaningless. Doesn't matter if there's 1 billion or there's 10 million. Daily volume is daily volume and market cap is market cap. At one billion shares this is .22 a share at 10 million its $22 but there would still only be about $300k of daily volume and you'd want to see about 10% of the market cap in daily volume so we need to hit about $22M regardless of if thats spread of a billion shares or if its spread of 10 million. Share count would only REALLY be a problem if they needed to raise money in the future. Seeing how they have 0 debt and are profitable this really doesn't matter. Again, this is something that sounds scary that's attempting to illicit an emotional reaction. You never really see these people explain why a large share count is a problem
BEAR THESIS:
"Almost all the financial gains from this stock have come from a single product that has been getting compressed quarter over quarter" this is true. Personally I didn't invest in this because I think Methadone and Vyvanese are great investments but this is 100% true and 100% a real risk
"They only have one major client" - true and a risk but also typical for the industry. There aren't very many pharma distributors. If we become a major manufacturer for generics we'll have like 6. But the risk at the moment of them turning around saying "nah we're good" is very real and would be very disruptive"
"Future growth is reliant on government approvals" 100% true. So far ELTP has done a great job identifying and getting approval for high margin generics but the "past doesn't predict the future" pendulum swings both ways.
Though it would be fun to add a bear thesis version of a common Fud - "ELTP will need to raise money in the future and the large share count will make that difficult" - I don't think that'll be the case since their so cash rich but this would be an actual bear thesis.
Really anything that's not trying to enact an emotional reaction is a bear thesis. If they are discussing the balance sheet, the market, the industry soberly then its a bear thesis. If they're basically going "LOL U BUY AT .75?" its FUD.
TLDR My Theisis - if you go back to when Wolv was spamming "buyout soon" you'd see posts by me saying "I hope they don't". Personally I invested in this because I believe in this managements ability to identify high margin generics and get approval for them and I believe there is a lot more money in that long term then selling the company for $1.2. The pharma market in the USA is screwed and I believe there is a lot of room for a new player and when they get established I believe that new player will be worth a lot more then the .39 / share my average is currently at. But this is still a penny stock. A million things could go wrong. The entire point is you can use a little bit of money to get a large position. So be careful and make sure your weighting your position properly. If my ELTP position goes to $0 I won't feel it. Oh also, this is coming
Good luck everyone I hope this helps you identify who actual bears are and who sad, sad people just trying to troll a subreddit are.
edit: I would also not listen to anyone telling you this is a sure thing. Its a penny stock. It has a lot of risk and there are going to be big swings. Personally I think the risk vs reward profile is high enough that ultimately I'll do better sitting on this then I would have in the S&P but be prepared for this to go to .1 before it goes to $1 and ultimately be prepared for it to even go to $0. You should NEVER go "all in" on a speculative penny stock.