I put $8,000 into this and see a decent risk/reward. I expect to be down significantly by the end of the week. It comes with the territory. I expect it after I purchase any stock.
Disclosure: My cost is $3.00 a share.
DD:
This company bought out a smaller company for $100 million approximately 2 years ago. They've put approximately $10 million of operating losses per quarter into the company's product that they bought. So the current product cost them $100 million + $80 million-$100 million to develop.
They haven't sold too many (around 5 systems so far) because it was never approved by the US Regulators until 3 weeks ago (only could sell in Europe and a few other countries until 3 weeks ago).
Stock has lagged over the years, but to me, that isn't really relevant. Because, now, they have US Regulator approval. As of 10/16/17, the company isn't even the same that it was on 10/13/17. A medical device company without a US Regulator approved product isn't even a company at all IMO.
Since 10/16/17, the stock price has moved between $2.15 and $5.00 creating many bagholders. Basically, it was like an IPO. The company was not and is not what it used to be before 10/16/17.
They SOLD a ton of warrants and stock BEFORE 10/16/17, on the idea that the only way those warrants become exercised is if they get US regulator approval. No one else has in the past 20 years since Intuitive Surgical, so no one would really assume it would pan out, other than those who money to lose.
Those 50 million shares of warrants, the majority of which have been exercised over the past 3 weeks (due to requirements when they were sold), have given TRXC approximately $50 million in cash (OR WILL ULTIMATELY ADD UP TO THIS, GIVEN THAT SOME ARE NOT REQUIRED TO BE EXERCISED YET).
Also, back in September, TRXC did a deal with Stifel to sell $50,000,000 of stock.
LONG STORY SHORT:
They have, or will receive, approximately $100 million from warrants and their most recent secondary. As of 6/30/17, they had $30 million of cash in the bank.
Before the dilution, they had 150 million shares. After the dilution, they will have 250 million shares.
As of today, the company is valued at approximately $500-600 million. They have a product they paid/invested $200 million into. They have/will have $100 million or so in cash BY THE YEARS END INCLUDING THE NEXT 2 QUARTERS OF OPERATING LOSSES.
PROBLEM IS, NONE OF THIS IS GOING TO SHOW UP on the report on Thursday. So, more than likely, the shorts are going to have a good time with it.
But...
Its a $600 million dollar company, as of today, with a product that is worth at least the $200 million they put into it, with a bank account that will be approaching $100 million by years end. That leaves a $300 million valuation of their future sales and their cash flows. They've sold about 5 systems, I believe, for about $1.5 million each so far and each system has recurring revenue from supplies, etc., same as ISRG's machines. As they sell more, and expand, their business could grow rapidly as ISRG has penetrated a relatively small percentage of hospitals in the US and around the world.
The stock is up 500% in the past few months. It is up 100% since it was US Regulator approved. The dilution to the stock during that 100% increase has been HUGE, close to 50% increase in shares outstanding, but the stock is holding up well until what I suspect will be beating on Thursday. But, really, it has held up well, given the circumstances of the dilution and the subsequent drop from $5.00 to $2.50
I would NOT BUY it until Friday or next week if I were you. But, if any of you people are looking for a speculative bet to do, keep an eye out on TRXC.
TLDR: TRXC, surgical robot company with US Regulator approval, probably going to get hit very hard this week, but may be a decent long term investment (speculative investment).
Submitted November 08, 2017 at 03:37AM by thewallofpain http://ift.tt/2m3ueXj
