Sold Wafergen
I had the unpleasant opportunity to experience the ups and downs in Wafergen (Ticker: WGBS). I initiated the position in May and recently experienced a nice run up into Q2 earnings. I sold ~ 20% of my position early in the week locking in some nice gains. In hind sight I should have sold more as the stock was pricing in strong Q2 revenue numbers. The stock fell sharply after the Q2 earnings report. The revenues came in a little light, but it was the revenue guidance that tanked the stock. The annual revenue guidance went from $12 - $13 million to $10 - $12 million. The short fall can be attributed to the placement of the icell8 instrument. These machines cost $250,000 a piece and purchasers are not closing in on the deals fast enough. It looks like some of the sales will be pushed into the next year. The revenue guidance reduction directly impacts the merger price as the final takeout price will be based on a multiple of revenues. I exited my position today as I have no confidence in their guidance. I still managed to generate a net gain of ~ 17% so I really can’t complain. I just got a bit overconfident and greedy. The market definitely puts you back in place…
posted by Money Turtle @ 2:39 PM
5 comments
5 Comments:
Did you listen to the call + Q&A?
I think the majority of the shareholder base has an IQ <80
Do agree that their guidance is not worth that much. Also, still a risk in the shareholder vote required for approval of the merger. I mean, shareholders on the Q&A didn't even understand how much they would be paid under various revenue scenario's. Wouldn't be surprised if these same shareholders still hold on to their believes that this will be a multi billion dollar company one day, and thus, don't like the take-out offer. Furthermore, I think the latest financing round was done at 1$/share, less then a year ago. Would expect that these guys are also not really enthusiastic for a buyout of they feel meeting rev guidance is a stretch
And one more thing:
Management has an incentive to guide high: securing shareholder approval.
Q3 release will be interesting...
I did listen in on the conference call and was also annoyed by many of the caller’s questions. The call reinforced my conviction to sell. I didn't get the sense of confidence from management. The individual investors who asked questions are dreaming that another bidder will show up. The company was well shopped and there were no takers except for Takara Bio.
CNBC stated IOI due by mid aug and SI had final bids tomorrow. How long does it take to formalize a deal after indication of interest. Safe to say by monday we should see a deal or it will be couple of weeks before its announced?
thanks
I would model an early to mid September for a final decision...
Post a Comment
<< Home