🚂 All aboard! We are now 50 editions young. Thanks for joining us on this wild journey so far, and we can assure you the best is yet to come.
If you like our content, please forward us to a mate - it’s what keeps us rolling each week ❤️
In today’s edition:
💡 The Rundown
🔮 Data analysis on 6 months of Reddit stock research
🧠 Neurodegenerative disease treatment
Markets
Sources: Google Finance, HotCopper, asxbot.io
WTF: Rewardle Holdings (RXH) behaved like a crypto today, zooming up 167%.
The market reacted ecstatically to news of a consulting services deal with SplitPay, a BNPL player targeting the UK and European markets.
This will see Rewardle earn a minimum $5k a month, with fees anticipated to average ~$10k a month in a 2 year deal - a solid amount compared to their current $437k ttm revenue.
The Rundown
💡
The big getting bigger: Apple has seen profits double over the pandemic, driven by Chinese iPhone sales.
BNPL partnership: Sezzle (ASX:SZL) has partnered with Market America Worldwide, giving customers of shop.com the option to buy now, and pay later.
Drone delivery market: German start-up, Wingcopter, has crafted a drone capable of making multiple drop-offs on a single flight.
Not bad for a boomer stock: Commonwealth Bank (ASX:CBA) has reached a 52-week high, surging just over 43% in this period.
Remaining constant: As expected, the US central bank has kept its interest rate at zero, as inflation rises and impacted sectors continue to improve.
Web Stock Analysis
🔮
Over the 50 editions of Hype Train we’ve posted 100+ links to Web Stock Analysis from many different sources around the web.
Amongst these sources is the infamous subreddit, r/asx_bets…
Now that we have collected data over nearly 6 months regarding the most upvoted stock research (due diligence) posts, we can begin to answer a highly anticipated question:
Is Reddit stock research actually any good?
Methodology
77 Reddit posts including some bullish and some bearish (we haven’t taken sentiment into consideration)
All posts were amongst the most upvoted due diligence posts on Reddit (r/asx_bets) within the week they were posted
Performance is calculated as performance from day posted on Reddit to today’s date (29/4/21)
Number of upvotes vs. stock performance
There doesn’t seem to be a meaningful correlation between number of Reddit post upvotes and stock returns
Date of posting vs. performance
Returns seem to become more extreme as time goes on from the post date
No periods of high success posts identified
Highest returning stock due diligence posts to date
🥇 DW8 and why you should own it (u/shadowpheonix2) + 133%
🥈 DOU - Douugh DD (u/itsdankreddit) + 129%
🥉 ASX:IHL Incannex Healthcare Biotech/Medicinal Cannabis (u/Exalted_HC) + 123%
FLN DD (u/ramzataztaz) + 92%
RLT DD (u/potato_monster1998) + 66%
Lowest returning due diligence to date
😢 Emerge Gaming (ASX:EM1) - A Final Word (u/neke86) -64% (this actually has a relatively bearish sentiment)
Bottom Line: Given the variability of returns we see above, r/asx_bets really does seem like the ASX casino. Further analysis should investigate (1) sentiment of posts and (2) quality of the post vs. return.
A big limitation (and definitely not the only one): Who knows how long the time horizon for any of these DD posts was meant to be… i.e. what if they suddenly moon or crash next week, next month, or next year?
Up to Speed
🧠 Alterity - Neurodegenerative disease treatment (ASX: ATH)
⚠️ This isn’t a stock recommendation. We’re not financial advisors… we are finance and business news guys simply introducing some ASX-listed companies operating in industries we find cool. The information in this section is for educational and general purposes only and should not be taken as constituting professional financial advice.
🏢 Company:
As the population gets older, there is a rapidly growing need to support people with neurodegenerative diseases such as Parkinsons.
Alterity is developing a new treatment that has been shown to preserve neurons and improve function in Parkinson's and MSA animal models based on their patented molecule ATH434.
Early milestones the company has achieved include:
$500k donation from the Michael J Fox Foundation
US patent approved
Development pathway provided by the FDA
How do they make money:
Currently, they don’t. Alterity relies on donations, grants and share placements to raise capital to further develop their treatment.
However, should their drug be successful in development and gain the required approvals, the company estimates that there is the potential for up to $725M USD in annual sales for the treatment of MSD. Now, given that the company have forecasted this number themselves, we will take it with a grain of salt; but given the tiny market cap of just $62M AUD, this highlights the growth potential.
💡 So what's the plan here?:
Having just completed phase one trials, the company needs to move their molecule through the remainder of the clinical evaluations and then take it to market. They expect this next phase of trials to be completed in 2022.
🏭 Industry:
There are many competing treatment options being developed for Parkinson’s and MSA which the company has summarised in the table below:
As you can see it is a diverse field of competition with ATH434 being behind many competitors in its development.
📈 Financial health and valuation:
Financial Health:
ATH's short term assets (A$37.4M) exceed its short term liabilities (A$3.0M).
Current ratio of 12.28 (Yahoo finance). This indicates that the company is comfortably on top of its liabilities.
Alterity Therapeutics Limited incurred a loss of $8,561,862 in the half year to 31st December 2020, but given their cash holdings, this should provide them with sufficient runway to meet their current goals.
Market cap is only $62m. Definitely well-in small cap territory.
Valuation:
$0.03 current trading price on 29th April
$0.06 from Morningstar on 27th April
This article details best practices for Biotech Valuation, which could be useful in assessing pre-commercialisation companies in an industry like this
🤔 Unqualified opinion:
Addressing a big problem: There is no doubt that whoever finds an effective treatment for some of the main neurodegenerative diseases and successfully commercialises it will have hit a goldmine, not to mention the ethical value of such a discovery. ATH is playing in an interesting space that could be lucrative if they are the company to make it to market with the right product.
Tough competition: The company themselves acknowledges they are just one player in amongst a market of companies rushing to push new treatments to market. Without any specialist medical knowledge (out my circle of competency) its very hard to judge what their chances of success are compared to the competition. Just something to think about though, if all the companies had an equal chance of success, the individual probability that it will be ATH is low.
Overall: This is a tough one to judge without being an expert in the field, as there are a lot of technical factors here. Without industry specific knowledge, and in what seems to be a highly competitive field it would be hard to assess this without substantially more in-depth research.
🔗 Research links to further understand this company
Being very new, there is still limited resources available for this one.
📧 Did someone forward you this email?
Sign up here, it’s free.
Thank you and have a great week.