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Once again, Droneshield (ASX:DRO) finds itself jutting up against the walls of overvaluation as the company inks its first ever profit of $2 million – leading to a sell-off Wednesday (though, there are many buyers in the mix as well, it must be said.)
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That’s more likely because, versus a $2M profit, the company has a $3 billion cap, and its $72M revenues aren’t too world-moving either.
Cash receipts were lower, too, at $60M, the company reported.
For DRO, that’s revenue growth of +210%, not to be sneezed at; there’s also the fact that it’s opened a new sales office in Europe, and the company cited a strong forward outlook. But there’s still the matter of overvaluation.
This isn’t the first time Droneshield’s been here. It wasn’t too long ago the price tanked after the market appeared to realise it’d started running a little bit too hot, but in that instance, markets also had a wall of short-sellers behind the risk-off pressure that peaked at 10.8% of shares in February of this year.
Then again, those short sellers have fallen off, and using public data (that lags by a week), clearly they’re not rushing back in. Helping matters is Canberra has recently pledged to spend on counter-drone technology, and earlier this year, DRO began making products for the civilian market.
Still, it must be said – based on fundamentals, and not vibes, this Aussie company’s inherently overpriced right now.
But looking around at global stock market sentiment, that mightn’t mean much right now, and it could be quite a while until it means something to anyone.
DRO last traded at $3.54/sh.
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