NASDAQ:SVRE
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SaverOne 2014 (NASDAQ:SVRE) significantly adjusted its ratio of ADS to common shares from 1 ADS to 5 common shares to 1 ADS to 90 common shares on October 28, 2024, to regain compliance with NASDAQ’s minimum $1.00 closing bid requirement. This effectively acts as 1-for-18 reverse split of the ADSs and has had the desired effect as the stock has again traded above $1 for the past 3 weeks and the company regained NASDAQ compliance as of November 12.
The pace of equity issuance by the company has been relentless over the past year and appears to have accelerated in 2024. As of 12/31/23, the company had 69.6 million shares outstanding but that number had grown to roughly 164 million shares as of November 2024.
VALUATION
Given our reduction in the forecast for revenues in 2024 and 2025, we’ve adjusted our target valuation for the company to roughly $20 million while increasing our projected ADS count to 38 million by 6/30/25. Thus, our new target valuation for the shares is $0.52/share but we recognize that many of the calculations that go into that target are highly variable and we will adjust our target as needed if the share count projections prove to be inaccurate.
The announced a significant distribution agreement with Motor Supply of South Carolina in September which followed a successful pilot between the two companies. The agreement grants Motor Supply the exclusive right to sell and install SaverOne’s system in ten US states. SaverOne’s management team indicated that this agreement “guarantees us at least 37,600 orders over the next 5 years”. This represents more than 10 times the number of systems that SaverOne has installed as of August 2024 in the company’s history, so it is obviously a very significant step forward for SaverOne. While pricing details have not been revealed it is safe to assume this could be a multi-million dollar contract for SaverOne if all of the orders are confirmed. Motor Supply of South Carolina appears to be a fairly new company founded in 2019 with less than 50 employees and it has only raised $2 million in capital to date so we assume that the very large number of orders mentioned in this press release relates to anticipated sales by Motor Supply to its customers. It will be important for the company to provide further detail around this agreement – for example what the unit economics are for the company, details around how concrete the “guaranteed” orders are and what is the timeline for the orders to begin showing up in the company’s financial statements.
VALUATION
We are adjusting our 12-month target valuation adjusted our target valuation for the company to roughly $12 million while adjusting our projected ADS count to 2.7 million at the end of 2025. If the significant Motor Supply agreement results in orders in 2025 this could positively impact our valuation target but for now our new target valuation for the shares is $4.50/ADS but we recognize that many of the factors that go into our calculation of this target are difficult to forecast at this time. We hope to have a clearer picture of the company’s prospects both domestically and internationally as we enter 2025.
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