More on SZYM

We discussed SZYM a lot when the thesis changed a quarter ago and I got out. It’s is still a Best Buy every month or so over at Hidden Gems. Now This quarter they had $9 million in product revenue, and cost of sales was $6 million, so they made $3 million on their sales. Roughly gross margins of one-third. Their SG&A and R&D come to $40 million!!! (I’m not counting $3.5 million in restructuring charges or $5 million in research grants because that’s not what this is about).

They were pleased because Revenues were up 29% year over year. But, with those gross margins, even a 1000% increase in product revenue (10-times increase) wouldn’t bring them close to break-even!!! It would bring in $30 million after cost of sales, and they’d need $37 million to break even. And that’s assuming no increase in SG&A or R&D (who are you kidding?). And yet it’s a best buy???

Saul

4 Likes

Sounds like WPRT. Stock price similar too!