GEO Investing

GeoInvesting believes Great Basic Scientific’s (GBSN) stock price spike is unwarranted.  This gives us more of a reason to remain short the stock as we feel that its price will retrace back to realistic levels.  Great Basin is a rapid diagnostic medical test firm. We first alerted GeoInvesting premium members that we identified red flags associated with GBSN on March 30, 2015.

Great Basin Stock Price Spike Unsubstantiated by Customer Count

This morning, GBSN issued a press release reporting that they had 101 customers to end the first quarter, hardly a good reason for the stock price spike. From this conference call transcript, we gleaned that the company revenue per customer is approximately $20,000 to $22,000. Using these figures, we calculated that the company should expect to make a modestly small annualized $2.0-$2.2 million from these customers. The price/annualized sales ratio is 61.6, using the midpoint of $2.1 million per customer.  This ratio is well above the price to sales of any of its competitors that we highlighted in our initial report (using the 2016 revenue estimate). The company’s guidance of 170 to 180 customers by this year’s end would amount to $3.4 – $3.6 million in revenue which wouldn’t be fully recognized heading into next year. As we think the markup and stock price spike on this news is unjustified, we are staying short GBSN.

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