I pointed out this concern above. The problem is a lack of data about the value of the altcoin in question, due to low liquidity. I contend that it is impossible for a formula to determine a reasonable value. It says in the white paper the input to the formula is historical trade information, but that is not a correct input to use, in fact there is no input that makes sense.
The formula is used to adjust the price toward the point where an equilibrium between token buy and sell volumes is reached. That price-point of course may change over time as it is a direct result of the market demand for the token at any given moment.
Here is
my talk from the recent Ethereum developers conference in Paris, where I go through the price-calculation method step-by-step.