Quote from: RationalSpeculator on May 24, 2013, 02:06:57 AM

Quote from: Zebulon Pike on May 23, 2013, 09:41:03 PM

Quote from: EskimoBob on May 23, 2013, 01:57:19 PM

I am wondering, what stage you guys are in collectively - looking at the Kübler-Ross model.
I think you guys are past the Anger stage (remember the whale song, uptick in price, followed by share dumping from the owner?).
Can this be some type of bargain phase, with a twits of "The idea that saves this train wreck... pleas!"?

OMG! I know! All you have to do is figure out, how to make this game exiting... easy Wink

I am somewhere between depression and acceptance. It makes me sad, but I am resigned to just watching my share value drop to zero. I have thought about selling them a lot over the last few months, but something keeps me holding onto them, in that I want to believe it will turn around, especially after seeing EV at Bitcoin 2013 last weekend.

Sort of like Bitcoin after the 2011 spike & crash, I am hoping that a year or two from now, everyone who sold out at this point will realize how undervalued these shares were.

My sympathies. Indeed compared to investing in bitcoins, sdice has been a disaster the past months. Basically totally collapsing from around 0.0070 to the current 0.0020, losing 70% of it's btc value. It's rightful to feel bad about that.

I agree with you that they are undervalued. It's very simple, it returns an average 10% dividend, but $ earnings and $ value have been tenfolding in only 1 year. This means this extremely fast growing company is valued at a P/E of 10. That is ridiculous. Sure there is a lot of legal uncertainty but still. Normally such fast growing company is valued at a P/E of 50 (dividend 2%).

If you hold it another year it will likely at least fivefold in $ earnings and $ value. Will it go up in bitcoin value? That all depends on bitcoin's performance but in my estimation chances are high that in a year's time bitcoin is still valued around $150, and that would give sdice a valuation of around 0.0100 instead of the current 0.0020.

After that however expect bitcoin to go into another bubble again, 100 folding in 1 ride and after the correction still having 30 folded. No chance for sdice to catch up as sdice will continue to shrink in size compared to the bitcoin economy. So I think selling out in 1 year and converting indefinitely into btc makes good sense. But indeed not now.

With some luck sdice is able to get a gambling license and then the current p/e ratio of 10 (dividend 10%) might very well change into a p/e of 20 (dividend of 5%), which is still cheap for such a fast growing company. This means the share price can double on top of the increased earnings. So instead of fivefolding in btc terms, it might 10 fold in 1 years time, bringing it to 0.0200 instead of the current 0.0020.

Basically sdice is valued at $40 million today. This company can easily grow to $400 million, and if it just continues to grow, even at decelerating rate, it will hit $4 billion too. In 10 years time, it might be worth $40 billion, and in 20 years time this company makes a chance to become the biggest company in the world, $400 billion (2013 Dollars). Nothing like being the leader in online gambling worldwide. It has not been seen before. That being said, the risk is much higher than simply holding btc, and btc has even higher potential valuations. So it's still a short term play I think, only to be prefered over bitcoin when bitcoin has just gone up a lot and is due for a long correction.

This is all based on the scenario that regulators will over the next year continue to clamp down on bitcoin, but will not outlaw it. And sdice will continue to be left alone by regulators. I think chances are high for this over the next year, since sdice just banned american residents and since there is no sign that bitcoin will be outlawed. If regulators do clamp down on sdice, all bets are off and even if sdice survives the value will be depressed. If that happens you will have regretted not selling sdice today for bitcoins. If bitcoins are outlawed than sdice is indirectly outlawed too and both will be depressed in value. So I think diversification into other assets remains important.

There is no reason or evidence right now that S.DICE profits will rise consistently and permanently. If Bitcoin value continues to rise, they will see negative turnover growth.

S.DICE is only useful right now as a hedge against a falling bitcoin value. It's latest dividend yield is low (10-15%) and worst of all, unstable. The March dividend was less than 5%, for example.

Saying they are undervalued is quite silly and invalid, since they absolutely are not undervalued compared to other securities. You can't say "X stock is undervalued because in the future it might be more valuable". Valuation is what the stock is worth right now, and measured mostly in its recent earnings and tangible assets.