Good & cheap SaaS biz / bad balance sheet

Shares will re-rate meaningfully when the company solves its funding gap

Welcome back, Absolute Value readers!

Today, I am sharing a write-up on a funky little situation.

This is an event-driven idea with the possibility of turning into a longer-term hold if the company is able to fix its current balance sheet issue.

There is some serious hair here. There is a non-zero chance that the equity could become worthless if operations deteriorate meaningfully and the company is not able to roll debt maturities or push out earnout payments. Alternatively, the company could raise equity in some very dilutive form. So, whatever you do, please SIZE it appropriately. Caveat emptor.

However, if the company is able to fix its current balance sheet issues, I think that the equity could be worth 4-8x the current price. So there is enough upside here to make this a compelling risk/reward situation even if the downside looks a bit scary.

With that said, let’s take a look at the opportunity.