“Headquartered in Sydney is an organisation trying to make Australia the wine logistics capital of the world through technological innovation. Digital Wine Ventures has created a new marketplace called WINEDEPOT and while the company is not yet profitable, it has clearly struck a nerve in the marketplace judging by its growth rate. At first glance it might seem like this company is overvalued, but dig a little deeper and it’s clear that Digital Wine Ventures is just getting started.
Like a nice wine, expensive, but worth it
Just like a nice wine, Digital Wine Ventures is certainly far from cheap with its Trailing 12-months EV/ Revenue ratio of 125x. However, when we look at the explosive growth the company has experienced over the last 12 months, the renewed focus of Australian wineries on the domestic market and the company’s new partnerships, we think the valuation is likely on the low side. When we look at the direction the company is taking, we really can’t see anything that we think should be different. There is certainly strong dilution risk for the shares in the near to medium term as Digital Wine Ventures is unlikely to be profitable in the next few years, but we don’t see any insolvency risk. Don’t get us wrong, this is a risky company as it is pre-profit and has yet to solidify its place in the market. However, for investors willing to take on that sort of risk, this is certainly one to look at. Four stars from us at Stocks Down Under.”