/biz/ - Business & Finance

>>22938405

You've completely overlooked the points which are actually important.

"Other large-cap silver miners don’t trade at similar multiples; to the contrary, based on sell-side figures, we believe the median silver miner’s price-to-NAV multiple is 68% lower than First Majestic’s. This disconnect does not reflect some kind of quality premium for First Majestic; it’s a recent anomaly, only dating back to early 2016 (around the time First Majestic began paying stock promoters in cash and options for “digital marketing”"

"Is it normal for miners to trade at such a massive premium to estimated NAV? No. Below we summarize one sell-side firm’s NAV estimates for several large-cap silver miners.28 Excluding First Majestic, they trade at a median price-to-NAV multiple of 1.9x, while First Majestic trades 210% more expensively at 5.8x."

"There’s nothing inherently wrong with speculating on the price of silver or amplifying that bet via the operational and financial leverage of a miner. For our part, we have no strong view of the future price of silver. But to judge First Majestic’s valuation, we don’t need to. The stock is now so untethered from reality that it has become less a bet on silver than a bet on the sustainability of First Majestic’s own hype. But even the best promotional campaign, like the best mine, can only last so long. When sanity returns and NAV starts to matter once again, First Majestic should re-rate downward by 70-80%."