Following a daily loss of 13.67% and a three-month loss of 27.27%, Mega Matrix Corp (MPU, Financial) is under scrutiny. With a Loss Per Share of 0.38, the question arises: Is this stock significantly overvalued? This comprehensive analysis seeks to answer this question by delving into the stock's valuation and financial strength. Read on to gain insights into Mega Matrix's current financial standing.
A Brief Overview of Mega Matrix Corp (MPU, Financial)
Mega Matrix Corp operates as a holding company through its two subsidiaries Mega Metaverse Corp (Mega) and JetFleet Management Corp (JMC). The company has three business segments: ETH staking business, GameFi business, and the leasing of regional aircraft to foreign and domestic regional airlines. The majority of the company's revenue is earned through its Leasing business segment.
When comparing the stock price of $1.2 to the GF Value of $0.05, it appears that Mega Matrix (MPU, Financial) might be significantly overvalued. This initial comparison sets the stage for a deeper analysis of the company's value, integrating financial assessment with essential company details.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is derived based on three factors: historical multiples that the stock has traded at, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance.
The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
Currently, Mega Matrix (MPU, Financial) appears to be significantly overvalued according to GuruFocus' valuation method. At its current price of $1.2 per share, Mega Matrix stock appears to be significantly overvalued. As a result, the long-term return of Mega Matrix's stock is likely to be much lower than its future business growth.
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Assessing Mega Matrix's Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of permanent loss of capital. Therefore, it is crucial to carefully review the financial strength of a company before deciding to buy its stock. A great starting point for understanding the financial strength of a company is looking at the cash-to-debt ratio and interest coverage.
Mega Matrix has a cash-to-debt ratio of 10000, which is better than 99.8% of 1025 companies in the Business Services industry. GuruFocus ranks the overall financial strength of Mega Matrix at 10 out of 10, indicating that the financial strength of Mega Matrix is strong.
Profitability and Growth of Mega Matrix
Companies that have been consistently profitable over the long term offer less risk for investors. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Mega Matrix has been profitable 5 times over the past 10 years. Over the past twelve months, the company had a revenue of $0 Mil and a Loss Per Share of $0.38. Its operating margin is -25422.73%, which ranks worse than 99.9% of 1036 companies in the Business Services industry. Overall, the profitability of Mega Matrix is ranked 5 out of 10, indicating fair profitability.
Growth is probably the most important factor in the valuation of a company. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Mega Matrix is -84.7%, which ranks worse than 99.9% of 977 companies in the Business Services industry. The 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 841 companies in the Business Services industry.
Comparing ROIC and WACC
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Mega Matrix's return on invested capital is -150.37, and its cost of capital is 16.61.
Conclusion
In summary, the stock of Mega Matrix (MPU, Financial) appears to be significantly overvalued. The company's financial condition is strong and its profitability is fair. Its growth ranks worse than 0% of 841 companies in the Business Services industry. To learn more about Mega Matrix stock, you can check out its 30-Year Financials here.
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