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  5. GRID: Hello. [Tantalus Systems Holding Inc.]
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Investment Q&A

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Q: Hello. Can you please profile this company and evaluate why it is a buy, sell or hold? Do you see the recent run as overdone or the start of something? Please focus on potential over 3+ years vs. 2024
Asked by Tim on March 13, 2024
5i Research Answer:

GRID is very expensive due to it's small cap, high growth profile. Valuation for forward EV/EBITDA is 112.2x, price-to-book is 92.9x, and forward EV/Sales is 1.3x. GRID's early stage makes the use of valuation multiples a bit harder to evaluate the company as we are more considered with the potential it has. We would focus on sales multiples for GRID, as that is one of the best ways we can evaluate growth in the company's early stage. Forward EV/sales does look like decent value on a stand alone basis, especially considering the potential for growth that GRID has. Additionally, all these multiple jumped up recently as GRID's price shot up with news the company had agreed to a partnership with GE. The sector gets plenty of hype, but we think there is significant growth potential, although at a high risk. Its small size and valuation makes an entry price less important. It is either going to work well, or not. After recent gains it might easily consolidate back to the 60c level. We think aggressive investors could buy in staggered small amounts as it develops. It is very hard to 'predict' anything over a long period. It is still losing money with negative cash flow, and it has some debt. It is going to need more capital as well, likely on a regular basis.