First of all, I like what Eric is doing, and I love MPOE. Last week I decided to cash out all my 250k shares at around 0.0040 - I guess I'm responsible in part for the recent drops. Below you can read my reasoning.
Let's start with the IPO. I bought 250k shares @ 0.0032. My reasoning for that was, that the 5-10x P/E is quite high for a small website, but on the other hand - it's a "stable" business, and I really hoped it would grow.
After a couple of months, what we can see on the charts is that S.DICE had a tremendous growth in dollars, while the profits - as measured by BTC - remained on similar levels.
Let me clarify what I mean by "profits" - obviously I mean *expected* house profits, sans the whales that came and went in Jan & Feb. If the wales come back, we'll have a reason to include them in calculating the profits, but as for now, at least I, wouldn't.
Aside from that, what I can see is that there is not much happening to the site. No new games, no new marketing - at least as far as I can tell from Eric's communication on the website and in this thread. As far as I remember, there are things happening on the backend - improvements etc, but marketing-wise, there is nothing.
I was taught that a part-time web business which is a milking cow, deserves 1-2x P/E valuation. In case of S.DICE there is a chance the service will grow jsut because it has the first mover advantage, and because of Eric's appearances on tv, but I'd say that this bumps up the valuation to 3x for me. Not 10x.
Finally, we all see what's happening to the price of BTC. It may be just a bubble, but if it isn't - there is a chance that we'll see a decrease in BTC profits. I'm surprised that it hasn't happened already - perhaps some miners bet a steady amount in BTC every month? Or S.DICE is used for some kind of btc-laundering? It would be quite spectacular to see the same amounts of BTC profits, but with BTC above $90...
And of course, there is a personal reason. S.DICE became a huge part of my investment portfolio due to the increase of BTC/USD price. I no longer felt comfortable keeping up such a high part of portfolio in one place. But if it was only for this reason, I'd leave some of my S.DICE shares. And if I was a panic seller, I'd have sold back in Jan/Feb, when S.DICE was at 0.008.
Now, back to the sale. After I decided I wanted to sell it all, the question was - how to sell it for the highest price possible. I was quite afraid that if I put a sale of 250k at a high price (like slightly below the lowest wall at the time - @0.0062), would cause a small panic, or at least, would make me wait for months before sale - and in the meantime someone else might come to the same conclusions.
I was afraid that putting it at 0.0050 (which was arround the lowest asks at the time), would cause a downwards trend with no chance for me to sell. I decided to go well below the lowest asks, at 0.0040. I lost 150BTC because of that, but I was still on plus relatively to the price I got on IPO.
It took like two-four hours to sell at this price.
I still considered keeping the remaining 100k shares, but after redoing the calculations over and over again (btw. I recommend Soulver & Google Docs for this
), I decided to sell them as well. Being a bit more relaxed, I decided to go for a higher price this time (not that much to lose), which was I think 0.0050, or even 0.0055. I sold 30-40k shares instantly, and the rest of the shares just hang there - that was the ~50-60k sale order some of you might have seen, the first wall.
During the coming 2-3 days some people began selling slightly below my wall, I moved the order to 0.0045, and noticed more people selling below the wall even still (the scenario I was afraid of when selling 150K the first time). But I got some more sales, and had just 30k left over. That's when I decided to dump it all at the market price, which was around 0.0031-0.0030, which you saw yesterday.
All in all, on average, I sold at ~0.0040, and earned 120BTC in dividends since IPO. I'm quite happy with the whole deal, although I obviously wish I've sold it all when it was 0.009 (but who would've known that the wales were just temporary - perhaps Eric?). I still have some of my BTCs on MPOE, waiting for one of the following:
- the S.DICE P/E to fall to 2-3x - either by an increase in profits, or by a decrease in share price
- Eric doing something which would increase the valuation to 10x in my eyes. That would probably mean consistently showing us that there is more done towards the marketing and development of the site
- seeing a premiere of a new game, and turning S.DICE into casino. I'm curious to see whether a new game would be classified as a new venture, or the same one. There is nothing in the IPO documents I can see that would forbid Eric from doing it as a separate venture. And if he did, my target P/E would fall down even further - to 1x-2x
Having said all that, I hope that I'm wrong, and I'll see selling S.DICE as a mistake
The MPOE is a very nice platform, and I'll be looking forward to future IPOs. As a side note though - I think Miresca should lower the setup fees, or introduce monthly support payments / payment by transaction. I paid 20BTC = 200bucks. Right now people have to pay 30BTC=2700 bucks. Therefore all the people with less than $100k to invest in one of three ventures on MPOE, need to use a passthrough. On the other hand - perhaps that's what he wants - to deal just with "sophisticated" investors.
On the other hand small investors can bring a liquidity to the market. An illiquid market brings down the valuations as well.
I was wondering whether to publish this all. Some people will say that I try to encourage a panic sell. As a matter of fact, I'd enjoy the panic very much - I'd gladly buy back S.DICE at 0.0009 (around P/E around 2x). Alas, after this post some people may set walls slightly above it
I hope though that this will stimulate the discussion, and we'll all learn something from it.
Disclaimer: some of the parts may be a bit off - didn't double check all the numbers, and don't forget some of them.
