Well-defined catalyst pathways represent the lifeblood for a pre-revenue public company.
Investor interest, and by extension valuation, becomes a function of catalysts or inflection points around valuation.
The fundamental problem facing a pre-revenue company revolves around time to an inflection point.
Unless he or she is deep value, the investor is not going to buy and hold for an event three years away.
Both pre-revenue public companies and struggling public companies face a very similar issue.
How do you drive increased sustained investor engagement, and increase trading volumes?
The answer is well-defined catalyst pathways and creating volatility.
When your stock is seemingly left for dead two variables are required to fix the situation:
1. Catalyst Pathways
2. Volatility
Catalyst Pathways: In order to drive interest, the company needs to develop a catalyst pathway.
The number of catalysts / inflection points needed and timeline length are an inverse function of how desperate the company may be.
The more desperate the company / narrative situation, the more catalysts are needed.
For example, a company trading less than $1 per share will need to identify as many catalysts as possible per quarter over a several year period.
A company might need to develop five catalysts a quarter for three years, which means 20 catalysts total.
In order to sustain success, the management team will need to continuously add five new catalysts to the end of the timeline each quarter to extend the timeline.
The total number of catalysts drives volatility, which is the variable that improves trading volumes.
Volatility: Low trading volumes for a stock mean little volatility and makes it nearly impossible to sustain a price change in an upward direction.
Injecting volatility into the company share price via a well-defined catalyst pathway will increase trading volumes.
The catalysts become a reason for investors to trade in and out over time. The more catalysts, the more trading that will eventually occur.
Developing a track record of success around the catalyst pathway will lead to more institutional investors and more high-quality investor stability over time.
Remember, if investors are not interested in your company use a catalyst pathway and volatility to fix the problem!
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