Regardless of the direction 3D technology will take in the long-term, RLD will benefit from the short-term shift in the movie industry. However, investors may not see an immediate impact to results, as RLD is expected to report bottom-line losses for several quarters as it struggles with the upfront costs associated with distributing and recycling its proprietary eyewear. Gross profit margins came in at 6.2% for fiscal 2010, but eventually economies of scale will allow revenue growth to outpace expenses.
It will work in RLD's favor that it maintains low debt levels and can reinvest two-thirds of the $75 million expected from the IPO proceeds into future expansion opportunities.
RLD may not appeal to investors that are focused purely on the fundamental strength of an IPO. Instead RLD offers strong growth potential for those willing to take a risk on a technology play.
A quick walk through your local Best Buy (BBY) or a drive past the movie theater will offer a good gauge for RLD's future potential. It has positioned itself to be the "go-to" 3D technology developer, but consumers will have the final say as to how the 3D craze will develop.A full report on this stock is available from IPOfinancial.com
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