Jesse Livermore (a pseudo):

More Intrade Financials

I paid 7.50 euros to see Intrade&#8217-s full filings from 2008 at www.cro.ie. I&#8217-m not going to post them publicly, because they contain the names and addresses of everyone who owns shares in the company. (Fun fact: John Delaney&#8217-s address does not have a number, it has a name.)

A few new pieces of information:

-How can Intrade keep losing money? Like any other startup, by issuing new shares. Intrade issued $2 million in new stock last year. About 320,000 shares were issued, on a base of 1.2 million shares, which would value Intrade at about $10 million, the same as my ballpark estimate yesterday.

-I was correct about the valuation of the Tangible Fixed Assets. Intrade valued anything left over from Trade Exchange Network at $0, and depreciated computer and software equipment by 33% of the purchase price per year.

-The report does not break down expenses and revenues in great detail. It tells total employee compensation, and interest income, but does not spell out commission revenue or other expenses.

-Trade commissions are (properly) recognized only when they are paid. Trading fees are paid when trades are made- expiry fees are paid when contracts expire. Intrade likely recognized a good deal of revenue on election day, which at least mitigated their losses.

I don&#8217-t view this with the shock of some on the Intrade forums. These numbers seem entirely reasonable to me. Intrade has grown substantially comparing 2004 to 2008, and even in the absence of legislative change, will probably be profitable in 2012. I&#8217-m not going to short the contracts on whether Intrade will still be in business. Even in the unlikely event that Intrade were to close, there is no reason to worry about customer deposits.

Part I

The InTrade numbers

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The InTrade documents:

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I have obscured the personal addresses of these 2 persons:

What is the future of InTrade?

Comments are open.

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I have obscured the personal addresses of these 2 persons:

Our commenter:

We would need to see note 12 to understand what happened to the Share Premium account. It appears that the December 31, 2007 balance of the P &amp- L Account was applied against the Share Premium account. However, at September 30, 2008, the Share Premium is 1,063,614 higher than it should be (6,651,502 – 5,715,540 = 935,962 vs. 1,999,576). Note 12 might explain why.

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2007

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2008

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There might be a slight discrepancy between the accounts and the balance sheet.

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I have obscured the personal addresses of these 2 persons:

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