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Don, thanks for the insights it looks as if the company will have more freedom , lets hope it is used wisely. Just hope Stelios does not off load his holding .
@Taverham - I worked at ezj over a 10 year period. Stelios wanted to treat it like a cash cow and use all the available cash to be paid out in dividends. That was his key motive and he demanded a special div. It's not like he was being cautious and keeping an eye on spending, it's just that as a 25% shareholder to him a growing SP meant nothing, because he was never planning on selling and retaining it forever. He wanted the cash it generated. He was opposed to expansion because that was cash that wasn't being paid out. Now, if you bought into ezj for divis then that is bad news for you perhaps, but if you worked at ezj then he was frustrating at best to deal with.
Now one can argue if you started the airline and you own that many shares then you are entitled. What frustrated me was and this is a key problem with startups when the person who started it retains a large stake.
Whilst he started it, he was not at all responsible for the success of the airline. He basically just had a lot of cash to buy a plane and others then took it over very soon afterwards and he rode along and made it difficult for the company to operate freely as he opposed so much. All his other 'easy' branded businesses went nowhere...
I'm in two minds about it too as on the one hand he may have exerted a useful control but on the other hand he may have applied an unhelpful brake. On balance I think it is a good thing due to the greater freedom it gives the board but only time will tell whether they use it wisely.
Press reports that Stelios holds less than 25% and no longer has a blocking holding is intriguing and I cannot decide if this is good or bad news - views anyone?
Actually PantherPet you don't have to believe me - believe EasyJet. This is from the RI RNS:
"The Rights Issue price of 410 pence per New Share represents a discount of 35.8% to the theoretical ex-rights price of 638 pence per Existing Share by reference to the closing price on 8 September 2021 (the last Business Day prior to the date of this announcement)."
So this is saying 638p is the theoretical equivalent to the closing price on 8 Sep which was 789p.
So £9 is equivalent to £11.13. Same can be done with the earlier placing but that was only a 5% discount for a much smaller raise so hardly makes any difference.
Sorry PantherPat but I do believe I am correct and certainly don't need any tutorials or need to do any further reading to understand the maths. It's fairly straightforward stuff and my background is in this sort of thing.
If a company's shares are worth £18 and it doubles its number of shares without raising capital then its value (mcap) is obviously unchanged and so its new share price will be £9 - all else being equal and exactly as you say i.e. £9 today is equivalent to £18 then.
If a company's shares are worth £18 and it doubles its number of shares but raises £18 from each new share then its value (mcap) will also double and the sp remains £18. So £9 now is equivalent to £9 then.
EasyJet have done something in between so the answer is between £9 and £18 (I make it that £9 today is equivalent to £11.25 then).
I can't think of any simpler way to put it. If you still think you are right though, just forget the maths, stand back and look at your conclusion. You are not only saying that to get back to £9 that this is the equivalent of £18 in 2020 but that at today's sp of £6.86 that it is already the equivalent of £13.72 in Jan 2020. Do you really think that given all the issues you listed and that I largely agree with? I agree its value has fallen significantly but your numbers are saying that it is currently worth the equivalent of £13.72 in Jan 2020 and so it is actually pretty close to its peak now??
Actually these boards are full of misguided optimists. I like to bring balance and perspective. I wonder if easyjet will be able to hire at their old rates. I hear wage inflation is a thing nowadays; furlough is ending but most people haven't stood still. I might look in tomorrow. Good night all.
Panther, I guess you are a shorter.
These BB's are full of them
EZJ currently looking for new crew out of Manchester.
This is basic stuff, I'm amazed at how people here seem to struggle with basic principles. As for a "shift" in habits, I don't believe that to be the case, same assumptions were made after 9/11. Zoom is not a viable substitute to meetings, people do want to go on holidays (cheaper the better!), petrol is at $80 a barrel so what? $120 did not put them out of business. £9 by the summer is entirely possible but I'm not in the cristal ball business either. As stated before below 700p is a bargain. As always, if you want a look into the future 6 months, look west and see what goes on across the pond. The UK is exceptionally slow in this episode but not exceptional.
hexam, this beginning to turn into a tutorial on share trading. I suggest you do some more reading. You are confusing share price and market capitalisation with enterprise value. Please look it up. And after you have, also please understand that easyjet has already lost over a billion pounds in value since it last reported results, due to a cash burn of £40m a week, much discussed on here and elsewhere. The enterprise value btw MIGHT be similar to what it was back in March (results are due in October I believe), but it's certainly a lot lower than it was in Jan 2020.
Mik3y, you are clutching at straws. There are any number of reasons why he might choose to stay silent. He might even be doing it as a favour for friends - we have no way of knowing. All we can do as investors is assess facts and evidence. Easyjet is overvalued at the moment in any case, since its current share price and market cap do not reflect its debt and profit uncertainty. The shareprice is at a similar level in terms of market capitalisation as it was in the halcyon pre-covid days. easyjet will not be bargain until it gets below £3, and even then competitors might choose to see it go broke and buy up assets in a firesale rather than buy the entire concern. That is a pessimistic assessment, but let's see what the next few weeks bring.
*your
No PantherPat, you're reasoning only works if more money wasn't raised.
In the placing in 2020 an additional £419m was raised and the RI raised £1.2bn so £1.6bn in total. So you cannot compare an mcap today that includes £1.6bn extra funding with one in 2020 that didn't.
The correct approach if you take account of the amounts raised and discounts offered gives I think around £11.25 as the answer of what is equivalent to £9 today, not £18. If £18 was the correct answer I doubt anybody would be invested. I certainly wouldn't.
You would also think that the CEO of WIZZ would want to deny the rumours, if they were fabricated.
Maybe, maybe not.
I am also in contact with people in the industry and EZJ is very attractive , I am told.
Hexam, the share price and the number of shares define the market capitalisation (the value of the company expressed by its share price). Back in Jan 2020, EZJ's market capitalisation was approximately 377.3m shares times £15, making a market cap of about £5.6bn.
Today we have 758,149,619 shares, slightly more than twice as many in Jan 2020 and the share price yesterday hit £7.22. That made a market capitalisation of nearly £5.5bn, very nearly the value of the company in terms of its share price that was achieved back in Jan 2020. I hope that helps you understand the share price.
M1k3y; there have been NO ACTUAL BIDS for easyjet. That idea was a smokescreen probably inspired by cunning underwriters and management and promoted throughout this process. IF the managers of a company receive an offer to buy the company, THEY ARE OBLIGED TO TELL THE OWNERS OF THE COMPANY (the shareholders) so that the owners of the company can consider the bid. The directors of the company are the paid professional managers of the business; they do not own the business. The so called 'offer' from whizz was not put in front of shareholders because it was not a genuine bid. It might have been a phone call for all we know, or a conversation over lunch.
It is dishonest and a bit desperate to try to have it both ways, saying it wasn't a bid, so shareholders didn't need to see it, but it was a bid because easyjet with all its debt and empty aircraft is such an attractive 'bid target'. easyjet is no such thing. It is a loss-making enterprise fighting for survival in a market which is very difficult at the moment. Even after covid has subsided, we will find that flying has changed permanently, costs will be higher and customer volumes will almost certainly be lower, perhaps for a decade or more. That is what people in the industry are saying. DYOR.
Hexam, the share price and the number of shares define the market capitalisation (the value of the company expressed by its share price). Back in Jan 2020, EZJ's market capitalisation was approximately 377.3m shares times £15, making a market cap of about £5.6bn.
Today we have 758,149,619 shares, slightly more than twice as many in Jan 2020 and the share price yesterday hit £7.22. That made a market capitalisation of nearly £5.5bn, very nearly the value of the company in terms of its share price that was achieved back in Jan 2020. I hope that helps you understand the share price.
M1k3y; there have been NO ACTUAL BIDS for easyjet. That idea was a smokescreen probably inspired by cunning underwriters and management and promoted throughout this process. IF the managers of a company receive an offer to buy the company, THEY ARE OBLIGED TO TELL THE OWNERS OF THE COMPANY (the shareholders) so that the owners of the company can consider the bid. The directors of the company are the paid professional managers of the business; they do not own the business. The so called 'offer' from whizz was not put in front of shareholders because it was not a genuine bid. It might have been a phone call for all we know, or a conversation over lunch.
It is dishonest and a bit desperate to try to have it both ways, saying it wasn't a bid, so shareholders didn't need to see it, but it was a bid because easyjet with all its debt and empty aircraft is such an attractive 'bid target'. easyjet is no such thing. It is a loss-making enterprise fighting for survival in a market which is very difficult at the moment. Even after covid has subsided, we will find that flying has changed permanently, costs will be higher and customer volumes will almost certainly be lower, perhaps for a decade or more. That is what people in the industry are saying. DYOR.
"Firstly, you should all realise that it will NOT be going to 900p because that would be the equivalent of the share price back in January 2020 being £18"
No it's not.
No idea how you worked that one out unless (unbelievably) you are saying double the number of shares means half the sp , which is obviously not true unless the additional shares were issues for free. I think it is you who is 'very confused about the price changes'.
I doubt they will get to 5.00 without further bids emerging.
I anticipate that they will, in any event.
People here seem to be very confused about the price changes affecting this share. Firstly, you should all realise that it will NOT be going to 900p because that would be the equivalent of the share price back in January 2020 being £18 (it peaked at £15). Back in Jan 2020, almost no one had heard of Covid-19, easyjet had low debt and full aeroplanes, and you could walk into pretty much any semi-civilised country with a UK passport and not much else. £15 was a highpoint. Since then easyjet has DOUBLED its number of shares in TWO rights issues.
Hitting £7.20 yesterday was amazing, because that was like returning to a pre-covid price of £14.40 (2 x £7.20 because twice as many shares in issue) and only 4% below the peak price 21 months ago. Today easyjet faces a lot of headwinds; read the rights issue prospectus and the last set of results to see what they are. Some of the headlines are losing £40m a week and net debt now at £3bn. The RI will knock a billion off that, but that still leaves £2bn. Back in Jan 2020 it was just £300m (normal level of debt).
Also, there is massive uncertainty about easyjet's future earnings. Look at the FCO's guidance for going to and returning from any country, even European ones. There are time consuming tests, evidence letters and even the prospect of quarantine. On top of all that, the cost of jet fuel has doubled in a year. Interest rates are about to go up. Winter is coming and covid case numbers and deaths are likely to go up, while business travel has been proven to be unnecessary in a lot of cases (though not all, obviously) and much more expensive than zoom meetings.
£7.22 will, I think, prove to be a highpoint for the shareprice. I expect the fizz to fade, now that the RI underwriters are no longer punting the shares to their customers. They've done their job, been paid their fee, and made about £58m this morning selling the leftover RI shares (the 7%) to their mug punters who saw the £7.09 closing price yesterday, grabbed the shares at £6.90 this morning and attempted to unload them for a quick profit as quickly as possible. I expect the shares to sink slowly over coming weeks to below £5.
Sept 28 (Reuters) - Bookrunner:
BLOCK TRADE: EASYJET ABB BOOKRUNNER SAYS ORDERS BELOW GBP 6.90 RISK MISSING
BLOCK TRADE: EASYJET ABB BOOKRUNNER SAYS BOOKS OVERSUBSCRIBED AT THAT LEVEL
Again you try to mislead, "are we going to be around the recent highs of 1100" has no meaning now as 1100 pre-rights issue is not the same as 1100 post-rights so it is not the right number to 'get back to'.
If the price reaches 900 then this will mean we will be back to those recent highs and I believe this is likely. I invest because I think a stock is undervalued not because I think it will be X on date Y. I believe it will get back to those recent highs (so over 900 factoring in the RI) which is also around my current target exit price. I am hopeful that is before March but prepared to wait longer when the summer season kicks in. There are no guarantees though and plenty could go wrong (as you are so fond of pointing out) or right (as others point out) in the meantime.
Easy Easy Easy!
Looking good going 4ward!
I can see up to a 5% rise today, now the rights issue has finished, the markets don`t like uncertainty so we should see a nice rise.
The SP has fallen - but not in the last month (unless you're comparing apples and oranges).
If you think it's well overpriced then fine, act upon it. I don't think it is overpriced and its prospects look a lot better than they did 4 weeks ago (and by more than the 9% rise suggests). Beyond that I don't predict specific SPs on a certain date as that is crystal ball stuff and I can't carry off the outfit or the accent required for a fortune teller.