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I’m holding this, but it’s future is looking risky
Tomo SP could take a tanking
Gl all
Indeed it was and for a good few before them. This will end badly I am sorry to say. AO are easily the best at what they do IMO but access to the market is too simple and most people buy on price leaving online players chasing the lowest spend consumers.
This might well be the beggining of the end for AO as far as its current shareholders are concerned.
Front page of Sunday Times
Credit insurance pulled
That was beginning of the end for debenhams
I just bought some appliances with AO and was impressed with their website, range, and prices, so thought I'd look into their shares.
I saw the price was way down and wondered if it was an opportunity.
Then I read some of the messages on this board - including the one by Phoenix here - and thought "maybe not".
Half an hour later I get a call from AO ostensibly to confirm my delivery details, but really trying to sell me insurance and "club membership", neither of which I needed. To be fair the lad on the phone was polite and not too pushy, but it chimed perfectly with what other posters on this board have said recently: the margins in the business are inherently paper-thin due to competition, so profits are relying on these shady tactics; I can only imagine the cost-of-living crisis will make people think harder about buying insurance plans or club memberships that they know they don't really need.
n1shares you said it yourself the price of domestic appliances in real terms is way below when I was selling them in the 70's.
When the Recommended Retail Price was ended in 1982 it allowed the major discounters Comet, Currys etc to destroy the profit margins in the industry which eventually destroyed most of the retailers and manufacturers alike.
I was a National Account Manager for a major domestic appliance manufacturer, the profit margins were wafer thin and getting thinner every year.
I left the industry in 2001 and I have seen nothing since to convince me that the industry will become profitable again, when AO. went public I couldn't believe how many people could be suckered into buying this non profit making industry.
I can safely predict that profits will not come back and the share price will continue it's downward trend and there is nothing the directors can do about it? IMO of course.
... then join us this Friday with the management of Marks Electrical, the fast-growing online electrical retailer, who will be conducting an investor webinar following publication of their FY results.
The online presentation will be hosted by Mark Smithson (founder & Chief Executive Officer), and Josh Egan (Chief Financial Officer).
This event will take place at 10.30am on Friday 10th June.
Sign up here to register: https://www.equitydevelopment.co.uk/news-and-events/marks-electrical-fyinvestorpresentation-10june
I am sure this will come good so I topped my holding up twice today.I have bought from them and from what I hear around there service is very good.In fact inflationary pressures could be good for them as there are even less electrical outlets now than ever before as nobody has been making any mone and electrical prices are still lower in the main than thirty years ago not just in real terms but actual so I am sure that profits will come back
Another very important source of profit is rebates from suppliers....the source of issues at Tesco in the past. For AO, the amount owed was 21m Sep 2020, which already fell to 16m Sep 2021. This is pure profit and that profit stream will b falling with sales . Suppliers won't be willing to pay as much to a customer with declining sales so will fall faster than sales
Other points-
Obv Roberts selling isn't good sign
Delay to audited numbers and the late announcement, a whole month post period and with minimal detail considering it is a serious profit warning
Continued refusal to tell.mkt how much of profit comes from commissions/product warranties. They push the warranties incredibly hard ,even on v low value products. surely someone will take a look. D&G often make multiple calls to customers to beg them to buy, judging from online reviews ..inappropriate
All commission revenue to AO is pure profit and allows them to invest in what is a good website and delivery proposition and reasonable headline product price
Cecenomy and Curry's are barely valued at 3x AO at c 1bn despite having sales 12x and 7x higher
Even after the fall, AO isn't "cheap" for a lossmaking (forget the nonsense of Ebitda) business
They need to raise capital urgently in my view before the suppliers take that decision out of their hands
Will the likes of Odey throw good money after bad into a business that has only ever made a profit In a Covid year when shops were mostly closed?!
Net income since 2014 has been 6m,1m,(4m),(4m),(9m),(13m),(1m), 9 (covid)
What's this worth?? UK online penetration won't fall or grow much from here is my best guess. people who have discovered online MDAs will have done so by now and as AO admit, the offline people have upped their games
If people have good counterpoints, happy to listen
I'm short these shares
Look at the warranties accrual in the H1
89m...way in excess of the cumulative profits of the business...and they've told us this could be subject to a material revision downwards. The whole thing is a guess based on how long people want to pay obscene amounts to insure products which mostly don't go wrong. At the last year end, apparently it transpired they had "misinterpreted" third party data leading to an 11m cut in the estimate for future warranty income and now it looks this will be cut again, this time due to customer behaviour changes. Yeah right
They've told us new countries are basically dependant on success in Germany, and they've told us that basically the accounts are delayed as they are figuring out how to treat Germany. De rating as hope value of new countries goes to zero. In H1 , German gross profit was less than marketing costs. How is this business worth anything....no one will bid for it
Liquidity is a real problem too. The company benefits when it grows as customers pay before they need to pay suppliers. They're now shrinking hence comment on needing to take measures to cut costs. The easiest way to do this is to cut marketing which will hit sales more. Suppliers will pull plug as they're owed 315m as of Sep 21
Smaller competitor Marks Electrical is still growing fast but AO has stumbled into a freefall on top line and has closed two temp warehouses .
Maybe coming up again this afternoon?
re...Directors selling their shares? Theres only one way this is going unfortunately... GLA
....cldnt make it up ;)
...Since the Group's IPO in 2014, our Founder and Chief Executive, John Roberts, has maintained his shareholding and increased it with selected share purchases. John has now decided that he will dispose of a small proportion of his equity holding on an annual basis. Whilst there will be no certainty on any disposal, it is expected that John will dispose of c. £5m in shares during this financial year, representing c. 5% of his total shareholding of 107m shares.
..lol..love the timing......anyone here care to make a prediction as to the direction of travel re sp....?
logic etc etc etc ...wld suggest that at some price this is a steal.....right or wrong??
my v amateur TA drawn on May 10th 2021...sp then c 230....had a massive breach of HS neckline with a tp of c 70...which seemed ridiculous then....and here we are.
Is this the low point?....I have no idea..(I'm not a holder by the way..either long or short)....
all I wld say...to those ppl who are...is that the low of March 2020 wld appear to be in sight...c 50p...+ given the substantial open short interest...I wld be looking for short pos.to reduce substantially and or some uber positivre news to shift sentiment .
Directors selling their shares? Theres only one way this is going unfortunately... GLA
did anyone expect anything different? all online is down. Is it a takeover target now? A market cap of c350m. Does anyone know what the companies assets are worth? Its a long way back to a 1.00 now never mind 2 or 3
Intresting posts a few days ago on the 21 st April re price drop....... methinks somebody knew something last week and got out early !!
I must admit that a few months ago I considered buying in here but held back for fears of inflation etc and glad I did now.
I think that with inflation going high and people going short of money I can see a big slow down for white goods in both Cury 's and AO for this year.
Hope so, what I’ve managed to get my ave down to
Estimating The Fair Value Of AO World plc (LON:AO.) = 100p
https://simplywall.st/stocks/gb/retail/lse-ao./ao-world-shares/news/estimating-the-fair-value-of-ao-world-plc-lonao-1
drop of c.12% on very low volume doesn't make sense. This should shoot back up quickly IMO.
can't see anything obvious
Anyone knows why the drop today?
Thanks AKA - I tend to agree.
General good growth pre lockdown, large growth uplift during 'lockdown', noticeable retrace when 'open up' started. Probably overvalued and overpriced pre lockdown and during lockdown, now probably underpriced. Investor confidence shot to pieces not helped by product and personnel supply issues not helped by direct and ripple effect of Russian invasion. A series of major National and global shock waves make reading this and a lot of other businesses very tricky.
Any thoughts on AO. recent performance anyone? Is it going to be a long slog back up?
I would say based on factual information from their financial reports both are consistently struggling to break-even and therefore are overpriced with AO being overpriced much higher since CURY's mcap is half the equity (which is virtual anyways due to huge amount of goodwill and intangibles) but AO's mcap is 5x of equity (although more tangible) with no sustainable profits (esp. on P/E basis).
But for growth punters - probably any risk is justified..