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Argo price is based on bitcoin. Bitcoin and a lot of stocks dipped some after Biden announced plans for higher cap gains tax. BTC recovering but hitting 60k resistance. When BTC breaks through 60k I believe ARB will raise steadily with it. Quarters and years as Peter Wall has said. HODL
"Argo price is based on bitcoin"
Please don't state such things without evidence.
The share price was 230p when bitcoin was at these levels in March.
Xenor
Yes the sp was higher we had a better PE ration, the wind was taken from the sails when the seed investors held the price down while btc was climbing, at this moment in time the P/E ratio is a joke we are undervalued as long as the shares are cleared once btc starts moving upwards again interest will return to this share have to remember a lot of the investors in these shares are also in crypto and right now it’s much easier to get a return from altcoins than it is btc or any btc dependant shares like miners once btc regains dominance things will start to move and the tide will turn
What is a good PE ratio for ARB though? Technically ARB doesn't earn anything because it doesn't sell any bitcoin. It's an asset on their books. A volatile asset as well.
Not the case. It doesn’t have to sell BTC to count is as income. They show any appreciation or depreciation in their P/L.
ARB earns plenty of BTC. And BTC is becoming increasingly mainstream/accepted as a form of payment.
Sorry, should add that they also of course show all the value of BTC when it is actually mined in their P/L - so all counts and overall PBT should be c£100m this year and P/E ratio will be very healthy- especially at today’s sp.
I think Xenor makes a valid point unless I’m missing something. So, ARB doesn’t sell any Bitcoin or Zcash. We know it has a loan it can draw down on but other than placings and diluting us, how is it paying its operational costs/overheads/staff?
Rory, completely agree. It was in the news today, just to give an example, money gram will be accepting Bitcoin. So more and more companies will start using it, perfect for us arb holders.
I kind of understand the model when all the BTC have been mined but up until then what?
Mittenator, long way to go yet mate, good few years of mining left, by then we should have loads of money, who cares what happens then. Remember Bitcoin will keep increasing in value. Imho DYOR
Poorinvestor, I get the ‘down the road’ bit but what about its current cash flow? Where’s it coming from? In any business, cash flow is king.
To be clear - ARB does have cash to pay expenses at the moment (from £49m of share issues in Q1). Some has been spent but most not and operational expenses are comfortably covered.
In the past it HAS sold BTC to pay operational expenses (else it would have a lot more now given how much it has mined).
Also it does not hold on to all BTC indefinitely anyway (though has held on to most of what it has mined this year). If it did this it would NOT be able to show any appreciation through its P/L.
Thanks for clarification Hexam
No problem Mittenator.
I must admit I had the same questions too, especially around its level of expenses and if, how and why it can recognise changes in the value of BTC. The answers though are in the company's detailed report and accounts along with lots of other interesting stuff (like breakdown of crypto assets held and the fact they use futures to hedge against HODL value). So well worth a read if you get a moment - though lots of dry bits as well to navigate!
So, at the moment ARB could draw down from the debt facility or sell ZCash to pay overheads etc.
I think they use ZCash to pay the mining costs which is the 15% (PW explained this in a Q&A), and hodl whatever is left.
The thing is that anyone investing in a company like ARB needs to think long term and radically. More and more companies are starting to accept it as payment, others are using it as a store of value (and hedge against inflation), and Texas is currently trying to legislate to more or less recognise some cryptocurrencies as formal currency that can be used to pay for goods and services just as the $ currently is.
So, in the not too distant future, ARB may not need to sell BTC/ZEC/whatever we mine in Texas to keep the lights on, they may be able to just use it to make payments - the same way they currently pay PW in BTC.
And the last BTC will be mined in 2140 - no need to worry about it.
Good job there are other cryptocurrencies out there too - and I think some of these will gradually overtake BTC in terms of profitability.
Rory - agree but as I mentioned below they also have plenty of normal cash as well to pay overheads at the moment. Also these overheads are currently small (only £2.4m in the whole of 2020).
Argo are one of the partners if you scroll down.
https://texasblockchaincouncil.org/#!event-list
@Hexam: So bitcoin does count as earnings even if they don't sell it? I was starting to think it might be more like an asset. Like if a gold miner didn't sell any of the gold it produces.
I find it hard to be optimistic about this industry any more. It seems to be too many private investors chasing rainbows and right now that is alt coins. Lots of people trading this share too which is annoying. Just look at today's chart. It will look similar tomorrow. I'm going to sell and move on once I get back within a 15% loss window (189p) but I fear we might not see those highs again anytime soon. The loss is too much right now. Hopefully we get some NASDAQ news soon so I can use that to exit.
That's correct Xenor. I must admit it was a surprise to me as I thought it would just sit on the balance sheet too but to quote the wording in the accounts it "acts as in the capacity of a commodity-broker-trader" which allows it to value BTC at fair value when it is mined with subsequent changes in gains and losses recognised directly in profit or loss.
In this way it recorded £0.3m of loss in 2019 and £2m of profit in 2020 from such changes in value. It is also uses futures, swaps and options to mitigate risk.
Like you I am frustrated by the SP at the moment as it is so driven by sentiment/fashion and people chasing rainbows to use your phrase. What keeps me reassured though is that the financials are so strong and in the end the SP should reflect these. I have projected estimated profits for ARB which I would never dream of doing for more traditional companies but here the business is so simple and the information so available. Of course you have to make assumptions (most notably future BTC value) but my own estimates suggest this stock is very undervalued. I could be wrong of course but I can only go on my own judgements. Good luck with yours and whatever you decide.
sorry - should read subsequent changes in fair value recognised directly in profit or loss
Xenor, it's your money and therefore your choice.
Please sell up and leave those deluded fools like me to wait in peace until BTC and Argo blow everyone's socks off.
Thanks for clearing that up Hexam. I was concerned as I had hear elsewhere that the miners are very over due to not having revenue in the traditional way (selling what they produce). And I figured that might help explain the collapse we are seeing. But if that isn't the case then I can only put it down to sentiment and rainbow chasing.
The share price concerns me because even though I sold some for a 15% loss a few weeks ago I am still sat on a big loss with the rest. Must be about 35% now. I do agree that value does come to shares eventually and the strong profits should help that value be realised. But my biggest fear isn't necessarily the rainbow chasers heading to alt coins and trading this stock up and down. It's bitcoin itself. This bull cycle will end at some point this year and crypto will go out of fashion until 2024 as happened after 2017. This stock will plummet at that point and we'll be sat on bigger losses than we currently are. I could well be wrong and bitcoin won't crash like that but it has in the past. People predicting £10 per share by the end of this year never take that into account.
I've learnt this stock is not for me. It's too volatile. When I bought into it, it was roughly following bitcoin movements in the 200-250p range and was quite predictable. Now it goes up and down based on traders, falls when bitcoin falls but doesn't rise when bitcoin rises. I'm happy to admit the stock isn't for me but I can't exit at these levels. Hopefully the price will rise at the end of the month when all the IIs buy in and I'll have a chance to get out. Good luck to all who have diamond hands and decide to hold longterm.