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With a recession on the cards and this business selling very expensive items, it seems to me that consumers will see this company as superfluous.
Yes consumers will still buy chocolates but will switch to cheaper options
Yes you can average down but very risky in my opinion as this company may see further big drops
Andykc, the UK has become polarised between the very poor and the comfortable , who imv will still find the money for premium brand chocolate, indeed in a recession people switch to comfort food so the future here is solid imv.
I guess neither of us really know what will happen...
Unfortunately at the moment any bad news is met with a massive price reduction
unfortunately the size of the sector which could be regarded as comfortable is diminishing with astonishing alacrity.wait until the energy bills roll in in october.
Just bought a further tranche at £1.25 - cheaper than their chocolate now!
Hope they don't melt in the heat ??
Reading the update the market reaction does seem pretty severe. This is a performant company on many fronts
Why oh why do so many companies think that the USA is the way to go. The lure of the huge potential is too difficult to resist, but so many from the UK have been stung in years gone by. It's a difficult market to crack and the USA is protectionist. So, they've basically retreated from the USA and wasted all the money that investors stumped up for.....people must be sick as a pig to see the price slump.
Then there is a question mark of £23 million of loans to a joint venture in Japan. The statement implies to me there is doubt as to it's recoverability and also a muted comment about whether they will carry on in Japan in the long run.
That then leaves largely the UK where the directors have suddenly realised (doh!) there is room for further expansion. To the directors I say, stick to markets that you understand, UK and closer to home such as Europe.
And it will be interesting to see if the Directors show their confidence in the company by buying . What a volatile market AIM is. Far too much manipulation in dealings. I've seen this volatility so often before with the likes of fevr and asos (when it was in aim). My view is the drop is overdone. We're back to square one with a 2015 price tag. Only thing is, when is the entry point on a falling knife. I often go in too soon. Sometimes best to play the three day rule and if slightly lower and levelling off then may go in for a little punt. More often than not this stock rises nearer Xmas. It's just a question of going in at the right price in the hope there is no further profit warning. I hate this sort of update. It's full of bs talk to disguise bad news, so I'm still hesitant on this one.
Simon, great post and just to repeat a point I made yesterday, research has shown that people are brought up with a 'taste' for chocolate and consumers in USA like the hershey tase not the UK taste. The american adventure was doomed from the start it just surprises me that the company did not already know that.
As for the sp, given the US bit was tiny ,the sp fall is way overdone and I added yesterday and will do so again today if the price remains this low,