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So about 36p is likely as the final price for this. Great for those that bought at about 24 and below recently…50 per cent profit approx. Not good for those that bought above 40p though. A big hit for those buying at a pound or higher.
Dollar strength? I see no value here. Maybe at 18 pence or something. Block is seen as weak with crypto. Still holding a few at no cost but too many other stocks going cheap. The reality here is that the Board here got very complacent and shareholders from 80p and above have taken a kicking.
Thordon how are you calculating TSL to be trading at a premium to Block?
Including the recent 9% capital return I make TSL to be at a 35%-39% discount to block (for no reason)
thinksmart is a holding company in investments with mainly block , so a usually discount to NAV to validate spread value.
Problem is Block holding is less then holding value of Thinksmart value.
Said this months ago should of just waited for the buyout clause money wise which was 3.5 times block value now.
Probably on days like this you see the good side of TSL, it never took off when Block was flying and now it's not dropping too much when Block is tanking. I bet it's still around 30p NAV but in this market that means nothing as zero buyers out there.
It is concerning how well Thinksmart is holding up at this price level, despite Block dropping heavily. Block is $58 per share at the time I am writing this post.
As communicated on the Tue, 29th Mar 2022 RNS:
"ThinkSmart continues to hold a position of 618,750 shares in Block, Inc (NYSE: SQ) ("Block") which based on a closing price of US$138.12 on 28 March 2022 and 1.31 USD: 1 GBP is valued at £65.2m equivalent to 61 pence per ThinkSmart share".
This represented an anomalous discount compared to the Thinksmart price at the time.
However, according to my calculations based on the above logic, we are now almost at fair value. With Block @ $58 per share = Thinksmart valued at circa 26p per share. This doesn't factor in the drop in USD/GBP.
At our latest valuation in the RNS above, USD/GBP was 1.31 USD : 1 GBP, at the time of writing it is 1.23 USD : 1 GBP. With GBP weakening and our 618,750 Block shares being valued in dollars this means we lose further value.
My thoughts are either shareholders are holding strong for the dividend or a further downward move is coming. I am a holder of Thinksmart and have been for a long time. However, historically we have traded at a large discount. Also on 12/05/2022 when Block dropped to a low of $65 per share Thinksmart dropped to a low of 19p per share, despite being below this for the 3 trading days we continue to hold.
Thoughts?
DYOR
https://www.tipranks.com/news/square-teams-up-with-apple-for-tap-to-pay/
Interesting that analysts see this as average upside of 70% according to Tip ranks. If that’s true then TSL is at a circa 70% discount to the future value of its Block shares.
https://block.brandlive.com/investor-day-2022/en/session/2c9836b4-c010-11ec-a230-b379299e726a
Interesting, especially re the Afterpay integration
I have this diarised for Wednesday
If I was advising the board I would tell them to trade the shares. So every time Block goes on a good run sell loads, if it keeps going higher sell more because I'm pretty sure if they hold their nerve they will get the chance to buythem back a lot cheaper on all these huge swings in the price. Instead they just hold them which to me seems pointless. Either sell them on a good run and invest in a new business or return the cash or trade them. They closed around 84 which is well off the lows of the week. Price is around 14-16p below the NAV too but that means little as they never trade anywhere near the NAV but they should not be this much difference.
I see that they intend to provide an update regarding the Block holding ahead of the year end results announcement.
I did wonder if an in specie distribution is one of the options being considered. At least it would give shareholders control of when to sell their Block shares [not to mention the almighty boost it would give to the SP]
Dartron, ah spotted it yes they do - as a non-current asset.
Good news however:
"As of March 31, 2022, the fair value of the investment in bitcoin was $365.5 million based on observable market prices which is $216.5 million in excess of the Company's carrying value of $149.0 million."
So at today's $30k per Bitcoin price the fair value of the investment is now around $240m - so they have $90m of unrealised profit they can't recognise until they sell those Bitcoins.
If Bitcoin were to drop below $20k (and they don't offload their Bitcoins before then!) then they would need to recognise a loss.
Steady buying going on at TLS this morning.
Agri, Block did buy a large amount of Bit coin. If you go back through the posts here, I wrote a summary when I was invested. I would say they are about break even on their bit coin purchase at current price.
Huge upside potential from this level
At today's prices TSL holding in SQ is worth $46m or £37m. Plus the TSL £2.5m distribution (cash) puts the market cap at a 37.1% discount to NAV. So 33p fair value if you believe Square will remain at $75/share. Or 63p if you see recovery to $150/share.
Rpmcc - you couldn't be more wrong. You need to look at their accounts. Their customers hold bitcoin and they hold customer balances which are both an asset and liability (and would include crypto balances). Then Block provide a crypto trading service but this is a back-to-back trade and don't themselves hold a stock of crypto as an asset - they buy and sell and take a relatively small profit on that trade. (crypto trading volumes have fallen 50% yoy 2022Q1 to 2021Q1)
My short term concern is the growth of operating costs without a corresponding growth in revenue - yet. The growth in the business looks positive however.
Today's £2.5m special dividend for TSL meanwhile is a 10% yield on current market cap - if TSL drops to 10p then that is more like a 20% yield. Plus you own Block an exciting fast growing business at a substantial discount to its current US market price. So 22p for TSL is a bargain. 10p will be incredibly cheap but I doubt we will get there. Doubt this will remain as low as 22p either.
Fantastic that £2.5m dividend is paying to investors. Just shows how strong TSLs business is currently despite the drop in shareprice
Their holding in Block ($SQ) bounced hard last night after a sustained period of dropping. So I expect we see a decent bounce here today into next week
Because they own a lot of bitcoin! Seems to drop and rise with bitcoin, but it’s actually only something like 1% of their value, so it shouldn’t be linked as much as it seems to be. I guess that was why I felt it’s a good buying opportunity now, as this drop isn’t justified to this degree? Might well go even lower but I’ve had a nibble today.
I agree, some will start to buy given the fall. I'm not sure where where bottom is but it hit my prediction of 20p today.
If it goes to 10p - 15p then i suspect we'll be able to buy in single digits.
Why do you think Blocks SP I affected by BTC?
Back to the price I first bought TSL. Nearly a 5 fold and I long since took my cash back. Square hit an all time low of approx $70 last night and I see lows of about $50 unless bitcoin really does tank when $30 is possible. US investors are nearing panic mode and there is a lot of margin calls after such a bullish run. I see TSL low at between 10p and 15p.....I am not sure this is the time to buy yet as I think the Nas is still going to fall but I can understand folk beginning to buy a few.
A couple of years ago I was heavily into GAN. it delisted here and relisted on the Nasdaq. The price soared many times and I sold out albeit a bit reluctantly. Since then the price has completely collapsed over 90 per cent. So easy to get attached to a stock and TSL is a classic example where investors have seen it go all the way up the mountain and then fall down the other side. For many, a large profit is now a large loss.
Block/square has tanked, hence this has, but is a lot of that related to bitcoin tanking? Crypto seems to be only a small part of their business, with main business still doing ok? No sign of the bottom yet but surely it’s close.. a lot of negative sentiment for tsl but this now looks very cheap
Given the macro environment I suspect this has further to fall, however, this is in an oversold territory on the daily chart. I suspect this will continue to fall, potentially to 20p. Look for the double bottom on the charts before this moves higher.
Wheres the perfect entry for TSL? Below 25p?
This will no doubt head towards 60p within a year given at least 100% upside.
Block now at $102.67 a reduction from $133 from Thinksmart value at £60 million.
We did not need to sell for shares and could of just let options go full term.
BoD have a lot to answer for , and we are just a holding company