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Pre-open price of Block values TSL holding at ÂŁ66.5M. Discount too large to ignore. Decided to average down today.
Wheres the perfect entry for TSL? Below 25p?
This will no doubt head towards 60p within a year given at least 100% upside.
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.
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.
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?
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.
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 ÂŁ2.5m 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.
At today's prices TSL holding in SQ is worth $46m or ÂŁ37m. Plus the TSL ÂŁ2.5m 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.
Huge upside potential from this level
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.
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.
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.
If Scaramucci is correct then SQ will do well in the coming months. If Bitcoin returns to $40k the unrealised gain on its BTC assets grows from $40m to $170m. $170m is only equal to 4% of SQ. market cap at today's $79 price but I doubt we would see a $79 price in a $40k Bitcoin world.
https://www.marketwatch.com/story/bitcoin-has-already-bottomed-has-a-fair-value-of-40-000-says-anthony-scaramucci-11659465805?mod=dist_amp_social&link=sfmw_tw&redirect=amp
Interestingly even after the dust has settled, the special dividends given this still trades at a 2.9p a share discount to the current buy price (38p) and a 5.9p discount to the current offer price.
This means if the winding up vote goes through (see my earlier note it's madness to keep a ÂŁ2m/year admin cost of a Plc going after October when it's only asset/operation are Block shares.... you lose about 5% of your holding per year while you wait!), there's a 14.4% return in 3 months to today's price plus (or minus) and movement from Square's market price (currently $85.94)
GLA
Eyewatering loss. But the rationale remains the same.
TSL confirm it makes no financial sense to keep TSL running (will lead to further shareholder value destruction).
The 15% discount to the conversion price in November remains the same. i.e. TSL's drop 36.5p to 30p corresponds perfectly to SQ's $85.94 -> $69 price. This is interesting because TSL previously wasn't correlating.
i.e. the market has cottoned on. So the question now is do you buy TSL and get a 15% return in November 2022 but run the risk that shareholders are the turkeys that do vote for Christmas - i.e. do vote against the scheme to shut down TSL and convert shares to cash at a 0.5% discount to SQ's price in November. The 2nd risk to consider is SQ drops lower than $69 in the next 6 weeks. Analyst consensus is that SQ offers upside, and is both profitable and cash generative albeit at a low level.
GLA
There is an implied threat of delisting the company if shareholders do not vote the way management want.