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If you look at BT and Vodafone, on a one year chart, they're both getting hammered.
https://www.google.com/finance/quote/VOD:LON?sa=X&ved=2ahUKEwiPqd-kxOn7AhWUhFwKHfsNBtMQ_AUoAXoECAIQAw&comparison=LON%3ABT.A&window=1Y
BT is down nearly 34%, with Vodafone down nearly 25%. The chart pattern for both stocks is almost identical, with the BT trace front running the Vodafone trace. In my opinion, Telecoms have been under sustained market attack for years, so I'll just keep holding and adding where I see value until the market games end.
As Warren Buffett says, "the first rule is not to lose money".
So I'm still not tempted.
Welcome back to the vod board Compound, nice to get your valued opinions here again
I had written off VOD as a complete basket case after reading this in the Nov results:
"Free cash flow was an outflow of €3.2 billion (FY22 H1: outflow of €1.0 billion) reflecting lower Adjusted EBITDAaL and
higher licence and spectrum payments in the period"
and then this.....
"Net debt increased by €3.9 billion to €45.5 billion (€41.6 billion as at 31 March 2022). This was driven by the free cash
outflow of €3.2 billion, equity dividends of €1.3 billion, and share buybacks of €1.0 billion used to offset dilution
linked to mandatory convertible bonds"
It makes it sound like VOD have a big black hole in their accounts from falling profits/rising costs/paying dividends that needed to be filled with debt so I stayed well clear, but after the recent big drop I thought it was worth a deeper dive into results/accounts to see what’s going on.
The real reason net debt increased is because there was a big jump in the collateral required for open derivative positions. That increased collateral is counted in the net debt calculation. The value of those derivative positions has increased, however that profit is not included in the net debt calculation. The value of the USD bonds are in the accounts at par value, which is higher due to the drop in EUR/USD at the time the accounts were prepared, but they are all hedged, but the value of that hedge is not in the debt calculation. You need to read the full set of results to see this, but the easiest place to look is shareholder equity which actually increased by 0.8bn over the last period. If the net debt was increased to cover a drop in profits/increase in costs/payment of dividends then that money would have disappeared and shareholder equity would have decreased, not increased.
The results are complex and the accompanying statements are somewhat misleading, so it’s hardly a surprise there’s been a panic since they were released and Read was sacked. Tbh I would have sacked him just for presenting those results the way he did, never mind all the opportunities he failed to capitalise on this year.
Don’t get me wrong, I don’t think VOD is in an excellent position and I can’t see meteoric growth any time soon, but the financials aren’t much worse than they were this time last year when the SP was much higher. On a fundamental basis the drop already looks overdone to me and at some point there’s going to be a rebound. Not catching this falling knife now though as I think a drop down to 78/80 is on the cards. I’ll have a little nibble around there I think, although fear could push this much lower if that level breaks. If I miss the boat before it gets there then so be it as the risk/reward needs to be right for me, and fundamentals could deteriorate which would warrant a lower price.
I certainly didn’t think I’d ever be able to buy Voda at 85p, but here we are. I bought some more this morning - we’ll see how this plays out as it definitely feels risky, with a lot of unknowns at the moment.
However, my feelings are that these are reflected in the price. I definitely agree with those saying there needs to be communication from the interim CEO though.
Who knows though, certainly not one for the risk averse at the moment! This was looking so good for me as I had bought the 52 week low of £1.06 and it looked to be on the recovery for a while. Oh well. GLA
I'm not really getting the detail I need on the charts as you have to 2002/2003 to look at similar prices. But, I have 78ish as the low in 2002 (you'd get a very different figure if you did the research properly and looked for example at Yahoo.finance data). But assuming some sort of relevance of that monthly chart it means buyers might get excited at the previous 'nominal' monthly low of 78. That would seem a sensible place to attempt something that's not just a penny bet if you like. I'm bored silly and without much to work on have entered my first very small long at just over 85.
Yesterday’s news was very positive. Luckily I was busy with other things so didnt fomo in. Added more today at 85p, what a gift at this price.
Margarita needs to come out and have a conference call as to what she will be doing as interim ceo.
Acceleration of strategy means what exacly in concrete terms.
Can't see any rights issue even being thoughts of, they will soon be getting the cash from the Advantage Tower deal.
If they now announce any rights it would look like VOD are in trouble and weaken their hand in the deal.
Just a little market jitters about vod and it will settle down again and go back to £1+
A piece of elastic stretches so far until it has to snap. Often those allowing to stretch believe they have no choice and at the point they try to unwind the tension a bit, its'exactly the point they should have let nature take it's course. The SP is inconvenenient, but I would not assume it's a block to a money raise. Again, look to RR.
"maybe there will be a rights issue to address debt some point. The debt is almost double the market cap"
Would you sell your house when house prices are rock bottom? Thought not, Vodafone are highly unlikely to consider a rights issue with the share price so low; Add to that, they're currently in the midst of a share buyback program to prevent dilution from MCB's, making a rights issue even more unlikely. The dividend's a different matter, and may go if a new CEO decides to drop it.
Today's drop doesn't look company specific as BT is also falling back fast. Is Jeremy unt about to hit telecoms with a WFT!!
Sold all my Voda share at 92 yesterday(Lucky when you see what the share price is now), may buy back when l hear some good news about the company.
It's not often I feel lucky, but I feel very lucky to have dropped out of this on a limit at 91 yesterday. I try to be careful, methodical and slow, but I made a mistake with my entry and have been very lucky to get out without being kicked in the teeth. I'd love to know why it jumped up yesterday (just to be slapped down)
think 81p test then who knows, 20p before back to a £1 on some development
I assume bargain hunters came in there just above 85 with a view that that represents value. I'm not that convinced and I think we could see 85 come and go on this drop alone. Voda would appear to have a lot of work to do. I'd also say that this is a massive and popular market that will make those of us who are patient a good bit of money. Trick is, be patient.
Well if that happens it won't be until next results as this divi payment has already gone ex Divi date, so have to wait another 6 months for any savings there.
Sell some more assets, cut dividend, and make up a masterplan. Back to a quid in no time!!
Indeed, both a divi cut and a rights issue seem very plausible. If I was in charge, I'd be pretty actively looking at addressing the debt. For anyone thinking that's unlikely, I'd say don't forget RR! I'd not carry too much Voda if I had the choice.
I'm in for a few just under 86p.
Will buy a few more when dividend is cancelled...
maybe there will be a rights issue to address debt some point. The debt is almost double the market cap
I'm looking at the longer term charts and with the SP in decline, it doesn't seem out of the question that the price goes to the 78-81p area. 45 billion is a lot of debt to service.
Yes looks like the spike has gone and we could be heading for 85p ish
I started trading VOD after the results and it's low spread and high volume made that good, until it wasn't and I entered when I'd have been better to wait. But yesterday the price rose up and got me out at a profit (very, very small profit) on a limit. What caused that rise? We're at 85.9 as I type and for spread/liquidity reasons it remains interesting (although I've not yet entered again). I was out at around 91, that's big pull back on the back of nothing I can see? Anyone?
Bought in @86.63 this morning...will add on/if further weakness....gla.