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G_G_G, I'm currently net short on this market but I'm pretty sure that this won't turn into a depression. Most likely we will see a pivot in central banks towards easier monetary policy once inflation trends down to the mandate (2%). Along with fiscal support from the government (pretty confident that Labour would do this + political pressure from conservatives would force their hand) the consumer should be insulated pretty well. Not saying we will see growth rates of 15-20% for a long time, however when valuing this for intrinsic assets I like this price, even if sentiment can carry it lower in the short term
It all hinges on the consumer, economic theory dictates that in order to reduce inflation you have to reduce demand (demand destruction). My view is that the market is overpricing weakness in the consumer demographic for ASOS. Thankfully I hedged my position when I bought at 11.50 so this isn't as painful, but I have full faith in management controlling return rates and getting back to previous profitability and growth.
Ubik, I don't think even the shorters think it will go to zero lol
Kgtrades, stay calm and don't do anything rash. Going purely by historical trends, the best buying times have been during large moves to the downside. Personally I think your fears are overblown, but I understand why you are concerned. Perhaps hedging your position to the downside (shorting some capital) may help you feel better about it?
Inflation bad for Boohoo --> forecasting looks like that stays high
Interest Rate Hikes bad for consumer --> earnings destruction, lower growth and margins.
Secular trends speed this up.
THIS IS UNDERVALUED. I AM BUYING SUB 45P
Opened a position here last Tuesday (£11.50) and averaged down on earnings. The drop is very understandable imo. UK CPI is expected to peak around 11% and the shorts are betting that return rates will increase with inflation. Given US inflation coming in higher than expected I suspect shorts believe Tuesdays CPI will come in higher than expected, forcing the BOE to be more hawkish and push the UK into a potentially stagflationary environment. That being said, I'm a big fan of ASOS and think we have a tremendous brand here. I like Jose also, think he is a great person to have as CEO. I'm would be tempted to hedge my position tomorrow
if there is further strength however, as I think this could go lower in the short term.
Was attacked a few weeks ago for my views. Advised people to sell on the rally however was shot down by T4G. Boohoo isn't going bust btw. Limit order in for 49.89.
Some good news.
Suspect that the next two updates will be positive. Expect better profitability and neutral if not positive revenue growth.
Southcoastbather sums it up better than I could.
Can't believe what I'm reading in this RNS. Feels like a joke how bad it is.
Trading4Good, I invest in Index Funds. Hence the single posting. I'm only posting here as you are spreading disinformation on this share.
Would like to hear how many shares you have.
Trading4Good, how many shares do you own? Seems odd you are here defending this share 24/7.
Don't think this goes lower in the short term. Institutions are risk off and are unlikely to short this further. Can see this reaching 80-90p while shorts unwind to reduce risk. Longer term, think this is in trouble.
I'm interested to hear it since he doesn't think cash flows determine the value of a business
Trading4Good, what is your bullish thesis on this stock?
Trading4Good, I'm not sure what your arguement is.
Firstly, you are assuming that the group will have the demand to support CapEx. This is not a given. Discretionary spending will decrease with interest rates rising. Before you give me the 'demographic are protected' arguement, they are not. Landlords and businesses will pass on costs, and wages will likely barely rise with inflation.
If they do reach this demand, it will be due to high marketing spend, hitting margins and due to the nature of the market this will remain, as the clothes are elastic in their demand.
Businesses are valued on the sum of future cash flows, and right now I can't see good cash flows. Neither can management as they're going into debt.
Trading4Good, what parts do you want me to explain?
Genuine Question, not trying to cause an argument.
UK growth is acquisition lead. ESG is nowhere near ASOS. Long term ROI on ASOS is far better than BOO, so the debt isn't as concerning.
MW don't need to spread fear on here, the financials do that for them.