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Also it should be noted that it's much more difficult for suppliers to get insurance against company with payment terms like this vs previous terms. Again i'm positive on boohoo but this is negative news for sure.
Regardless of whether 60-90days is the norm in the industry. it was not the norm for boohoo until December 2022. So suppliers prices for boohoo will increase for a fact. As Fowldsy says the longer period of payment needs financing by someone so if factory or supplier going longer without pay then the price will be higher for sure.
Boohoo also offering discount terms for earlier payment. any supplier will add the discount terms % onto the price and take earlier payment so again prices will go up.
To disclose my position on boohoo i think it is a great long term share to hold and absolutely undervalued right now.
But this is not positive news re supplier payment terms.
This is one share I have no doubt returning in future. Regardless of short term these guys are growing every year even through rough periods. Sales will continue to grow. Profits hits are temporary. If you are holding and worried please I would urge just hold and the ride may be uncomfortable but boohoo share price will return to over £3 it may just take several years. Hold.
PE looks low due to profit affected by unexpected rising costs which can be factored in future as sell prices will rise to maintain margins. But transport costs faced last few months are not necessarily covered by sales of same items yet. Retailers work to set margins if costs go up the sell prices go up. Boohoo will make the required margin while customer pays £2 more for a hoodie.
Would be better to be more realistic. Fully expect this price level of £6 but perhaps in 3 years or so. Price level of £3 based on actual profit levels expected within 9 months personally. Would be delighted with earlier but at some point the share price will not be able to be contained since the bitcoin value held is increasing rapidly with each passing month.
The way we keep increasing our mining capacity and profit levels the market cap will catch up to reality. Rough calculations with bitcoin staying 50k usd. Mining 200 bitcoin a month from july mining margin 85%. 75million £ ayear. Meaning with 15 to 20 PE we should comfortably sit over £3.
Personally I can only see bitcoin moving higher than 50k usd and further expansion for ARGO meaning the £3 is a Conservative price based on facts of profit levels only. Not hype or imagination.
How many other shares have the amount of good news we have coming? The market cap will catch up to the profit levels in the end. We could get to the point within a year or so even with bitcoin at $50k where we're making nearly 100million a year profit from mining.