Member Info for giantsquid

The fall is reminiscent of a major holder offloading in the background.

# Trades 2,466
Vol. Sold 1,044,696
Sold Value £1,401,767.38
Vol. Bought 2,280,398
Bought Value £3,034,100.32

These are not small numbers. These are not small trades. Time to stop making excuses and blaming the fall on low volume. Low volume it is not. Something else is going on here imv, be that shorters, a leak of some description or a large background seller.

Why are we blaming the falling share price on low volume? 2,000+ trades a day isn't low volume. It's actually a lot more than many large FTSE companies has in a typical day. In my opinion something else is going on here.

The dow is reacting positively to today's comments by fed chair Jerome Powell. Could be a good day tomorrow.

https://www.cnbc.com/2023/02/06/stock-market-futures-open-to-close-news.html

A bit of negative press won't do anything to suppress the share price. The company is booming.

The owner of British Gas, Centrica, expects a near eightfold increase in its earnings this year due to its balance sheet being boosted by soaring wholesale gas prices after Russia’s invasion of Ukraine.

The FTSE 100 group said on Thursday it expected earnings a share to be more than 30p this financial year. That represents an upgrade on City expectations of 23.6p to 26.6p a share, far outstripping the 4p a share generated in 2021, when pre-tax profits hit £761m.

https://www.theguardian.com/business/2023/jan/12/british-gas-owner-forecasts-eightfold-rise-in-earnings-amid-soaring-gas-prices

The William Hill acquisition was announced by RNS on 9th September 2021

What's noteworthy is the share price began to tank shortly after this RNS. It appears the market doesn't like the amount of debt taken on to acquire William Hill. It may come good in time, but risk has greatly increased as a result of this deal and the market doesn't appear to like it.

Dovish comments from Jerome Powell yesterday - the Dow will probably rally today. This could jump quite a bit this afternoon.

https://www.wsj.com/articles/global-stocks-markets-dow-update-02-02-2023-11675340054

Stocks with exposure to the US market will probably rally today after yesterday's dovish comments by Jerome Powell.

https://www.wsj.com/articles/global-stocks-markets-dow-update-02-02-2023-11675340054

It just isn't wise to take on huge debt, many times the company's market cap, and go on a massive spending spree at a time of massive global uncertainty, record inflation and high interest rates. They must have known they were taking a huge risk, but decided to go ahead anyway? And it's the shareholders who are taking the brunt of the risk, if debt becomes a serious issue and the share price tanks further, it's the shareholders who'll end up getting shafted.

Edward. No. Just no. One man and one man alone is responsible for driving this company into the ground.

The company has repeatedly stated "existing equity holders risk very significant dilution"

With those share price predictions, mcap would be in the hundreds of billions!

It's never going to happen.

Warren Buffet built Berkshire by reinvesting profits. He didn't spend money the business didn't have. He's famously opposed to taking on huge debt to fund expansion. So I suspect he would have described the William Hill acquisition as foolish and risky. It's a tactic that almost ruined Cineworld and almost completely wiped out shareholder value. The company still teeters on the brink of bankruptcy. William Hill is a great business but taking on so much debt to acquire it is why this stock has become high risk and it's why it's impossible to predict how much lower this could fall - especially when you look at what happened to Cineworld which has fallen 99% to just a few pence a share.

"come on MOOK drop a trading update ahead of any BID, to show them
that you are back in control"

Jesus Christ, isn't "Mook" the guy responsible for the share price falling 99%? A circus chimpanzee could have done a better job with this company than Mooky.

"888 bought Will Hill for £2 billion quid .... current market cap is £300M"

What matters though is net asset value (total assets - total liabilities)
I haven't checked what the NAV figure is here, but you really have to compare market cap with nav, rather than comparing market cap with total assets.

"Debt is from William Hill acquisition"

Big acquisitions like that are on the one hand exciting, but saddling the company with huge debt can become a real problem longer term. I know it's an entirely different company, but on the surface it does remind me somewhat of Cineworld's $multi billion acquisition of US cinema chain, Regal. I'm sure at the time it was all excitement and dreams of world domination etc, longer term though the debt became a serious issue that has almost driven the company to bankruptcy and the share price has fallen 99% to just a few pence a share. As i say it's a different company and I'm not suggesting that will happen here, but I'm of mixed opinion about taking on huge debt to fund massive acquisitions, especially at a time of high inflation/interest rates. I wish holders well here - I may buy in at some point but I'm opting to remain on the sidelines for the time being.

https://money.cnn.com/2017/12/05/media/cineworld-regal-entertainment-movie-takeover/index.html

"Following additional hedging arrangements, the Group ended the year with £1.8 billion equivalent debt, with 43% of effective debt in Sterling, 49% in Euros and 8% in USD, with approximately 70% of interest costs fixed for at least three years. As at 31 December 2022, cash (net of customer balances) was £170 million, with undrawn committed facilities of £150 million, giving total liquidity of £320 million"

"Revenue of £1.85 billion, in-line with guidance"

Debt does seem a bit of a concern? although the company generates a lot of revenue. I noticed the shares bottomed just below 30p in 2011 although presumably the company has grown somewhat since then - so maybe those lows won't be seen again. I'm not invested here but personally I wouldn't worry about today's update, I think it's a short term blip, nothing more. Whether this is a buy though at today's prices I'm undecided. The debt figure would be my main concern.

I suspect the reason behind the fall is Ukraine. The markets are over reacting to news German and American tanks are being sent. Tanks are just military equipment the same as missiles and anti aircraft defence systems - all of which the west has been supplying to Ukraine for pretty much the entire duration of the conflict. There's this assumption that just because tanks require personnel to sit inside them, that it's an escalation of the war. It isn't. The personnel operating the tanks will be Ukrainians, not German or American personnel. Which is exactly the same as all the other military equipment that's been supplied by the west - all of it is operated by Ukrainian personnel. So in effect sending tanks is no different to sending any other military equipment. The other thing to point out is the German tanks won't be deployed for months - and the American tanks won't be deployed for at least a year (as they're being made from scratch, IE, they won't be tanks from the American fleet). The whole thing is being taken out of context and blown up out of proportion - give it a few days and the tanks news will have disappeared from the headlines and the markets will once again have stopped panicking unnecessarily. The airlines are recovering strongly - I'm pretty sure all will move significantly higher over the coming months as we near peak summer season.

"revenue was at £1.3bn in the half-year to 30 June 2022 - that just doesn't stack up to me from a valuation point of view"

When it comes to running a successful business, the most important aspect of financial management is cash flow. Whilst it may look impressive to have vast levels of revenue from sales, the primary focus should be on ensuring a regular inflow of cash.

As the saying goes "revenue is vanity, profit is sanity and cash is king"

Russia won't risk direct military conflict with the west. It's a war they can't win. And they know it.

Inflation is rapidly cooling, interest rates will begin to come down by the summer. Any recession will be very mild and short lasting. The markets would barely react. Most shares already have a recession priced in. Asian markets officially entered a bull market early January, Europe and the US will follow very soon. The second half of 2023 will see stocks widely begin to rebound strongly and that'll continue well into 2024.