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Personally I do not think there is minimal risk at this level. My average is £10 and I'm wondering if me buying was a mistake and that there is going to be some heavy dilution on the way.
According to the last reported balance sheet, ASOS had liabilities of £959.8m due within 12 months, and liabilities of £881.4m due beyond 12 months. Offsetting these obligations, it had cash of £406.7m as well as receivables valued at £96.1m due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by £1.34b.
Given this deficit is actually higher than the company's market capitalization of UK£621.13m, and that ASOS earnings are falling as a result of the global headwinds, the debt levels are scary and indicate that there may be some dilution to shore up the finances. Something has to give.
It's a discussion board and I am a shareholder discussing a share I am holding on the board for the share. Does that answer your question?
I bought £47k worth of ASOS in my ISA and another £15k worth in my SIPP, thinking it was good timing at 1080p so when it went down to 970p and I was 10% down, I wasn't feeling too good. Of course that's probably not as bad as a loss for some on here but it still hurts. I'm under no illusion that this will fluctuate quite a lot and that I probably should have held out for an even lower entry considering where we still have to go...
Interest rates rise by 0.5% on Thursday will mean even less disposable income for households as more money will be going towards mortgage repayments.
Then in October we have another increase on the energy price cap and that will take the average income expenditure on energy since the energy crisis began from 4% to 15%.
All these inflationary rises as seriously denting peoples disposable incomes meaning far less available for retail spend. This cycle will get a lot uglier before it gets better but let's see what happens. I'm happy to hold at a 1080p average for a year or 2 and if it does drop drastically still, I have a lot of funds to average down considerably.
GLA.
On the contrary, I think this is the best time to get in. Inflation data on the month only went up .1% from last month which seems to indicate that inflation is leveling off. Even in the US, inflation figures aren't as high as feared. We're expecting a .75% rate rise in the US, 0.5% from the ECB and .5% from the UK.
Commodity prices have come down quite a bit and so the overheads for ASOS and similar businesses should fall back. Prices at the pumps are already starting to come down a few pence.
Going into Winter, it's hard to predict what may happen, especially with Russia and NS1 but for now, the risk of rampant inflation and therefore a global recession is lowering, hence the sentiment returning to risk stocks such as ASOS.
This is why I bought a decent size tranch of around £50k. Got another £150k to play with if I need to average down but long term, ASOS is a kind in the retail clothing space and at these levels, I am very happy to get in.
"Exclusive: Russia likely to restart gas exports from Nord Stream 1 on schedule - Russian sources"
July 20, 20229:39 AM GMT+1Last Updated an hour ago
https://www.reuters.com/business/energy/exclusive-russia-seen-restarting-gas-exports-nord-stream-1-schedule-2022-07-19/
Screw it, why not, bought £47k at 1077p. Let's hope I don't regret it :s
But the shorts are so high. What do they know that I'm not seeing.
What about todays Euromillions numbers Any ideas?
@Tegop
I guess we will have to see what the results look like in September for the first 6 months of the year. It is expected that Cineworld will report another loss in 2022 but there may be a surprise profit. We will have to wait and see.
The current debt pile stands at around $9bn and Cineworld only has a cash balance of $350m. But even then the biggest threat right now isn't even inflation or interest rates, it's the Cineplex judgement. There is no way that Cineworld can pay that if it isn't overturned. Best case scenario is that Cineworld survives but has to massively dilute shareholders to raise money if that's even possible. Any further debt raising would be suicide with the interest rates. Worst case scenario is Cineworld folds.
Either way, if the judgement is not overturned, it's lights out for existing shareholders.
@PyschoCurt
It would be good to know what you think my motives are by asking questions on a random Internet board aside from maybe learning something from present holders that I might not know or see regarding Cineworlds prospects for debt servicing in the current climate.
Why does a post have to be neutral to get "reasonable answers" and what exactly do you mean by "neutral"? Should I be pandering to holders?
Oh and I think we all know whose being butthurt at the moment. SP speaks volumes.
You haven't answered the central question of how Cineworld is going to service it's monster debt with rising interest rates and a global economic recession, which regardless of what you feel, will impact footfall.
Inflation means that Cineworlds expenses will rise. The amount they spend on buying food, paying ground rent, energy bills for their sites etc etc. Interest rate rises will make their debt more difficult to service.
You say footfall will not be affected but I don't see how that can be if costs are going up for consumers. I doubt Cineworld will keep their prices at the current level. They will have to raise them, further putting pressure on consumer spending.
Surely this is why the SP is so depressed? Or am I missing something?
@Tegop
Ok, let's take this one at a time.
1. "Attacked the stock"? - Asking a question around debt management is "attacking" a stock?
2. "Imaginary statistics"? - I didn't offer any statistics so which stats are you referring to. I can offer some now though.... is the SP currently 18p and down 45% YTD? Is the MCAP a mere £240m. Was net debt $8.9 billion at end-December 2021? Are interest rates rising globally? Is there a cost of living crisis? Are streaming platforms reducing theatrical windows?
3. "connected with your imaginary cancel culture enemies". - Apparently I was filtered by antmoss44 after 1 post. If that's not snowflake cancel culture, what is?
4. "18p is a good price to short." - I don't short stocks. Don't know how. I made lots of money in Cineworld in the past on the Covid vaccine rebound. Check my post history if you care....or don't.
5. "But what do i know?". I would hazard a guess and say not much based on the SP performance, debt levels and global economic outlook. The market seems to think this share is currently a pile of doo doo. If you want a definitive answer, how about you share how much profit you're in in Cineworld? I'm guessing it'll be a negative number.
Can't we have a civilized debate where people can ask difficult questions and not be cancelled or attacked for having a view different from them. Burying your head in the sand won't make you money. Period.
Typical snowflake response resorting to cancel culture. This is a discussion board, not the Cineworld cheerleading board. The idea is to discuss different opinions, not cancel the ones you don't like. Sigh.
Oh and PI's discussing a stock on a random forum board on the Internet has no bearing on the share price of a FTSE share so you shouldn't be so scared of little old me. But of course you can continue to bury your head in the sand, much like the stock is burying your capital. Ignorance is *not* bliss in this case.
With the monster debt pile, how is Cineworld planning on paying off the debt with interest rates rising alongside increasing inflation. It's the perfect storm of reduced ticket intake as consumers tighten their belt, and interest rate rises to service the massive debt pile Cineworld currently sit on.
What are peoples expectations here?
They will in Winter. Both inflation and interest rates are expected to rise further. This has far to play out yet. Right now it's a battle of the bulls who want to get in to the very depressed share price, vs the bears who are looking at the wider macro environment and betting against retail with the recession risks looming.
No economy in the world will function with oil at $380 a barrel, heck, economies are struggling with oil at $100 a barrel. Unless energy prices come down, a global recession is all but inevitable, at which point energy prices will have to come down. Either way, energy prices are going to have to come down which is why I think Shells SP is where it is.
Wish I sold at £2450 but hey ho, I sold earlier today at £2020, around £34k profit down from that peak but still more than double that in profit at selling price.
Even with the very high oil price, the dollar is getting extremely strong making it harder for economies to keep up with the cost of energy. China too can't decided if it wants to lockdown or open up making inflation matters worse. Then there is the Ukraine/Russia war. I think the current share price is reflecting the fact we are headed into a global recession, with central banks aggressively looking to raise interest rates to curb inflation as we head into the colder months.
Holidays/flights/retail spending, it's all dropping and that won't bode well for the OP and therefore Shell in the long run.
Shell to me seemed to be a way the best place to put my money considering they're practically printing money at present but the SP action doesn't suggest there is too much further upside to be had, especially with the pitiful divi and the forward outlook for the global economy. I'll look to stay in cash for a few months I think to see what happens and maybe buy some of the beaten down shares when there is a whiff of a potential turnaround.
GL for all holders and I hope you're quids in!
Although I am up £150k since the pandemic, at £2450, I was £200k up so £50k down in Shell in a matter of weeks when the oil price is at $100pb. Incredible stuff.
Don't know what to do with this now. Decisions, decisions.
@JonHarris I agree for the most part, the upside potential is good, but I think ASOS and other exposed companies are in the midst of a downward journey before it will shift. It's current a perfect inflationary storm. There is going to be an energy crisis this winter, food shortages due to lack of grain (Ukraine war), pressure on household spend due to increasing interest rates affecting mortgages. The dominoes are lining up. A global recession is all but guaranteed at this point.
You say the downside is limited, I say we haven't seen anything yet.
I have over £200k in oilies, over half of which is profits, part of which I'll retain for divi and part of which I hope to redirect to ASOS/Boohoo in the future if and when the tide begins to turn in their favour.