Member Info for MattDCFC

We will have to take your word for it ;)

Although spending your weekend arguing about the share price of a Bangladeshi mining project and doesn’t really read as someone who’s sitting pretty financially.

Because short covering is only one part of the order flow.

If ASOS is still falling while reported shorts decline, it usually means:

* long holders are selling in larger size

* new buyers aren’t stepping in aggressively enough

* or shorts are closing gradually into existing liquidity rather than panic-buying

People often imagine “shorts closing” automatically creates a squeeze upwards, but that only really happens when:

1. short interest is very high, and

2. there’s limited supply of shares available

At ~1–2% reported short interest, there simply isn’t enough fuel there to overpower broader market sentiment.

Falling short interest in ASOS doesn’t automatically mean shorts have turned bullish — sometimes it just means the easy part of the downside has already played out, borrow costs changed, or the risk/reward for staying short no longer looks attractive.

It’s also worth remembering that low short interest isn’t inherently bullish. Plenty of weak businesses have very little reported short interest because there’s no longer a strong catalyst either way.

For me, the more important signals remain:

* active customer trends

* revenue stabilisation

* and whether margin improvement can continue without hurting demand

If those improve materially, the short interest becomes irrelevant anyway.

Nate_D

Posts: 228

Price: 299.00

No Opinion

RE: All quiet on the ASOS front

24 Sep 2025 17:22

SIH & Shaw now both below .5 threshold. 3 shorts remain open over .5, total 2.48%.

This is going to fly at next results, guaranteed!



£4.50 by end of year.

I think that’s a fairer take than most of the takeover-driven posts, but I’d still say the market reaction is being interpreted a bit generously.

Yes, extending runway and avoiding a near-term equity raise is clearly better than the alternative. But buying time is not the same as fixing the business. The company still needs to prove it can return to sustainable growth, and that remains the part with the least evidence so far.

The warehouse disposal helps liquidity, but it also underlines the position ASOS is in — assets are being monetised to support the turnaround. That’s stabilisation, not strength. Likewise, management commentary about capacity not being an issue is only really relevant if demand genuinely comes back.

I’d also be cautious about extrapolating the womenswear improvement too far. Turnarounds often show pockets of improvement before hitting a plateau, especially when margin gains are driven heavily by tighter inventory and reduced discounting. The real test is whether active customer declines actually stop and whether growth returns without needing materially higher marketing spend.

So overall, yes, probably good news in the sense that near-term financial pressure is reduced. But I don’t think it materially changes the core debate around ASOS yet — which is whether this becomes a genuine recovery story or just a better-managed decline.

Have a good weekend guys

Have a good weekend guys

You’re focusing on where it came from rather than whether it’s wrong.

If the points about ASOS are off, it should be pretty easy to pick them apart—source doesn’t really change that. Most of what was said (weak revenue trend, reliance on cost-cutting, unclear catalyst) isn’t exactly obscure or controversial.

Calling something “AI” isn’t really a rebuttal—it’s just sidestepping the substance. The market won’t care whether the argument was written by a person or a machine, only whether it turns out to be right.

That’s a fair caution in general, but it’s a bit of a deflection here.

Any tool—AI or otherwise—can reflect the framing of the question. That doesn’t make the underlying points wrong. What matters is whether the arguments hold up against the actual situation at ASOS.

In this case, the key concerns being raised—uncertain revenue recovery, reliance on cost-cutting, and lack of a clear catalyst—aren’t “AI opinions,” they’re the same issues the market has been pricing in for a while.

So I’d agree you shouldn’t rely on any single source blindly, but dismissing the analysis because it came from ChatGPT doesn’t really address the substance. The better approach is to challenge the points directly:

* Is revenue clearly stabilising?

* Is there a durable path to growth?

* Is there a concrete catalyst?

If those answers aren’t convincing yet, the conclusion doesn’t change—regardless of where the analysis came from.

Agreed. It’s interesting that some very obviously AI generated posts are well received, with 5/6 recommendations, however AI posts that are skeptical of this share should be treated with caution.

Almost as if you’re happy to accept as long as it fits your existing narrative?

In situations like ASOS, trying to “catch the fat part early” usually means entering before there’s any confirmation the turnaround is real. That’s exactly where most of the permanent losses in turnarounds happen. The big winners are visible in hindsight, but ex-ante they’re indistinguishable from the many that never recover.

Also, using past outcomes like a 1:7 success doesn’t necessarily validate the approach—it can just reflect variance. Turnarounds are notorious for having a low hit rate with occasional outsized winners, so the key isn’t just participating early, it’s having a repeatable edge in identifying which ones will actually turn. That’s the hard part.

On the “not waiting 3 years” point—fair, but the market doesn’t reward speed, it rewards being right. In many cases, a stock that’s already proven stabilisation still offers substantial upside with far less downside risk. You’re not always sacrificing the “fat part” by waiting—you’re often just avoiding the weakest part of the curve.

Position sizing does protect you, but it also implicitly acknowledges that the probability of success isn’t high. So the real question is whether this specific setup offers enough asymmetry to justify that risk—not just in theory, but based on what’s actually improving in the business.

Enjoy the weekend 👍

That’s a fair distinction in principle, but I think it risks becoming a bit of a semantic safety net.

Calling ASOS a “speculation” rather than an “investment” doesn’t actually change the underlying question: what is the expected return relative to the risk taken? Whether you label it speculation or investing, the capital is still exposed to the same fundamentals—and right now those fundamentals are uncertain.

The issue isn’t that it’s a turnaround bet—that part is obvious. The issue is that even as a speculation, the thesis still needs a clear, evidence-based path to upside. Otherwise, it becomes reliant on:

* sentiment shifting

* execution improving

* or external events (e.g. bids)

…none of which are predictable or within our control.

Position sizing helps manage risk, but it doesn’t improve the quality of the opportunity—it just limits the damage if the thesis doesn’t play out.

So I’d frame it slightly differently:

There’s nothing wrong with speculative positions, but they still need a disciplined edge or identifiable catalyst. Without that, it’s less “informed speculation” and more just accepting uncertainty and hoping the outcome is favourable.

I think this analysis sounds thoughtful on the surface, but a lot of it leans on assumptions and signals that don’t actually provide a reliable investment edge.

On the balance sheet point, separating book equity from solvency is fair in theory—but in practice the market is forward-looking. What matters isn’t current liquidity or “undrawn options,” it’s whether the business can generate consistent cash flow. Without that, balance sheet flexibility tends to erode over time, not support valuation. The 2028 convertible isn’t just a “risk if things go wrong”—it’s a structural overhang that the market is already factoring in.

The shareholder interpretation is also questionable. Large stakes from investors like Camelot, Povlsen, or Frasers don’t inherently create value for minority shareholders. In many cases, concentrated ownership leads to misaligned incentives or strategic gridlock, not competitive bidding. The idea that these parties will somehow drive a favourable outcome for smaller holders is speculative at best.

The takeover discussion is another weak pillar. Acknowledging it’s “unknowable” but still treating ownership movements as indicators of a potential bid introduces bias. Most underperforming companies never receive a takeover, and building that into the thesis—even indirectly—distorts the risk/reward.

On operations, the key issue is being underplayed. Margin recovery without significant marketing spend is highly uncertain, and even if achieved, it doesn’t solve the core problem: lack of revenue growth. Cost-cutting can improve reported performance temporarily, but without demand returning, it doesn’t create a durable recovery.

The “each quarter raises the floor” argument also assumes a linear improvement path, which is rarely how turnarounds play out. Progress often stalls or reverses, and the market tends to reprice quickly if momentum fades.

Overall, this reads less like a fundamental investment case and more like a collection of loosely connected positives—insider activity, ownership structure, possible bids—without a clear, evidence-backed driver of returns. The only factor that will ultimately matter is whether the business can return to sustainable growth, and right now there’s no solid proof of that.

Unless you want an echo chamber that only confirms your own cemented belief system, it is a good thing that people with varying perspective are engaging in this forum.

No — I wouldn’t agree with that statement.

Saying “this will be bought out” about ASOS is too definitive for something that is highly uncertain. A buyout is just one possible outcome, not an inevitable one.

Why that claim is flawed:

* No confirmed bidder — there’s no concrete move from Zalando or anyone else

* Many struggling retailers never get acquired — they restructure or stagnate instead

* Ownership structure complicates deals — large existing shareholders can block or shape outcomes

* Strategic fit isn’t obvious — integrating ASOS isn’t simple or risk-free

* Market already considers this possibility — it’s not a hidden insight

👉 A more honest version would be:

“A takeover is possible, but uncertain and not something you can rely on.”

Treating it as inevitable turns an investment into a bet on a specific event, which is risky unless you have strong evidence that others don’t.

No — this isn’t a sound investment case for ASOS. It relies mainly on a speculative takeover by Zalando and insider buying, while overlooking the core issue: the business itself is still struggling to grow in a highly competitive market. That makes it more of a gamble on future events than a decision based on current fundamentals.

Key issues:

* Takeover is uncertain and unproven, not a dependable catalyst

* Insider buying is supportive but not decisive

* Core business still shows weak or unclear revenue growth

* Heavy competition from Shein and Temu

* No clear edge or overlooked insight in the thesis

👉 Overall: speculation outweighs fundamentals.

Confirmation bias in investing is when you seek out, believe, and remember information that supports your existing view of a stock—while ignoring or dismissing evidence that you might be wrong.

When things are going badly, this bias can actually get stronger.

Here’s how it typically plays out:

You buy shares in a company and believe it’s a great investment. Then the price starts falling or the business weakens. Instead of reassessing objectively, you might:

* Focus only on positive news (“analysts still say it’s undervalued”)

* Ignore red flags (declining earnings, rising debt, poor management decisions)

* Reinterpret bad news as temporary or irrelevant

* Seek opinions from people who agree with you

* Avoid looking at opposing analysis altogether

So even as the investment deteriorates, your confidence stays artificially high.

Off to work now, have a good day on here guys. Remember to think critically, and not to be led by confirmation bias of your investment in this share.

Think you mean swooped not scooped to new lows, Jamesss. Silly billy 😂

I get the joke, but I’m sharing my own analysis here. Happy to debate the points if you disagree—always more useful than taking shots.

It is fair to point out that ASOS plc is no longer in the acute stress phase of FY22–FY23, but it overstates the durability and significance of the recovery.

On gross margin: the move from ~40% to ~48.5% is clearly positive, but the key issue is quality and sustainability. Much of the improvement appears driven by lower markdown activity and tighter inventory following prior overstocking. That’s a reset effect, not necessarily a structurally higher margin base. In a highly price-sensitive segment, those gains are vulnerable to renewed promotional pressure—especially from structurally lower-cost competitors like Shein. The relevant question is through-cycle margin, not rebound from a distressed base.

On customer acquisition: the re-acceleration (+9% group, +10% UK) is encouraging, but it doesn’t address unit economics. The key variable is whether incremental customers are profitable after marketing, returns, and fulfilment. Historically, ASOS has struggled to translate volume growth into profit due to high return rates and logistics costs. Without evidence of improved LTV/CAC dynamics, higher acquisition risks reverting to unprofitable growth rather than confirming a structurally healthier model.

More fundamentally, the business model remains unchanged. ASOS is still a first-party, inventory-heavy operator with high returns and significant fulfilment costs. Compared to Zalando’s more asset-light marketplace mix, ASOS retains higher capital intensity and less flexibility. The recent improvements don’t materially alter that structural constraint.

On capital structure: the 2028 convertible at ~11% is more than just a risk factor—it’s a pricing signal of weak credit confidence and uncertain forward cash flow. Even with EBITDA recovery, free cash flow remains exposed to capex needs, lease obligations, and working capital swings. That significantly limits equity upside.

The ROIC < WACC issue also remains central. A margin rebound doesn’t fix a multi-year track record of sub-economic returns on an expanded asset base. For the equity case to work, ASOS needs sustained improvement in capital efficiency—either higher margins or better asset turns. There’s limited evidence of that so far.

From a Peter Lynch perspective, this is a turnaround—but that implies execution risk across multiple fronts. Early improvements are visible, but not yet proven or durable. Many turnarounds show initial progress before stalling when structural constraints reassert themselves.

In short, the recovery indicators are real, but they are early-stage and potentially cyclical, rather than evidence of a structurally improved business. The bear case isn’t based on outdated data—it’s based on the view that the underlying model still caps returns, and recent progress may not be sufficient to overcome that over a full cycle.