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Very interesting idea, and fingers crossed that you're on the money here Ocelot.
I guess from my point of view this still isn't ideal. I came into LOOP thinking of it as a classic value play, and now it has become a turnaround story - and in a slightly different industry (telecoms vs software) that I'm much less informed about.
That doesn't mean that LOOP isn't a great investment - it just means I feel much less confident in making that call!
Ocelot I'm inclined to agree. I'd be very happy to be bought out, and that this price it seems attractive, but would hate to miss other oppurtunities while waiting around for that. I imagine they'd have to show a good few quarters of positive results with the new strategy before a telco would buy them out based on it.
Can anyone recommend a forum that isn't full of users like bigsmoke, spamming the board with meaningless drivel and getting aggressive at anyone who shows the slightest bit of critical thought?
If you can I'll happily move there and leave you guys with your salt.
Ocelot thanks very much for your reply, very useful.
So the niche they are targetting is "predominantly medium-size businesses, that have a presence in more than one country", who for whatever reason aren't interested in using one of the more "significant Microsoft partners" where their differentiation vanishes.
Out of interest, do you think this strategy is viable?
Do you agree that the market's uncertainty about this strategy is behind the (lack of) share price movement? Or have I missed something?
Could also be people looking to crystalize losses for the CGT writedown.
Given the year we've had I suspect most people have profits, meanwhile there's no momentum here so people are happy to lock in a loss, pay a bit less tax, and feel they are unlikely to miss out on any big movement in the next 30 days.
Sorry what do you mean exactly by "taken out"? M&A? Went bust? Delisted? Something else?
Did all the examples you listed end badly?
So while the valuation metrics look good on paper, they have to be taken with a big pinch of salt because the entire business model is being switched out for something much more experimental.
And actually the forward-looking statements aren't that positive. The shiny new Cloud Telephony segment - to which the company is pivoting and spends half its update talking about - attracted 3 contracts this year, TCV of £0.64M. So that's one contract a month. I know it's early doors - this was only released in July - but the market needs more than that to get excited.
I suspect the drop in price is because more people have got over the initial "more revenue YAY" response and have thought more about the above.
Oops got cut off
- if you Google "external phone call microsoft teams" there are a ton of competitors. Again, LOOP says it is differentiated, but at this point it's gamble whether the differentiation is worth anything (and again, the evidence from the pandemic is that unfortunately it isn't).
The penny has finally dropped for me on why the share price is so restrained: LOOP is effectively a gamble.
The reason being that LOOP is in the middle of what must be a very risky pivot: from providing its own remote meetings solution to being a telephony provider for Microsoft.
Historically their product has been the remote meetings software that has attempted to differentiate itself from its many competitors by, above all, better resiliancy to poor network conditions and higher call quality. So no wonder the market reacted badly when the pandemic hit and it turned out that their differentiated solution was in no way worth the money comared to the many alternatives. And let's face it, Zoom and Microsoft employ top-tier engineers and there's every reason to believe that they will be able to catch up with whatever advantages LOOP currently has for the "Professional Services" niche where the high call quality is particularly important.
Somewhat to their credit, management appears to have accepted the above and so is dropping the investment in the software (which the consumer market voted against with their feet) and is instead focussing on their connectivity infrastructure, relationships with global telephony providers, and strong compliance offering. This Cloud Telephony offering is front and centre of their recent update, with quotes including "The market spotlight is squarely on the cloud telephony market", "The cloud telephony market is forecast to become a $26 billion market by 2024", and talk of 2021 being a "transitional year".
So in many ways this is a recovery play, but with the attempted recovery somewhat accelerated. And the market has plenty of reasons to be cautious:
- we can't get away from the core truth that when the sh*t hit the fan and we all had to work from home, very few companies choose LOOP's core product offering - their remote meeting software - which means they're clearly doing something wrong
- they talk of their Cloud Telephony solution being "internationally differentiated" - but is it? How wide is their moat, if at all? The market is being asked to form an opinion on this on very little information.
- they describe Cloud Telephony as "enabling customers to make and receive external phone calls via Microsoft Teams". Note that Microsoft already offers this capability directly (see link at the bottom). You have to pay for extra licensing, and it looks like there is some degree of faff in setting up and maintaining the system, but it remains to be seen how much additional value LOOP offers to make their stuff worth paying for. Again, their big differentiator is that their telephony network is designed for resiliancy and higher quality calls - so it sounds like the same set of customers for both Cloud Telephony and Remote Meetings, hinting at a risk of cannabalism.
Microsoft external phone calls link: https://docs.microsoft.com/en-us/MicrosoftTeams/set-up-calling-
Very glad to admit that I was wrong, feels like management have done a reasonable job this time of giving a clear and positive update.
That said... a bit surprised this seems to have stalled out here, up only ~10% from when results "should" have been released. Definitely feeling more comfortable about holding longer-term after today's update, but feels a bit like the unknown spectre holding the price back is still out there!
I agree with stew (although unlike him I am definitely twitchy): at these prices a negative outlook has already been priced in.
The continued selling right up to the line of the results is scary and hints and something worse than mere "negative outlook".
Oh well - there's nothing to do now but wait for tomorrow. I've had too much FOMO to put any of my money where my fairly cynical mouth is, and am still holding a ton of LOOP. Lessons will be learnt tomorrow one way or another!
So the mere concept of me wanting to see some evidence to back up claims being made was enough to drive you to make a snarky comment?
That tells me everything I need to know about your opinions, thank you.
As I said above, "I have a substantial investment in LOOP". I'll clarify that that's a LONG investment for the cynics.
I am trying to break free from the reckless optimism and echo-chamber effect so apparent in this forum. It's pretty scary that anyone expressing a reasonable negative opinion about a share gets shouted down, rather than counter-arguments based on actual facts or analysis.
I'm putting effort into this because I genuinely want to come to an evidence-based conclusion about this share. If that conclusion is to hold, then fine. If it's to sell and take a loss, then so be it.
Yeah sure he says he's frustrated... meanwhile *someone* is continuing to offload shares.
As I said, everything we are seeing is EXACTLY what would happen if there was bad news coming and insiders were selling. If I was an insider, had more that I wanted to offload, and wanted a bit more time to do it before I gave a negative update, I would also blame the auditors and go on about how frustrated I was, while not giving out any more information.
Let's say the books are fine and it is just a case of handling the intangible amortization - the other points still hold, it still feels like there could be bad news coming, e.g. forward-looking statements not looking so positive.
If they had something good to say, why not say it today?
If the intangibles from their recent takeover are now worth less, is that because they failed to capitalize on business oppurtunities that came with that purchase and that counted as some of the intangibles?
Again I hope I'm wrong, but this is starting to feel like a value trap.
I can't stop thinking: isn't everything we're seeing EXACTLY what would happen if some insider knew there was some bad news coming up and was quietly getting rid of their shares (legally or otherwise)?
- no updates from management for months
- sneaky feel about results delay (the date disappearing from the website for a few days, then today's "update")
- consistent selling pressure for months, despite the apparently "obvious" value here
- the delay in auditing - sure it could be inoccuous, sure it could be because the auditors are deciding exactly how to frame some fantastic news that will send the price rocketing, but let's be honest, the most likely reason for this delay - and no published announcement of a revised date - is that there is something off about the books that the auditors are looking into.
Feels like people on this board are twisting themselves in circles to see this as positive development, while to an impartial observer* it seems overwhelmingly likely that it's bad news
*I'm not really an impartial observer - I have a substantial investment in LOOP - but got in recently so losses so far are small. But I'm concerned about those losses becoming far more meaningful if things continue in this way.
jointhedots, thanks very much for your response. You're totally right that my "analysis" was overly simplistic assuming no shares being retraded (and also just wrong by a factor of 2...). But you seem to also be of the same opinion as me that the conspiracy theories are baseless, and that shares are shifting happily at the current SP because, for whatever reason, people are happy to sell them at this price. We just have to hope that they are driven by some goal other than buying underpriced shares and holding them until they go up.
CHRI55, I think both of the things you said are truisms.
CHRI55, could you please explain exactly how, why and by whom the price is "getting held down"? Because this is the bit I don't understand!
In the last 3 months 19.8 million shares have traded, all in the 70-82p price band.
That represents 36% of all shares, or 57% (!) of the free float.
How many more shares can the "larger investors putting pressure on the board by suppressing the sp" possibly hold? Seems like a rookie mistake to attmept to bully the board by using your massive holding to artificially keep share prices low, only to find that in order to execute your strategy you have to sell the vast majority of your holding. You then miss out on the inevitable rebound in price once you run out of shares and/or some external catalyst drives the price past where you've been pegging it.
I keep seeing all these "conspiracy theories" about why shadowy players may be holding the price back, but still haven't seen any logical, rational explanation for why this strategy would be beneficial to such players.
Seems like Occam's Razor to me. Either there's some mysterious cabal acting against their own interest, or.... some insider knows something and is happy to sell at the current price.
Please convince me otherwise!
I don’t know, there’s a spooky feel about this share.
This board is full of people (me included) who are convinced of the value prop here. It jumps out of the financial statements and smacks you in the face! Yet day after day there are people willing to sell at the current price.
I have a significant position here and I’ve decided to hold out and see what happens next week. But I can’t shake the feeling that someone out there knows something important (and negative) about LOOP, and I may end up having to chalk this one up as a learning experience - “too good to be true”, that kind of thing.
Hope I’m wrong! Good luck all.