Stocks & Shares

Just taking a different tack on this... my perception ahead of this frenzy was that the company in question was losing money (a lot) year on year? Aside from the shorting, and aside from people trying to block that short, the company has a very token future.

There are two things to consider here. First, are you doing this on the basis of hurting hedge funds? And second, do you want to try and make money on this? At some point, I can see a lot of people having lost a lot of money because they got carried away in a movement. While those who moved earliest will make a very big return.

But mostly, I feel sorry for the company. A short term bubble won't alter their profitability or robustness of its business model.

 

Pension pot wise, it’s unlikely that fund managers would have invested in the stocks that Redditors/short sellers are targeting. That might change in the future, mind.

 

Sounds painful.

 

Which was my exact point. Is this political or financial? Because at some point, the company isn't sustainable.

As the frenzy carries on and people pile in late, they have most to lose when the dumping of those taking profit takes place.

 

If you look at their financial statements, it's a company where the slide has well set in, and in my direct experience, i expect the existing management to have a stab at reducing costs (probably store closes and cutting supply internationally) through a recovery plan that won't go far enough and then it's a case of who picks the carcass and how many times. Sales are falling 3 years running, significant losses in the last 2 years so at some point the inevitable will happen. It's the same at nearly every failing company, sales fall, they try and cut costs, sales continue to fall, they cut more costs, and so on and so on til they run out of time and money.

I've not taken a deep dive, but the headline figures are grim reading.

It was a cheap stock for good reason. As I say, its the company I feel for most and those who got in late thinking it was a chance to print money.

Whereas it's moderately entertaining that the city traders, get a bloody nose, they won't be the only ones.

 

Its not a phrase you hear in the turnaround community, I can assure you.

And of course, the existing management will give the appearance of confidence, they'll likely be first for the boot when either hedge fund or administrator take over.

 

One thing I don't get. Fee aside, why does whoever owns the shares in the first place loan them to hedge funds when they must know that they will be worth a lot less when they get them back?

 

The bounce comment.

Looking further at the statements, it looks that to Feb 2020, a store disposal programme had commenced, actually, looking at store comparatives, they've had a net decrease in sites every year for the past 5 years.. Looking at their more moderate revenues in Canada, I suspect that may well be significantly reduced, but much is going to depend on lease terms and expiry. The possible short term positive, some of the decaying market sectors have had a shirt term bounce because of lockdown. Games should fall into that category, so if they can't post a 30-40% uplift in revenues in the 2021 y/e, then their time is likely to come sooner rather than later.

The balance sheet weakened considerably over the year too. Perhaps most alarming, what the statements suggest is their chief source of liquidity, its cash reserves which fell to a quarter of their value the year before.

Anyway, I just hope people who don't want to, or can't afford to lose money don't. And with all businesses at this time, I very much hope the internal management succeed.

 

Down by just over 20% at the moment. Selling in panic isn't going to help the outcome.

 

I thought everyone was meant to be "holding" on this.
Doesn't help that apparently people aren't able to buy.