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1,704 Posts.

639

19/12/21

14:16

Post #: 58395068
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Originally posted by Kmtw ↑

There isn't any indication BUD are selling enough volume of product at a sufficient gross margin to cover costs. Further, the disappearance of growth in the US market over the key sales period is deeply concerning as it indicates just how low the saturation threshold is. Other markets are new and coming off such low bases that the US is the key indicator to future prospects of sustained growth.

Then you get to the actual production cost. If LIFX products are selling at a 50% gross margin, but are 200% the price of competitors then BUD lack any ability to even remotely come close to competing on price. Selling LIFX at cost, they'd still be considerably more expensive than a cheaper smart light. To be successful in selling light globes you need more scale, and the economics of BUD/LIFX won't enable them to get there.

To me, it looks more like they are employing the Dick Smith method. Run your inventory down to reduce operating costs and give the false impression the business is sustainable.

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Kmtw, could you please explain how that theory of running inventory down to reduce operating costs works in practice.

BUD Price at posting: 1.2¢ Sentiment: Hold Disclosure: Held
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