The journey of stocks through the COVID period has been incredibly interesting, challenging and educational for me. Companies where you'd expect an uptick in revenue, customers or net profit (LVT - focused on remote working and hence a huge 'opportunity', APX - 1 million + remote workers already WFH & profit of major customers skyrocketing, ALU - moving to the cloud platform for circuit board design) have all languished and struggled to maintain even conservative earnings forecasts. Many of the larger tech players in Australia (outside of BNPL, Ecommerce) started the period with guidance firmly upheld, only to be 'shocked' at the changing behaviour of their customer base and hence the re-prioritisation of spend away from projects that traditionally 'sold'. Appen is the best example I can see (and hold) of this, and I definitely believe this to be an unpredictable headwind in sales growth.
Even A2 Milk were naïve in assuming they would meet guidance with a shrinking sales channel, Chinese pressures & restrictions on supply, and their shareholders caught on all too late (also hold this one, luckily still well in the green).
My point is that this period of earnings is unpredictable, and even though we would assume Livetiles should take full advantage of the uptake of Microsoft Teams, cloud integration in business, and remote working conditions, it might not be quite as straightforward as it seems. The share price (imo) reflects low confidence by the market that Livetiles has capitalised on this market opportunity, albeit driven also by distrust in the leaders at the helm. I think if they could release their communications with a little more frequency, and/or announcements of new customers (instead of a simple update on a website no one outside the customer and motivated shareholders actually sees), it would work wonders for market confidence. A business that is growing, approaching positive cashflow territory with consistency and capitalising on the Microsoft Teams/remote wave? A buy every day of the week given their current market cap.
A bit of a ramble but all in all I am remaining patient until we see the report in a couple of weeks, and provided it shows what we expect it should (improvement upon the last results and steadiness of the cashflow) then I would consider topping up. If we languish and/or stall in growth (again), well, that will probably be a moment for reflection and decision making.
LVT Price at posting:
23.0¢ Sentiment: Hold Disclosure: Held
(20min delay)