In my prior post I stated that ‘interest rates get cut in...

In my prior post I stated that ‘interest rates get cut in February which results in the ad market turnaround which results in SWM delivering multi-bagger returns from the extremely cheap levels of 15 cents a share.'

So lets break it down into steps because people seem to be struggling to understand this sequence of events

1. The Australian Interest rate cutting cycle begins in February 2025 (this has JUST happened today )
2. AFTER interest rates start to be cut business and consumer spending improves resulting in increased ad spend which benefits brand building marketing versus performance marketing which specifically supports a further rebound of the Total TV (BVOD +Linear) ad market.
3. SWM has improved trading results caused by this improved ad market delivering positive operational leverage for the business (Think about what happens when you keep costs extremely low and revenue sharply improves = massive earnings upgrades). The first of these earnings upgrades is likely announced either at the Macquarie Conference in May or this improved performance is revealed in SWMs FY25 Full Year Results this August.

Now the point is this you can’t just expect to go immediately from step 1 to step 3 in the space of one day.

The economic benefits that SWM accrues from the interest rate cutting cycle is something that will develop over the coming weeks and months and will start to show in the ad market momentum which will continue to compound.

Investors will likely front run this above three stage process by buying once they can ascertain for certain that SWM is likely to deliver an improved trading update. (Meaning in practical terms the SWM share price will likely start rising sometime before an improved trading update is issued to the market).

"You can ignore the reality, but you can't ignore the consequences of ignoring reality."Ayn Rand

Investors can ignore the reality that right now the Total TV ad market has turned positively upwards however they cant ignore the consequences of that reality which is earnings upgrades.