I’ve done a lot of research on P2P and I thought this had...

I’ve done a lot of research on P2P and I thought this had promise but the writing was on the wall at the half year which is where I got out. Don’t get caught in a value trap, this will go a lot lower than today’s close. A few things to think about:
- This business recycles capital and while EBITDA might look ok in time this business is a long way off generating decent cashflow
- They have not once demonstrated that their model works as they’ve missed so many targets. Remember in the prospectus they forecast a dividend, which was not paid, they missed their other prospectus forecasts and FY2019 earnings were just cut by 50%. Management had to go!
- The competitive response was substantial and something I initially under estimated. Despite their large fleet these guys have limited scope to manage their utilisation at this time and that has smashed earnings
- As per above there is a very real chance that these guys will breach their covenants or require an equity raise. A CEO resignation is an automatic review at WBC so their interest costs will go up and they’ll likely be put in their ‘bad bank’
- And don’t forget the management that was sacked have their millions of shares coming out of escrow in November which even if they sell a few the low liquidity of this company could further smash the share price
- The one thing I like about this business was the advertising angle but the boxes had faults and payment terms of clients are too long which has impacted the SP and cashflow which they so desperately need

Up to holders but often losers keep on losing and this one is going lower