Ann: Business Update and FY2022 Outlook & Investor Call details, page-6

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ChrissyJWatto

467 Posts.

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18/01/22

09:08

Post #: 58935179
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Originally posted by SOsoSlow: ↑

except that EVERYTHING bar cash is down (cash will always be a high point after xmas and that cash will go back out as RBL runs its payment cycle) - and even worse - the company is now loss making. went from being a profitable cash generating machine to a loss making position.

I seriously question management's judgement. Revenue was always going to cycle off. The tech market was already starting to drop a bit and costs were rising but it was my belief that RBL wouldn't be as badly impact as it was profitable and its earnings multiples for ecommerce were actually pretty good. But then this new strategy saw a binge on costs right as its revenues were going through its revenue 'valley' - the previously guided mid single digit earnings are now negative. The writing was clearly on the wall for 3-6 months before the announcement of managements new strategy that this pivot was underway - with rising interest rates, input and freight inflation, fading tech sector and investor preferences for nearer term earnings.

Go back and read my open letter to management - i clearly predicted the impact of rising costs and its impact on RBL - but nah - management went and hired a shiat tonne more people. I can imagine the board room "it's tech - tech loses money right who cares - hire hire hire"

I can't tell you how irritating this is as they squandered a sensational financial profile. Investors want nearer term earnings even if slow revenue growth as it results in a higher equity value in this current environment. That will only continue to be the case an in fact accentuate as global interest rates rise. It was so predictable what was going to happen. Management's grasp on the financial impact from their cost binge and new 'strategy' looks non existent as they were guiding ~5% earning margins not that long ago and its clear the business is now going to be loss making.

I should sell and expect a heavy sell off the next few days.
It would be my hope and dream management will look to rationalise its cost base and abandon its strategy which is clearly value destructive - but I would imagine they have backed themselves into a corner and won't change no matter what

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$1.90 looks likely in the next 2-3 weeks IMO

RBL Price at posting: $2.99 Sentiment: Sell Disclosure: Not Held
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