This is to Gooncheese ( I dont know why it's not letting me reply directly).
I am a realist, not a pessimist.
There's a difference between value proposition to customers, and value proposition to investors. I explained this in detail before. Some decisions positively impact both, some neither (not common), and some borrow from one to give to the other. This is the last one.
A business in this stage of its cycle, especially a 'disruptive' one, shouldn't be fighting with customers over the margins it charges, it should be about service deliverability and its growing pains. It's the exact same situation ZIP was caught in about a year ago, and guess what, the charts look exactly the same.
You can't reduce your commissions materially and tell us it will result in more growth. Growth in revenue, or customer numbers?. You are lending out certainty and borrowing from hope. Though I am sure there will be at least one recognisable potential customer that they will be able to onboard with this decision, which is probably why it was considered in the first place.
Now with what I suspect to be razor thin margin contracts, I suspect DW8 will announce to the market some more recognisable customers. But I wouldn't get my hopes up, investors now know what it costs to deliver this service, and the dollar contributions from these customers will be too low to reveal or allow to be calculated. Perhaps if this decision was made a couple of years ago it may be a real engine starter, but not now.
It appears that the high commissions previously charged were targeted to early and small-time customers which gives the impression of high returns per customer and high margins (which nevertheless it couldn't do that in my view), but this will dramatically fall further as DW8 is roped into servicing large customers for razor thin margins. It shouldn't have to be be doing this at least until it hit substantial scale, but it hasn't.
The margin pressure in this industry is already razor thin, nothing like what we once believed. Do you remember a couple of years ago we were told that the margins in the existing business was something like 30% and the DW8 platform could offer an alternative of something like 5-10% easily and offer an enormous value proposition to investors at the same time? What happened to that?
No matter how you move around the pieces, the only possible solution to this puzzle is that it's value proposition is not as good as the market thought it was.
Thesmoo, I wouldn't put me on ignore. I am not a perma-DW8-bear. I've written some of the most valuable takes on DW8. Like two or three weeks ago when I said that the rate of chatter of capital raise would pick up dramatically as we near this June 4C and the stock fell 50%+ since for that very reason. I may turn bullish if I see a turnaround in the financial numbers (which is actually my strength). And if I see it, I will write about it and my sentiment will change.
(20min delay)