Good morning. I reflected a fair bit on the situation with SPX,...

Good morning. I reflected a fair bit on the situation with SPX, and here are my conclusions:
- The company continues to BS. They tuned it down since the "yachts" but after a nonsensical 94% ARR, it is now an embarrassing 500% growth on payments flows, to $4.2mio. 500% is the new 94%. Do they think we're stupid or what?
- There is zero details about the business revenues mix, other than the lending side. All we know is it returns $12mio x 19% / 4 = $570k per quarter. And the implication is that $123K comes from other sources of revenues that are not explained in any details. We have no idea how much they are charging for payments. We can imply from a supposedly $150mio annual volumes and $123K no-lending revenues that SPX may be charging 0.33%. It's probably wrong, but it is telling that this is what I have to do to guess what is going on. The attempt to present the results yesterday on the video that was published did not provide any details, other than they are not charging for software.
- I believe that the DW statement is vague enough to not be an outright lie, but is misleading. "More favourable", "increase net margin" do not imply lower fixed rate nor absence of capital to fund the first loss. My assumptions are that they will pay 13-15%, and will have to capitalise 5-10% of the first loss. I had discussions last night with an institutional grade credit fund manager who was very doubtful that SPX could have got a deal below 10% and without capital, which is what some seem to be assuming on this forum.
- It is really unclear at this stage whether they have the deals available to ramp up this $50mio warehouse quickly and with the necessary quality.
- I also note that the financials do not seem to make any provision for credit loss. This is highly unusual, and the comments from the video released yesterday about the company do no reassure me that there is a good understanding about what credit risk is about.
- The economics of the warehouse are very important at this juncture. With the above economics, SPX has only until the end of the year before they need a CR. We should demand clarity and details about this.
- There is probably some on-going discussions with the large accounts that SPX has historically been connected to, such as Capricorn or to some extent Carpet Court. These are the 2 names I have come across publicly and on this forum. There could be more. Any strategic deal with one of those would make a big change to the current bleak picture. I think that is what the credit fund that has funded the DW believes. It is unlikely that a credit fund would advance $50mio if they thought the runway was just about 6 months.
- Whilst I give some value to the above, I believe that SPX is playing with fire in terms of timing. Those discussions we all have heard of have been going on for a very long time, and should have brought some revenues by now. If not a game changer, at least something more than zero... Those potential big clients are not naive and seeing the SP crumble is not a good look. They also would hesitate to do business with a company that could go bust in 6 months.

Bottom line, I am not happy at all. I think the management should come out with better details, and bring into the business someone that has credibility in managing a complex financial services business.

I will be transparent here about my holdings. I own over 20mio of shares, with a breakeven below 0.02$. It is a position I can write off, but I want to make $$. I will be actively trading the stock from now on, with a clear bias.