Great question. After revisiting the downgrade announcements and the analyst call, I am none the wiser. Management were short on detail and very guarded on quantifying the 'drivers' of updated guidance. Shareholders are left to second guess how the business is really travelling and will have to wait until February for many answers. What concerns me is that management were unable to frame any positives.
'Looking at the share price, is this what has transpired?"
Spark's recent financial performance and guidance revisions indicate significant challenges and a decline in market share, particularly in mobile and IT segments. Competition has intensified with Vodafones agressive marketing and pricing strategies, and 2degrees has been gaining market share in mobile and broadband. 2degrees recently won a big education contract previously held by Spark.
'What has changed because the tenor of the share price suggests it’s more serious than BAU'
The weakness in the share price has been underpinned by several factors:
EBIT has halved in the last twelve months
Significant debt burden of NZ$2.25 billion
New Zealand economy entered a technical recession in the December quarter 2023
Spark began consulting staff in August about potential changes to its operating model, and lowering headcount
After three downgrades in six months and management struggling to reset, it is clearly not BAU.
SPK Price at posting:
$2.68 Sentiment: Hold Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)