An overly simplistic explanation that covers only one of a number of possibilities, but the share price clearly looks sick however. Reflecting more a lack of buyers down around these levels rather than desperate sellers given volumes are very low. That said, a case could be made volumes are only low because there are no buyers. I have posed the question before; why no buyers at what has been breathlessly described by one poster as a once in 5 to 10 year buying opportunity?
The lack of buyers at these cheap prices is and should be concerning to all holders, although not apparently to some true believers for whom the share price doesn't matter because SFX management have moved beyond such "antics". Moved beyond to what I wonder? Perhaps some enlightened astral plane where a capital raising are always over-subscribed and placed at large premium to the share price. Maybe management have shaved their heads, dress in orange robes and sit around meditating on an equity funding package. A shout out to management from one of the "nervous and uninformed shareholders", a little more communication or share price support antics and a little less silent meditation please!
To me the share price action (lack of buying) is clearly concerning, reflective of no good news at best or bad news at worst. Many years of positive correlation between price action and pending news releases have proven the value of technical analysis. Not always correct of course, but worth paying attention to at critical junctures of news flow. With the share price falling so easily through support (what buying support there is), the sale process is getting long in the tooth (imo), and only private updates to Chinese off-takers and presumably other stakeholders, everyone not privy to inside info on the sell-down should be concerned. If SFX is such a sure thing bargain, no chance of a cheap CR but almost guaranteed for price upside after a buy-in partner is announced, then why are buyers not soaking up these 30 month lows? Why not announce to the market what stage the process is at, and when it's planned to be finalised? That UBS has muzzled management into absolute silence on all sell-down matters just doesn't wash with me. Management should know that some shareholders who bought in good faith cannot afford to ride this ship all the way to the bottom and may be stopped out. Those shareholders deserve a board who will support the share price and settle nerves if everything is still on track and looking positive. But no, just crickets....
Time will tell if this price action was simply due to the information vacuum and buyers understandably just too uncertain to step into the void, or insiders getting out while word spreads that a CR is being discretely being sounded out at certain brokerage houses. I'm not trying to scare monger here, simply that these are rationale concerns to consider given the share price action and that all funding offers have probably been tabled by now for consideration. While I won't be surprised to get hit with a large and cheap CR some here clearly will be. If that outcome eventuates following a share price sell down and withdrawal of buying support, it will be interesting to read the explanations on HC from management's staunch supporters. Given the crucial mistake of dealing out off-take deals before going into the final equity funding and project sell-down process is such a strategic blunder I don't see any basis for the absolute optimism shown by many that management won't possibly stuff the final equity funding deal.
Still, hope springs eternal in the human breast, the belief people holds during difficult circumstances that things will get better. I find it interesting that well rationalised posts with negative observations, of the say the share price action, are never well received. Other posters shout quite subjective opinions in bold that it will all be OK because management are full of free performance shares and UBS have been around the block before and get applauded with thumbs up. HC readers on the whole don't want to have their fundamentally bullish views clashing with the contemplation of a pretty sick share price and understandably so. Stress levels go up, nerves get frayed, the desire to stop out of the pain becomes potentially unbearable. Life is so much more comfortable without those negatives thoughts, don't want to know. Holders only want confirmation bias, to hear that things are great, on track, not late and there's no chance SFX won't get the equity sell down it desperately needs. It never ceases to amaze me how cognitive dissonance works it's soothing magic. Humans don't like stress, so they selectively view information to avoid the clash contradictory facts.
I don't like uncertainty or stress any more than the next person but I embrace the analysis and debate as the facts dictate. Overall I have found a slightly nervous and cynical disposition to be more valuable for playing the market than blind optimism. Nothing does more damage than over confidence. Many outcomes are still possible, but realistic shareholders are collectively holding their breath as gravity is pulled from under the bid. Clearly, the the short term share price and long term share valuation will be determined by what sort of funding deal, if any, gets done shortly. I am enjoying the buzz of the gamble if not relishing the market pricing signals.
I should also add that at current prices even a large CR is unlikely to be set too much lower, if lower at all. The CR overhang has done a lot of damage already and the risk-reward equation looks pretty good, even if the odds of a good outcome are falling.
good luck all.
SFX Price at posting:
54.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
