Share price has rocketed up this morning!
Bad luck short sellers
Hey, I bought some shares of Boohoo because my hypothesis was that the company that executed well and whose brands were loved by their customers. So I believed they would rebound to a strong position when the Covid crisis was over.
What Iâm trying to understand is why it has had sudden jump in its stock price over the past 7 days.
Does anyone know if any knew information came to light
TL;DR: A worker leaked that Boohoo had a cool 230% growth in processed orders.
Boohooâs stock price. grew 45% in the past few days.
I donât want to avail of the overused word âunprecedentedâ, but itâs quite the rally!
First of all, equities have been on their way up in the past few days. The S&P 500 gained 1.5% today, making this its best week since 1974. (source)
That always helps.
For Boohoo specifically, e-commerce is booming right now.
Anecdotally, I hear from friends selling online that their sales are way up. I reckon itâs because people are literally twiddling thumbs at home and there is not that much diversity in entertainment (Tiger King, I know).
There was a bit of news underscoring this on 7 April.
Basically, the Guardian accused Boohoo and ASOS that they donât enable social distancing and hence putting their workers at risk. One worker shared a data point:
(paywalled source)
So thatâs the bit of news you might be looking for.
But as we learnt from Jeff Bezos, these results have been made quarters ago. Boohooâs business is well-managed - its supply chain is diverse with 40% in the UK, and it invested ÂŁ32m on automation at one of its two distribution centres.
For its recently completed financial year, an enterprise value (market cap minus net cash) of about 1.6 x sales is expected by analysts.
Make no mistake, plenty of risk here as is the case with individual shares, but itâs been a well-managed company.
Fraserâs Group has also seen a nice rebound this week with a 25% (47p) increase from a week ago
Ah yes, at least in their case I know that they did a raise so I understand that: Asos raises ÂŁ247m in share placing as sales drop by 25% - Retail Gazette
Ahh now thatâs starting to make sense.
Most people believe itâs undervalued now + the spike in demand at their warehouses = increased demand for their stock.
Thank you very much for this, I appreciate it.
oh I didnât even know that mike Ashley had rebranded. I suppose quite a few clothing retail shops are up.
I recently read that ASOS had a lot of sales reductions. Maybe the others are doing the same? Have to do some research
This is one business that didnât suffer from Covid! It raised ÂŁ198m in a share placing earlier in May, to do mergers and acquisitions (good time to do it I think).
Now it spent ÂŁ324m to take a 66% stake in Pretty Little Thing.
Yesterday the share price was down a short-seller (ShadowFall) accused Boohoo with misrepresenting its free cash flow by ÂŁ32.2m (65%).
There always seems to be something going on with this stock.
Boohoo already owned 66% of PLT - the acquisition today was for the remaining 34%. Personally, I think itâs a great chess move as one of Shadowfallâs points in their report was that the longer Boohoo holds out, the more expensive the minority stake in PLT gets and due to the same family ownership, is a conflict of interest to shareholder value. Obviously doesnât take away from Shadowfallâs argument that Boohoo had the option to buy PLT 2 years ago and they only exercised 66% of it.
boohoo (AIM: BOO), a leading online fashion group, is pleased to announce the acquisition of the remaining 34% of shares in prettylittlething.com Limited (âPLTâ) from its minority shareholders (Umar Kamani and Paul Papworth) for an initial consideration of ÂŁ269.8 million, potentially rising to ÂŁ323.8 million. The acquisition is expected to be significantly earnings enhancing on a fully diluted basis with immediate effect.
Thatâs right, thanks for correcting it. I got confused, trying to read all the news about my watchlist stocks!
One of the things that repelled me about fast fashion before was the waste these companies would produce.
In the case of Boohoo, âgreenâ initiatives include
- incentivising customer recycling: it launched a sustainable second-hand range, and it keeps promoting the longevity of its clothes.
- Itâs also working toward better supply chain transparency and it has offered it would allow the auditing of its Leiscester factory. Media frequently painted the place as a reshoring dystopia.
Itâs a good question though if a fast fashion company can ever become sustainable.
Lawyers filed class action suits against PrettyLittleThing and Nasty Gal last week following a similar claim lodged against Boohoo last month. Total damages could exceed $100m if the claims succeed, said Almadani Law and AI Law, the firms leading them.
It would be interesting to look into Almadani Law and AI Law and this lawsuit. Why, who, why now, etc.
A successful company will be a target, the question is if that will impede its growth and how well they can fight back.
What a bargain.
- Year-on-year UK sales up 30% in the three months to 31 May, to ÂŁ183m.
- Year-on-year US sales up a chunky 79% to ÂŁ92m.
(source)
This one of those few businesses that Covid-19 only made stronger (Games Workshop is another one).
Those good at e-commerce thrive now. I hate that I invested in JD Sports!
While the share prices of most UK retailers have suffered big falls, Boohooâs is at an all-time high. Its ÂŁ5.2bn market value would see it join the FTSE 100 if it traded on the main market rather than Aim.
Boohoo this week said sales would rise at least 25 per cent this year, a stark contrast to the sharp falls expected at established high street rivals such as Next and Marks and Spencer. Even brands that appeal to the same young customer base as Boohoo, such as Primark and JD Sports, will suffer sales fall this year.
The sales are tiny compared to its peers though.
I hope that means growth potential, and Iâm considering to invest in this company.