Fundamentally Furloughed

I was aware of it for things like BAE but didn’t know it reached as far as UK airlines as well. The more you know hey

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Make that the world! From what i understand any brand/ celebrity that needs glasses made relies on them to do it. Look at the list of brands on there, any name in glasses and shades is there, including all the high-end names. It’s a monopoly!



Before the merger with Essilor, Luxottica revitalized Ray-Ban at a time the company was in financial trouble.

Ray-Ban became increasingly popular. Everybody wanted to buy a pair. Management decided to drop prices in order to get a wider customer base, allowing lower income people to be able have a taste. Sales dropped with the lower prices, for the customer now perceives the brand as of lower quality and without the sense of exclusivity. On its knees, they are acquired by Luxottica. Luxottica raises the prices. Sales increase…

Oakley tries to fight Luxottica. Luxottica wins and acquires Oakley.

Essilor merger with Luxottica. Prescription glasses and contact lenses merger with designer shades. Loads of real estate. Loads of R&D investment.

Not only they have a moat around their castle, they have generals, an army and the equipment to overcome challengers. As long as they have consumer psychology on their side, they are winners in their game. Their realm. There are loads of people who like to feel they can afford to pay 150, 200, 300 quid for a pair of shades with a famous name on it so they can show it to everyone else.

Manufacturing costs for the shades: 2 to 3 quid. Per unit.

Love the business.

Love Hawkers shades. A privately owned competitor with a different business model. All they have is a warehouse and a website. Manufacturing costs for the shades: 2 to 3 quid per unit. Retail price: 20 to 50 quid. Much smaller cost structure. A lot less employees and partners needed.


Unite Students is an interesting recovery play. But the whole student sector is a big question - Unite is not too far off its highs either, so seems expensive with the uncertainty.

Would you be able to show a graph where it isn’t far off it’s high? As I don’t think it is near it’s high yet

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One to look at then! :eyeglasses:

Just need to figure out where I can dig up all the data! That’s the downside with finance being so US focused, interesting companies outside the core of wall st are much harder to research. I guess how hostile LSE can be with it’s data is to blame for a lot of this (and other exchanges too!)

I agree with @don_quixote it’s not close to their highs, but I do see your point on the student sector. It sounded like Unite had a few agreements in place where uni’s would still pay some of the costs, and they are hoping to ride the wave of government support to universities, how useful that will be to them we don’t know though.

One month Google Finance

One year Google Finance

HP (HPQ) - A Future Money Printer?

HP likes to describe itself as the original Silicon Valley Startup. Founded in 1939 but split in 2015, we are looking at the printing and personal systems side of the two HP related companies.

hp logo

What Are HP Up To?

It might seem odd to ask what such an old and well-known brand is up to, but since the company split they have been given the freedom to grow their hardware offering.

Source: HP Q2 2020 Presentation

The easiest way to breakdown any company is to use their language, it makes it simpler when it comes to understanding how they make their money and where the issue could be.

At the highest level, HP is broken into two halves, the personal computing and devices side of things and printing.

Unsurprisingly the money with the printing business is largely driven by supplies and ink. Those £9 ink refills plus shipping is making someone rich after all. Within the printing side of the business, HP has the new 3D printers. 3D printing isn’t just the hardware either, it includes supplies and support.

The personal computing space is dominated by their notebook/laptop ranges, which is the likely candidate for why you see the HP brand each day. Alongside this is the peripherals like monitors, keyboards, and the other bits you can spill your coffee over in the morning, this is all part of the “personal systems” side of the business.

How Has COVID-19 Impacted HP?

As expected supply chain issues have been the biggest pain point for HP, given the Eastern world was impacted by COVID-19 first, they felt the pain ahead of other industries.

However, the shift to work from home has spiked the need for printers, supplies, and new laptops. As such HP has been trying to load up their inventory (they never want it to be as high as it is right now) to try and counteract any more supply issues during the pandemic.

Source: HP Q2 2020 Earning Summary

The good news about seeing the Q2 summary is this appears to be the worst of the impact. While the situation is being monitored, HP is well stocked to limit any more disruptions to their supply lines, which also means they can reduce any ordering in Q3 and focus on selling existing inventory and R&D.

While Q2 has been a slump, and Q1 saw some impact, the real issues were linked to supply and demand. Rather than a fundamental issue with the business.

How Do HP’s Fundamentals Look?

I promised I wanted to look at an undervalued company, it should be no surprise that HP is currently cheap relative to the rest of the market, while still be a strong financial powerhouse.

Source: Genuine Impact

Let’s breakdown the key figures and see what story is inside, I’ll be focused on the quarterly figures and I’ll point it out if I change to annual. With $12.4bn in revenue and a Price to Earnings ratio of 8.21x, HP is an oddity in its size and relatively cheap price.

Breaking down that revenue we can see where HP has some room for improvement. The disappointing aspect of HP’s operations is the cost of revenue, in my mind, this is what is holding them back from becoming one of the great companies to invest in. A gross margin of 19.01% is horrifically low and makes it amazing they can even generate a profit. The profit margin is also a disappointing figure coming in at only 5.36%.

With such a large range of products offered we can find out the top-level margins but this is a very competitive space. Printing is the real winner here, this is driven by reoccurring purchases rather than meaningful innovation or IP

Source: HP Q2 2020 Presentation

In terms of Earning Per Share (EPS), we have a respectable 2.06x. For a company of HP’s size this is good to see but looking into their history they have been involved in heavy share buybacks, something I will touch on later.

The other value metrics, we have the cash to book ratio of 3.20x, but a book to share -0.84x and price to book of -20.11x. This raises some questions around their debt and liabilities. The debt to equity ratio is currently sitting at -29.05x. HP has a very interesting approach to cash and debt.

Source: HP Q2 2020 Presentation

They have always run a deficit of cash compared to their current debts. Only a few weeks ago HP confirmed another debt raise to pay off the due senior notes, while the new notes are being locked in at a lower percentage around 2-3%, they don’t appear to be paying off any debt rather they are always extending their credit.

The debt to assets percentage is always over 100%. For the past four quarters, it has bounced around 102% to 105%.

Having looked at the short term numbers, due this year, we have $19.6m available to go out but $25.2m is due, and HP is keeping their free cashflow protected. This explains the new notes and financing being issued.

Long term debt is very manageable with HP’s balance sheet, but it’s the short term accounts payable which are eating away at the business (money they owe to their suppliers.)

What About The Future?

The sell-side analysts aren’t singing HP’s praises but they aren’t off-put either.

Source: Genuine Impact

Most of the sell-side analysts are recommending a hold, given the debt juggling HP is currently managing and the current distribution issues, it’s no surprise they have taken a wait a see approach.

Then why do I consider this an investment that will pay off in the future?

Source: Wallmine

HP has been paying out since 1996 with a dividend, recently this dividend has been growing as they seek to transfer more wealth back to the shareholders.

I mention share buybacks, and this ties back to what has HP been doing with their money.

Source: HP Q2 2020 Presentation

The buyback scheme is slowing down but the management team at HP still have an objective to return cash to shareholders. HP has always sat with a comfortable $4-6bn in free cash, rather than buying back shares they want to increase the dividend.

we do plan to be active, returning at least 100% in this fiscal 2020 year. For 2021 and beyond, we remain committed to the 100% of free cash flow unless there’s a better returns-based opportunity

HP’s CFO when asked if they are returning 100% of free cash flow to investors in 2020 and 2021.

While this is under review and HP has withdrawn their forecasts due to COVID-19 they do have a plan in place to increase the long term rewards by being an HP shareholder.

Summary Pros

  • Strong financial balance sheet
  • Undervalued compared to the market, especially the industry
  • Large and stable company, a no thrills long term buy
  • Buybacks are slowing down in favour of dividend payments

Summary Cons

  • Short term logistic issues and mismatch between debt and income
  • Competitive space has squeezed margins, not a lot of wriggle room in the profit margin
  • Not an innovator and dependant on slower-moving hardware sales
  • Dependant on 3rd party suppliers for their products with no plan to centralise more of the business
  • Focus on shareholder benefits could be at the expense of the long term safety for the business

My Thoughts?

HP isn’t typically the type of business I would invest in. It’s a large slow-moving fairly defensive business. They are running at a discount and we know Q3 is going to be better but still slow, this gives us a cheaper entry point.

Long term the increased dividend, which is already at 4.10%, will make this even more attractive. While the share price growth and revenue forecasts are average, I like the look of this business as a dividend machine more than anything.

I think HP is a nice source of future dividend in a portfolio, cheaper than expected with a predictable recovery incoming, it’s not going to turn into a ten times return, but will slowly payout over time.

What do you think? Is HP something you have looked at or interested in? I’m always keen to hear your thoughts!

Thanks for reading and stay safe.


Thanks Jack for analysing eBay! Appreciate your views :+1:

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Thanks for the lovely comment!

I’ve been spending some more time outside enjoying the sunshine but I’ll have a look at another write up soon. Maybe take my laptop outside, anything to try and escape the heat!

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Reach (RCH) - UK print and digital news

I’ve been looking for some cheap investments while COVID-19 has the market in a slump. Ideally trying to find stocks which hadn’t returned to their original potential, and appear to be cheaply valued. Potentially Reach (RCH) on the London Stock Exchange meets that criteria.

Who Are Reach?

If you haven’t heard of the name before, don’t worry. Reach is a collection of UK print and digital newspapers and magazines, some focusing on national news, others on gossip and celebrates, and a few on hyper-localised news. They are the largest commercial national and regional news publisher in the UK, with over 150 national and regional multichannel brands including the Mirror, Express, Star, OK!, New!, Daily Record, Manchester Evening News, Liverpool Echo, WalesOnline, MyLondon and BelfastLive.

Source: Reach 2019 Annual Report

You might think a print-based company would be the last investment you would want to make when you think about the world in five or ten years. Keep in mind, in December 2019, Reach sold 40m newspapers and reached a digital audience of over 47m people in the UK, their digital offerings are growing.

With a new CEO who joined back in August 2019, a period of operational focus after buying the Daily Express and Daily Star, and now with COVID-19 there are a lot of headwinds that Reach are battling.

As this is a UK listed company, it’s harder for us to get up to date information, as the fundamentals update bi-annually. Thankfully we have seen a trading update which we can talk about later on.

How Does Reach Make Money?

Print has been in decline for several years now, with that in mind it’s important to make sure Reach is actively looking to diversify their income.

Source: Reach 2019 Presentation

As we can see, they are expanding the digital revenue but it is massively behind print, and print is declining faster than digital can replace it.

Source: Reach 2019 Presentation

Looking at the breakdown for print it’s the advertising which is in decline above everything else. As advertisers move to more holistic, trackable, and cheaper methods it’s hitting Reach’s top-line revenue.

That isn’t to say Reach doesn’t love advertisers. The digital offering is the new powerhouse in terms of what can be done for advertisers with customers data.

Source: Reach 2019 Presentation

The digital aspects of Reach have been tailored to build up a complete picture of you across all their brands. The more data they collect, the higher fee they can charge for more targetted advertising. Reach has already made this a priority within their traditional print outlets to ensure they have a strong digital offering. The vast expanse of outlets and the hyper-local solutions drastically increases the odds of Reach being able to offer you up to advertisers.

Is Reach Fundamentally Strong?

Reach has brought up other brands, currently going through an integration, and digitally upscaling their efforts, which all sounds very expensive.

Source: Genuine Impact

I was taken back and impressed to find some pretty sable fundamentals for Reach. Even compared to investments in the US, Reach was showing up as a cheap buy and had a solid balance sheet behind it.

Naturally, we want to dig into the raw data to make sure we understand the business a bit more.

Carrying on with the finances, let’s talk about the revenue again. Bringing in £702.5m worth of revenue is a pretty decent figure, as we know it’s what happens next which matters.

The gross margin is not as high as I normally like, 47.23% means you are losing half your revenue just to make any money at all. The print business is an expensive one to be in, and this is something Reach is looking at reducing. With the two new brands on board, there are more savings to be made there operationally speaking.

Where I start getting impressed is the profit margin of 13.42%. This dipped in 2018, due to buying the other brands.

We also see a return on assets of 6.60%, and a solid return on equity of 15.81%. One thing Reach gets right is putting money to good use.

Seeing how Reach just brought some new brands I wanted to check out the debt to see if there were any clear red flags.

Source: Wallmine

Debt to assets of 52% is higher than it needs to be but not uncomfortably so. We do know they have drawn down an additional £25m in debt to protect their cash during COVID-19, considering the current debt is £693.2m this isn’t a dramatic change. They also have £35m left on their credit facility if they need it.

Speaking of debt, I wanted to have a closer look at the balance sheet. In terms of cash, we have £20m plus £102.2m in net receivables. Then things get weird. £224.9m in equipment (told you printing was expensive) and £810m of intangible assets. These very high intangible assets could well be the value of the “brands” rather than anything you should be taking debt against. When you consider this, the debt to assets percentage isn’t as attractive. Removing £810m from the assets brings it down to £518.6m, and suddenly the debt looks a bit more serious.

While COVID-19 has stalled many dividend payouts, including for Reach, it’s worth mentioning as when this dividend returns it’s one to hold onto. An 8.34% dividend yield which has grown for the last four years, it’s suspended right now but will be returning. The payout ratio is only 20.79% meaning as the price increases the yield will drop again. Though keeping 80% of the profits does allow Reach to keep building a war chest and hopefully chip away at that debt.

Is This A Value Purchase?

The price has seen a COVID-19 related drop, and we have had some tame news about revenues being down but digital being up. We already know that a hit to print is a meaningful cut against the top-line revenue.

Source: Google Finance

The price still hasn’t recovered, and until the UK is back to work it’s unlikely to. Reach won’t be able to replace the missing revenue, but they can speed up their digitalisation.

It’s worth noting the high intangible assets will inflate any figures for value hunters, and Reach has used this to help them raise more debt. Assuming we think these assets do hold their value, what does that mean for Reach’s numbers?

A price to earnings of 2.55x is extremely attractive compared to the rest of the UK market, this is being boosted by a strong EPS of 31.50x. Looking elsewhere the numbers are much lower. Enterprise value to sales of 0.32x, and a price to book of 0.39x.

This gives us some nice headway in terms of the assets they hold, but it comes down to your belief in their balance sheet and how successfully will they bounce back.

What About The Future?

Reach-ing into the future the sell-side analysts are optimistic but not sold. In terms of the share price growth, the expectation is recovery is incoming. For a one year position, this makes Reach very interesting.

Source: Genuine Impact

To turn this growth into hard numbers, we are looking at a target price of £1.25~ versus the current price of £0.80~, a 55%+ increase. However, this is not enough to push all analysts into a buy position.

Source: Genuine Impact

With no clue about when the UK will return to normal, and will the UK buy as many papers again, this is a dark cloud above the share price.

Analysts are moving into a more defensive position to wait and see, for either the momentum to pick back up again or until Reach announces more promising news in future trading updates.

Summary Pros

  • A massive brand which is focused on improving its operational ability
  • Big focus on going digital and expanding their offering
  • The promise of higher dividends in the future
  • Undervalued still because of COVID-19 and the print business

Summary Cons

  • No clue about the success of print post COVID-19
  • The assets and debt against them is questionable
  • After spending so much money having COVID-19 means another profit slowdown
  • Will advertisers come back and what does advertising look like right now

My Thoughts?

It’s an old business which is trying to go digital but it still makes so much money through print. Will COVID-19 make them change their ways and drive forward with more digital innovation?

Long term the debt can get out of control, and being the biggest doesn’t mean being the best. They have a strong digital appeal but they aren’t making the most of it.

As a long term investment, it comes down to what they can do digitally and turning digital into a meaningful revenue stream.

Short term if you are hopefully about the UK returning to “normal” then we can expect a spike with more people returning to work. If working from home becomes the new normal, there will be long term damage to Reach.

What do you think? Is this a hopeful buy based on the UK returning to work, or do they have more to offer on the digital side? Or maybe they are an old company which has seen their day?

Let me know what you think, I always welcome any feedback!

Thanks for reading and stay safe.


Great analysis, personally don’t think I’d go for it until there was a bigger switch from them to digital.

What are your thoughts on TRIG

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The digital switch is the big pain point. One of those situations where print is so profitable for them it’s hard to quickly move away, though the pain they are experiencing now might speed that up!

I prefer Greencoat UK Wind as my UK renewable exposure, they are focused on wind power rather than a wider selection.

TRIG Document

Greencoat Document

Both are similar in my mind (performance wise not a lot between them) but TRIG has more diversity. Greencoat has lower fees and a very slightly higher dividend.

For me I am in Greencoat (or TRIG) as it’s something I think needs to change in the world. It’s more voting with my wallet and aiming to keep pace with inflation for me. I reinvest the dividends and leave it to grow.

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Tesla (TSLA) an electric future?

Telsa, along with its infamous current CEO Elon Musk, is best described as a marmite investment, you either love it or hate it. I’ve avoided looking at Tesla due to the unprecedented volatility and market defying rallies it has experienced. With COVID-19 forcing many companies to take their foot off the pedal, for Tesla, it was merely a speed bump towards becoming one of the biggest auto manufacturers on the planet.

With this in mind, I don’t think there will ever be a “quiet” time to look at Tesla. Let’s charge up and drive through some fundamentals.

tesla logo

How Does Tesla Make Money?

I’ll skip over the usual “who and what is Tesla?” because, even with stay-at-home orders and a global lockdown, nobody has time to pick through that essay.

Let’s focus on how Tesla makes money to help us understand what the business is focusing on and why.

Source: Tesla Q1 2020 Presentation

Broadly speaking the business is split into three areas, selling cars (and leasing them), selling solar power and batteries for storing electricity, and supporting businesses such as selling power to charge your Tesla (charging stations.)

Tesla is best known for their cars, their market strategy is a simple one. Start by building high-end luxury vehicles which are limited in supply. Reinvest these gains into building vehicles targetting more of the mass market at a lower price point, and keep repeating. The result being everyone owns a Telsa at any price point while retaining that original luxury image. Currently, this has been the case, with Tesla’s regarded as a luxury manufacturer even when compared to direct competitor products.

Having a strategy is nothing without execution, and right now the limiting factor is manufacturing capabilities.

Source: Tesla Q1 2020 Presentation

While this helps the luxury aspects of the brand due to the limited supply, this has not been intentional.

Limited production also means the additional services will also suffer. Charging stations are not exclusive to Tesla vehicles but with many manufacturers partnering with suppliers and charging ports directly, there is less of an opportunity here versus running a petrol station. There are additional streams such as the fully self-driving car upgrades, and ongoing costs associated with the in-vehicle features, all of which require you to own a Tesla in the begin. Expect this revenue line to follow the main auto manufacturing line item.

Source: Tesla Q1 2020 Presentation

The last item to cover is the energy generation and storage side of the business. Taking a page out of Amazon’s book, if you have an internal solution is that a viable business in its own right? Tesla’s efforts to expand its battery technology led them on a journey to acquiring a solar company (SolarCity.) Now able to offer a complete charging and storage solution, or split individually to both end consumers and even government bodies alike.

What About Tesla’s Fundamentals?

There is a lot to cover when it comes to Tesla, I’ll try and keep us focused (for your sake and mine) as this write up should serve as the appetiser and not replace your due diligence. Plus, reading the last 10-Q I spent as long reading about lawsuits versus how they make their revenue.

Source: Genuine Impact

Unsurprisingly Tesla is very expensive and seems to follow the trend of a technology company rather than any manufacturing company. Even the future momentum is lower than you would expect, largely due to the recent rally passing sell-side analyst expectations. What you might be shocked to see is the relatively poor condition of Tesla’s finances. We know Tesla has had a few close calls when it comes to bankruptcy and their aggressive growth as resulted in no single year being profitable.

With that in mind let’s dig into the raw details to find out what these ranks mean to us.

Source: Wallmine

With the last three quarters showing a positive profit margin, the COVID-19 lockdown has been a very painful shock for Tesla, what should have been a successful Q2 2020 is likely to be a slip back into negative profit margins again. One question to ask, how negative is a negative profit margin?

Last four quarters Tesla has made $26bn. While it beats Ford’s $0.3bn, it is nothing compared to BMW’s $117bn. However, revenue is a meaningless figure on its own. We need to break down the cost of revenue.

For the full financial year of 2019, Telsa has a pitiful gross margin of 16.56%, which is then reduced again but all the additional costs bringing us to a -3.51% profit margin. This reduction isn’t as much as I expected. The extra expenses are heavier on general admin than R&D which isn’t what I expected to see. This does mean Tesla has additional money it can access in a pinch, though you can argue that will cost them in terms of long term competitive advantage.

While Tesla is busy opening up new sites and investing heavily into the build quality these are headway expenses that will hopefully reduce with scale.

Source: Tesla Q1 2020 Presentation

While an odd example this is the kind of focus Tesla are trying to bring into the business, optimising their existing processes. Reducing their costs to increase the margins, while making the process simpler.

A bit part of Tesla is their debt, which is eating away around $170m each quarter in interest payments.

Source: Tesla Q1 2020 10-Q

In terms of short term (due this year) liabilities Tesla owe $11.98bn, oddly it’s the payments to their suppliers which is the highest contributor to this (barely.) Long term Tesla has $13.9bn which will be due in the future. Given accounts payable made up a third of this year’s debt, debt wasn’t as big of an issue as I expected. The debt to assets last quarter was 71.19%, while high it is still very manageable.

I was fairly surprised to see Tesla has been building up a war chest, last quarter they had $8bn in cash. In terms of Tesla assets, the manufacturing sites make up the bulk, sitting at a cool $20bn.

Source: Google Finance

The last six months for Tesla has represented some incredible growth. Even now Tesla is up again by almost 4% following a bullish analyst claiming the Q2 numbers can be beaten.

As an investor, Tesla is a tech stock, meaning extremely high valuations. The negative profit margin saves Tesla from the shame of meaningful P/E ratio. However, we can always see what kind of premium we are paying by looking at the book to price, 26.90x. Even the cash to share ratio is an unpleasant 36.94x.

To justify these ratios, Tesla must have some strong backing by the sell-side analysts.

Source: Genuine Impact

As I keep saying, this is not the case. It’s rare to see such a hotly disputed stock. We are seeing analysts shift from hold to both buy and sell. While analysts are extremely hopeful with future EPS and Revenue figures, the target price is the topic of many debates.

Source: Wallmine

The current target price (taking the average of 32 analysts!) is negative compared to where we are right now. The current price is higher than that screenshot says, by a solid $80 a share.

Are The Fundamentals Meaningless For Tesla?

Fundamentals are a tool in your belt, it has a time a place and you use it to help you make decisions. Maybe the last bit didn’t make too much sense, you don’t ask the hammer before you cut wood but you get the point.

The fundamentals are showing a business which is slowly increasing its margins but scaling. Each new factory, each new mass-market vehicle, it all brings us closer to Tesla’s ultimate goal.

The debt is more under control than I first assumed, their long term debt is aggressively priced with a few 7% bonds in there, these could do with some refinancing. Surprisingly Tesla has been doing a good job of keeping money in its own pockets, while still pumping out an alarming amount of new vehicles.

Summary Pros

  • Arguably one of the cutting edge auto-manufacturer if not the manufacturer they can be a provider into another eco-system
  • The vertical integration and in-house nature works at scale, something they are starting to achieve
  • New sites opening up, the growing Chinese market being a prime target
  • Cult following similar to Apple in terms of brand loyalty and high levels of advocacy
  • Leasing is high margin and helps drive the fully autonomous vehicle research, a potentially large revenue stream if achieved with the right partners

Summary Cons

  • Extremely overpriced, even account for their growth, the next three years feels very comfortably priced in
  • Emotionally linked to Elon Musk, for better or worse and I’d put this down as a con as much as a pro
  • A constant struggle to hit a year of profitability is resulting in higher financing which keeps slowing Tesla down
  • Big brands like BWM are innovating at the same speed and make for extremely tough competition

My Thoughts?

The cult of Elon gives and takes. The passion that drives Tesla can not be ignored. If the next model of Tesla vehicle requires a new alloy to be created, few companies could be capable of such a task and yet this always feels within Teslas reach. Making the impossible seem like business as usual is something Tesla does with incredible ease.

There are very substantial and real threats to Tesla and a lot of spinning plates. It’s easy for Tesla to be distracted and lose sight of the big picture, but that is also the charm of the business. The same way Steve Jobs pushed to reduce the size of his phones, the small details create something greater than their parts.

I currently have less than 5% of my portfolio exposed to Tesla (indirect through an investment trust) and it’s something I am comfortable with.

A bet on Tesla is not a fundamental decision, it’s a decision on what I want tomorrow to look like. Few companies offer services today while looking to build tomorrow the way Tesla does. This is the kind of innovation that drags the world kicking and screaming with it.

I don’t know if Tesla will “win” the electric vehicle race, but I do know our world is better for having Tesla in it.

Let me know what you think, is Tesla something you are watching? Are you on the fence like the analysts or do you have a strong view?

Thanks for reading and stay safe!


Really interesting review of tsla, thank you!

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I’ve been avoiding looking at Tesla as the raw numbers don’t always make sense, but I figured that makes it even more interesting to overlay some numbers and try and turn my thoughts into an explanation.

Tesla is a very emotional stock, which makes it very difficult to invest in, but it does have a place in my portfolio, even if that reason is backing something I believe in.

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Maybe an analysis on Lemonade following their recent IPO?


I wish I was that good :smile: the only way to judge them is by looking through the IPO documents, link to the doc if you are interested

Interestingly this is another non-profitable IPO.

If we look at the full year for 2019:
Revenue: $67.3m (inc $3.5m from investments and commission, rest is premiums)
Cost of Revenue: $45.8m

Looks like the gross margin is around 30%, not terrible honestly. Then we have the nasty stuff.

Marketing and Sales: $89.1m
R&D/Tech: $9.8m
General/Admin: $20.9m
Other/Insurance: $9.6m

The end results before tax is a $107.9m loss. In the last three months they have lost $36.5m before tax.

They are growing their revenue faster than their costs but both are growing.

In terms of cash they have $274.2m, but as a financial firm they are required to keep a set amount of cash on hand. This is why the debt to assets ratios always look great for financial related firms. I don’t know how much Lemonade is required to keep.

They do have some really good insight into their future plans and what makes them unique which is super cool.

I wish I was better at reading through the raw filings. I’m sure there are some cool gems in there. Interesting we are seeing a trend of non-profitable companies IPOing and aiming to be profitable within five years (I believe that is the exchange requirement in the US isn’t it?)


Rough times for Reach Plc, they have cut staff and their share price has taken a meaningful hit.

Long term this hopefully will refocus them on their digital outlets, but never good for the individuals affected to see job losses right now.