SPK - Spark NZ

[KW]

"Pivot to", "isn't going to happen"? Spark already has 16 data centre sites, they've been in the market for many years, and are aggressively growing and expanding that capability. They have all sorts of innovative partnerships around access to energy.

And they are all going to be subject to the same price pressures that is currently facing the likes of the pulp mills.  Who is going to be paying for the power?  Not the customer, unless the customer is forced by law to use an onshore data centre.  

[Basil]

Spark recently started price gouging people who wanted to retain their xtra email accounts. Price went from $5.95 to $9.95  per month, nearly doubled in one foul move.

[Apollo]

Spark recently started price gouging people who wanted to retain their xtra email accounts. Price went from $5.95 to $9.95  per month, nearly doubled in one foul move.

If you're not paying for the product, you are the product.

An article on gmail and confidentiality.

https://www.theguardian.com/technology/2021/may/09/how-private-is-your-gmail-and-should-you-switch

There is a reason Google and Facebook dominate the online world of advertising.

[lorraina]

$9.95 a month is great value.
Crikey I paid $40 the other day for a hair cut,and I now have half the hair I had when it cost $15..................lol.

[Basil]

This article I saw today might explain a few things.  Gosh...90 million shares to be sold if Spark exits the MSCI index.  That's a really serious truckload of shares !!

Leading New Zealand broking houses are telling clients that between 34 million and 40m Spark shares are tied up in what market observers believe is a short-selling campaign. Spark shares have plummeted in six weeks to trade as low as $3.01 early this week, their lowest point in more than nine years. Spark shares last traded below $3.03 in August 2015 and were last below $2 a decade ago, in October 2014. The fall has been accompanied by unusually heavy daily traded volumes. Estimates In a confidential note late last week, which BusinessDesk has sighted, Jarden told high net worth clients that as of last Friday "meeting the short position in SPK (Spark) currently amounts to around 40m shares". Forsyth Barr estimated the short position in Spark shares to be about 34m shares late last week. The Australian Securities and Investment Commission, which maintains a register of stocks that are being short-sold, has been consistently recording more than 6m Spark shares in recent weeks. This appears to be about twice as many of the dual-listed Spark's shares as have commonly been disclosed on the Australian Securities Exchange register, but does not include shares that may have been short-sold on the NZ Exchange (NZX). The NZX maintains no short-selling register, making discovery of short-selling activity almost impossible for any market participant not directly involved in the activity. NZ Regco, which monitors NZX share trading, has so far made only one boilerplate comment in response to media inquiries about the apparent short selling of one of the local exchange's most liquid and widely held stocks. That comment, made last week, said Regco monitors all stocks for unusual trading activity and would continue to "monitor this stock" accordingly. Index changes Jarden told clients that Spark had dropped out of the FTSE All World Index and would be expected to leave the MSCI index in coming weeks, which would inevitably cause selling in Spark shares. "The pricing for the [MSCI] change will be determined over the last 10 days of October, with the change being implemented on the last Friday of November," wrote Jarden director Jeremy Ashworth. "This is expected to result in the sale of 90m SPK shares. As noted in this morning's meeting, the short position in SPK currently amounts to around 40m shares." How it works Short selling ahead of an expected fall in a stock's share price allows traders to profit from the falling price in the same way that most investors expect to benefit from a rising share price. The practice is entirely legitimate, but not visible to most investors or market watchdogs in NZ, where short selling has tended to be uncommon. To short-sell a stock, traders will often "borrow" stock from an existing shareholder, usually an institutional investor or broking house, for a fee, then take the difference between the higher and the lower price when it occurs in the future. As a trading strategy, short selling comes with the risk that the anticipated fall does not occur, but the momentum has been all one way on Spark since shortly after its profit announcement on Aug 16. The company announced a weaker-than-expected profit and a dividend increase, despite dividends outstripping free cash flows for some years. A "model portfolio change instigated by one of our competitors" was also a source of selling pressure on Spark, Jarden noted.
.

[LoungeLizard]

This article I saw today might explain a few things.  Gosh...90 million shares to be sold if Spark exits the MSCI index.  That's a really serious truckload of shares !!

So it turns out that there was more to the overselling than met the eye. Not a conspiracy theory after all.
All the more reason, imo, not to sell, and in fact buying at these levels or lower, the possible drop from the MSCI index notwithstanding, is still a good long term strategy. If the downtrend is an artificial, manipulated event, then is this a case where buying in a downtrend is actually the smart thing to do???

[Basil]

Well, yes, no, maybe.  The problem is that I believe the potential index exit isn't until sometime in November, someone else may know the exact date so there's plenty of opportunity for more short selling to exacerbate the downtrend. Each to their own, I'd rather buy companies with proven growth and genuinely plausible prospects for growth to be ongoing on much cheaper metrics than this company which all it has proven it can do so far, is not grow.  It's not just the dividend yield, it's the direction of travel of the level of dividends one needs to focus on just as much as the yield itself.  Maybe they can pay 20 cps on a sustainable basis going forward in the medium term, fully imputed,, that's 27.77 cps gross.  That in theory might support a company in the late $2 range, maybe even around the current price if the reserve bank drops 50 bps next week so maybe we are close to the bottom, who knows, but I remain deeply skeptical regarding any realistic prospect for earnings growth in the years ahead.

[BlackPeter]

So it turns out that there was more to the overselling than met the eye. Not a conspiracy theory after all.
All the more reason, imo, not to sell, and in fact buying at these levels or lower, the possible drop from the MSCI index notwithstanding, is still a good long term strategy. If the downtrend is an artificial, manipulated event, then is this a case where buying in a downtrend is actually the smart thing to do???

What was first - the chicken or the egg?

Clearly - there must be a reason for the Spark SP tanking. That Spark is now removed from various indices is not the  cause, but the consequence of its SP tanking.

The 100m $ question is - what is the root cause?

I recon you don't need to look further than Sparks economical outlook. How much is a share worth which earns in average 25 cents per year and shows no sign of any sustainable growth?

If you think that's more than $2,50 - then absolutely, go for it and fill your boots. Better though, to do this in silence. The less you ramp, the more cheap shares are available for you.

Go for it!

[Basil]

the more cheap shares are available for you.

I thought I'd learned that lesson already lol, but I wish I'd kept my mouth shut on the HLG thread.  I'd love a few more at $6.30 but don't like my chances now

[BlackPeter]

OK - just lets have some TA fun:

Anybody noticed that these down slides often seem to come in waves of three - with the middle down wave being the largest?

The first slide started in January around $5.40.
The second slide started in August around $4.40.
Now we are at $3.

If this is the end of the second slide (which needs confirmation), than the third and last slide might go down to $2.

Not far away from my 1 handle - spooky;

Wherever it ends, it is probably fair enough to assume that we will have afterwards a slight recovery (particularly with interest rates dropping). Not enough in my view for a two bagger (no matter, where the bottom will be), but hey - small animals produce manure as well ...

You cannot view this attachment.

Discl: Nobody can predict the future ... including me.

[BlackPeter]

I thought I'd learned that lesson already lol, but I wish I'd kept my mouth shut on the HLG thread.  I'd love a few more at $6.30 but don't like my chances now

To be fair - Sparks liquidity looks somehow favourable compared to HLG's - however sadly, this is not what I could say about the respective financial outlooks of these two companies.

comparing stock water with Champaign?

[LoungeLizard]

If you agree that the extent of the slide has more to do with what now is an acknowledged short selling campaign, then conventional TA analysis isn't really that relevant.
 
At current SP levels coupled with a still healthy dividend (27.5cps) Spark is a value share, regardless of whether you think there will be a return to growth next year (Spark are forecasting there will be). Capital gain + dividend over the next 12 months looks attractive to my eyes.   

[entrep]

If you agree that the extent of the slide has more to do with what now is an acknowledged short selling campaign, then conventional TA analysis isn't really that relevant.

How so? That would make most TA redundant. All shares can and are shorted.

[LoungeLizard]

How so? That would make most TA redundant. All shares can and are shorted.

Not on the scale we've seen with Spark. I can't remember anything done to this scale on a blue chip company before.

Large scale shorting really distorts market pricing and by its nature it's a temporary distortion which makes it impossible to project any kind of "normal" trend.

[entrep]

Many assets are "shorted" all the time, not just NZX shares.

US shares, FX, gold, crypto, etc, etc. Futures and spot. On all kinds of scales.

Shorting does not make TA redundant. Otherwise all TA would be redundant.

It's the market.