SPK - Spark NZ

[BlackPeter]

There's a report apparently of Spark winning a $100m contract with Transpower. But the sell down continues regardless....

Ah well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

[Breezy]

Ah well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

Well I'm very sure that those that ignored the market when XRO fell from $45 to $12 and then back up to well  over $100 are still holding up their middle fingers whilst lying on a nice beach somewhere. Those that did the same when CNU dropped from $4 to $1.40 and now near $9 would be doing the same and how about GTX $5.85 to $1.50 now over $10, how many examples would you like or perhaps you don't want to hear.

[LoungeLizard]

Ah well, there is a German proverb which translated into English says something like: "Those who don't listen have to feel the pain".

In other words - ignore the message of the market at your peril - or don't catch falling knives.

I suppose if we just look at Sparks earnings potential they are still ways overvalued. NTA is hardly material and not clear where future earnings growth would be supposed to come from. But hey - this is just me. I realise that any share has a huge hype component which can swing in any direction at the whim of a bipolar market.

As anybody else I am not very good in predicting the move of this hype component, though noting that hype typically follows the trend - Ouch.

But hey - there is always the bigger fool theory, and yes, it can work. Just have a look of the amazing jitter of Cryptocurrencies, which have no underlying value at all!

Cryptocurrencies now? Left the 19th century railroad analogy behind?

Falling knives I get. No-one can predict the bottom of a market that has moved into overdrive on the overselling. I'm happy to pick up at lower values, but will it go lower still? Maybe. Maybe not.

People have different investment strategies, and that's fine. I prefer large, essential, infrastructure companies that provide good long term growth (SPK doubled in value in ten years, whilst paying a solid dividend) and the occasional long-shot punt (PEB). That approach has done me just fine over the years - in the case of IFT (my biggest holding) more than just fine.

One of the advantages of this low-risk, steady as she goes approach, is not only that it has beaten the NZX50 and managed funds returns, but I don't have to sweat over every little announcement and dip. I even trade in these stocks sometimes, as I know that if the trade goes south, I'm still left with a good long-term hold.

Anyway, let's see where SPK is in 6-12 months. I'll wager it will reward those who got in at these sort of levels and those who missed out will be in the park shouting at the pigeons.    

[lorraina]

I am invested in SPK and GNE as part of my dividend portfolio.
I also recently added to my SPK and GNE holdings to get the upcoming  divies.

[LoungeLizard]

I am invested in SPK and GNE as part of my dividend portfolio.
I also recently added to my SPK and GNE holdings to get the upcoming  divies.

Yes, GNE I also hold and have increased. It's another stock where those who invest with a different strategy, just don't "get." A PE of 18- (ooh-er). Re-capitalisation to pivot to emerging technologies (careful now!). A temporary cut to dividends to execute long-term strategy (down with this sort of thing!). Ah-well, each to their own 
 

[Shareguy]

Gosh this stock has had a beating. Not surprised with worst to come I reckon. Young ones using messenger and apps for calls and messages. Lots of competition with number portability making it easy to switch.

FB say today

The stock has fallen by ~-40% in 2024. We expect continued weak performance from here, and downgrade SPK to UNDERPERFORM $2.90 with divi to face cuts.

[seaweed]

Gosh this stock has had a beating. Not surprised with worst to come I reckon. Young ones using messenger and apps for calls and messages. Lots of competition with number portability making it easy to switch.

FB say today

The stock has fallen by ~-40% in 2024. We expect continued weak performance from here, and downgrade SPK to UNDERPERFORM $2.90 with divi to face cuts.

Is that 2.90 kiwi or Aussi SPK ASX is at 2.90 now.

[Basil]

Its Forsyth Barr mate so all their price targets are in $N.Z. 

[BlackPeter]

Is that 2.90 kiwi or Aussi SPK ASX is at 2.90 now.

Don't think this matters. Remember - analysts are always optimists ;

[BlackPeter]

Interesting - the next down-leg is looming:

https://businessdesk.co.nz/article/markets/sparks-msci-world-index-slot-in-doubt-as-share-price-falls

(probably pay-walled, but the title gives it away ...)

[Apollo]

Don't think this matters. Remember - analysts are always optimists ;

Morningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

[LoungeLizard]

Morningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

Yes, you're right there -everyone can find an analyst to support their position. Are Morningstar likely to be more impartial than NZ institutions and ratings agencies who are regularly involved in the investement in /  business affairs and placements of the very businesses they are supposed to be "objectively" analysing? 

[Basil]

https://www.nzherald.co.nz/business/finance-director-quits-at-under-pressure-spark/YJZRDGNH6NBN7LPSOPUYXBN4P4/
Paywalled but well worth the very small cost of the weekly subscription.

[BlackPeter]

Morningstar values SPK at $4.60 so sounds like analysts are a lot like posters on Stocktalk in regard to valuations.

I guess no one has any idea how much passive funds following the MSCI world index would have in Spark but I assume a lot. I do not suppose they will just dump them all in one day. What is your buy price BlackPeter? I think you had $2.50 or something close to that earlier on the thread.

Good question. I think I said something along the lines "if we allow for a PE of 10, they would be worth something around $2.50".

The thing is - I try to identify and buy stocks which are undervalued, and I wouldn't call Spark at $2.50 "undervalued".

Maybe I would be interested with a one handle (which would be a PE<= 8 ), but I assume that if it goes down that far there might be other news still to consider.

Bare any other news I suspect it will bottom somewhere around the mid $2's - and driven by hype, sentiment and plainly physics go up again a bit ... though I don't see it returning to its former glory anytime soon.

It probably will just stay one of these stocks I continue to watch (one can learn so much from fascinating human behaviour, though watching Spark is for long periods of time just like watching paint to dry or watching cricket ).

Maybe Spark and me are just not made for each other - I don't even like to buy services from them, why should I want to own the shares?; Does this make me a stock - stalker?

Ah yes - and analyst estimates (even from more reputable sources like Morning Star) might be interesting (because they describe one possible working assumption and as well because they are input into the price finding mechanism for the market), but they are not statistically correlated with the future value of a stock. I did some analysis on this subject years ago on the other forum ... correlating analyst consensus and future stock values just gives you white noise. That's the thing with the future - nobody can predict it.

[LoungeLizard]

That's the thing with the future - nobody can predict it.

I knew you were going to say that...