SPK - Spark NZ

[BlackPeter]

FB latest underperform IE sell $2.90

Don't believe them - analysts are always too optimistic ;

[Basil]

https://www.nzherald.co.nz/business/whats-eating-spark-three-pain-points-and-a-three-step-comeback-plan/CBBYOOBAUZCI5ONDHZRNLHBBQY/

[BlackPeter]

https://www.nzherald.co.nz/business/whats-eating-spark-three-pain-points-and-a-three-step-comeback-plan/CBBYOOBAUZCI5ONDHZRNLHBBQY/

https://www.nzherald.co.nz/business/markets-with-madison/have-telcos-lost-their-spark-not-a-revenue-growth-story-analyst/MDO6HB3BCZDUNFZD4X6PYS4Z4Y/

But hey - nothing one couldn't have read already months ago in this thread. Its just that the Herald now writes about it to fund its paywall.

[LoungeLizard]

Wow - $3 resistance level broken  and we're in free fall again. $2.93! I may be the only retail buyer on the exchange who looks at the 13% return and thinks...hmmm...

[Ferg]

I may be the only retail buyer on the exchange who looks at the 13% return and thinks...hmmm...

Hmmm as in good?  Or hmmm as in dividend yield trap?  Analysts have predicted that in future the dividend will be cut.

[entrep]

The dividend is not sustainable unless they found a way to grow money on trees

[LoungeLizard]

The dividend is not sustainable unless they found a way to grow money on trees

More like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

[Breezy]

More like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

This is the same opportunity as buying CNU at under $2 a decade ago, all the naysayers and big sellers were proven wrong over time and will be the same here. Even if they cut the divvy to say 20c it will still be a good one and even then I only expect it to be a temporal drop for a year or so.

[Breezy]

Hmmm as in good?  Or hmmm as in dividend yield trap?  Analysts have predicted that in future the dividend will be cut.

Maybe so yet the avg tp over 9 analysts is still $4.37 so lots of upside even in their eyes.

[BlackPeter]

Maybe so yet the avg tp over 9 analysts is still $4.37 so lots of upside even in their eyes.

LOL - analyst consensus? Not different to publishing the latest reading of ones tea leaves ...

... but I guess it is with the analysts as with the market. If they agree with us, they clearly must be spot on and right, and otherwise they must be wrong.

Let the analysts our of the game ... they don't know more about the future than any of us do (i.e. nothing) - and if any of them would have divine capabilities, they would not need to make money by publishing their horoscopes - oops - price targets and recommendations, wouldn't they?

[entrep]

We got a ways to go. FWIW I think this could be an excellent buy at some point. I would just prefer to wait.

From ChatGPT:

When a stock is removed from an MSCI index, it often triggers a selloff because many institutional investors and funds that track the index (such as index funds or ETFs) are required to adjust their portfolios to mirror the changes. Here's how the timeline you provided could influence the stock's price movements:

Announcement Date (November 6, 2024):
Once the removal is officially announced, some investors may start selling the stock in anticipation of further drops, knowing that index-tracking funds will eventually be forced to sell. This could lead to an initial selloff as investors react to the news.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this period, you may see gradual selloffs by investors who want to get ahead of the index funds. However, it is unlikely to see the biggest volume of trades here because index-tracking funds typically make changes closer to the effective date.

Effective Date (November 26, 2024):
The heaviest selloff is often expected just before or on the effective date. This is because the index funds that track MSCI will need to rebalance their portfolios on or right before this date to exclude the stock from their holdings. This concentrated selling pressure could lead to the largest drop in the stock price.

In summary, while some selling may occur after the announcement, the biggest selloff is most likely to happen around the effective date (November 26, 2024). Keep in mind that other market factors can also influence the timing and extent of the selloff.

[Breezy]

We got a ways to go. FWIW I think this could be an excellent buy at some point. I would just prefer to wait.

From ChatGPT:

When a stock is removed from an MSCI index, it often triggers a selloff because many institutional investors and funds that track the index (such as index funds or ETFs) are required to adjust their portfolios to mirror the changes. Here's how the timeline you provided could influence the stock's price movements:

Announcement Date (November 6, 2024):
Once the removal is officially announced, some investors may start selling the stock in anticipation of further drops, knowing that index-tracking funds will eventually be forced to sell. This could lead to an initial selloff as investors react to the news.

Between Announcement and Effective Date (November 6 to November 26, 2024):
During this period, you may see gradual selloffs by investors who want to get ahead of the index funds. However, it is unlikely to see the biggest volume of trades here because index-tracking funds typically make changes closer to the effective date.

Effective Date (November 26, 2024):
The heaviest selloff is often expected just before or on the effective date. This is because the index funds that track MSCI will need to rebalance their portfolios on or right before this date to exclude the stock from their holdings. This concentrated selling pressure could lead to the largest drop in the stock price.

In summary, while some selling may occur after the announcement, the biggest selloff is most likely to happen around the effective date (November 26, 2024). Keep in mind that other market factors can also influence the timing and extent of the selloff.

Those in the know like Blackrock will already know whats exactly going to happen, there has been above normal selling volume for a while now on certain days which means of course there has also been above normal buying .Of course over the medium to long term this index shuffle is just a blip to get through, as with the CNU selldown some of these big players are going to lose a huge amount of money.

[KW]

More like grow money on data centres, but I get your point.
At these levels you are still looking well into a double digit return on your money. Is it a dividend trap? I really don't think so. I am still of a mind to see this sell off as being at odds with Sparks position in what will only be an expanding market. It's a testing time for holders for sure, but a steady hand is needed to resist selling low out of some manufactured fear.

I think you mean losses on data centres.  The cost of setting up data centres is a constant drain.  Losses will be incurred for years.  And unlike CNU with a fibre buildout that is "one and done" after which it can sit back and harvest profits, building and expanding data centres is constant.  More capital (usually financed by more debt) brings more losses.  Only need to look at the last ten years of Next DC which a specialist data centre company in Australia. 


You cannot view this attachment.

[LoungeLizard]

KW - I get you're down on data-centres, but perhaps then explain why IFT's investment in CDC both here and in Australia continues to grow? (EBITDAF up 26% for last year and projected growth of 20% this year). And why their success may not be emulated by Spark?

Nobody invests in new technology (renewables, electric cars)  expecting profits to be immediate. But if it's the right technology at the right time then the growth curve inexorably turns to profit. Provided of course that things are executed well.

It's a bit premature to say that Sparks investment won't pay-off in a reasonable time frame. Whilst their IT revenue generally was down fractionally, datacenter revenue was up over 50% from last year, and they are tracking ahead of other targets.

Personally I am pleased that Spark are getting behind this - it demonstrates proactivity in looking for other revenue streams to compliment the existing business. To stand still and ignore what most commentators say will be a huge new industry would be far more worrying.

Maybe all those people selling are dividend hounds with a much shorter investment time frame? 

[KW]

KW - I get you're down on data-centres, but perhaps then explain why IFT's investment in CDC both here and in Australia continues to grow? (EBITDAF up 26% for last year and projected growth of 20% this year). And why their success may not be emulated by Spark?

What is the IFT dividend yield?  1.7%.  If you think SPK can pour money into data centres and still maintain their dividend, you are deluded.   That capital has to come from somewhere, and the market is telling you its going to come from shareholders pockets.