Image source: Getty Images
Back when I bought some, predictions of boohoo (LSE: BOO) share price was strong.
It turns out they were very wrong. But I think it was because of the problems that we could not see at the time. At least, I didn't see them.
Professionals
Since you've been bitten, why do you care what the so-called experts think now? I'd say their guess is as good as mine. And that would probably be true.
But we're also looking at a loss-making company, with the success of its restructuring plans very much in the air. And in cases like this, it pays to listen to all opinions before making any decision about the purchase.
Oh, or sales, of course. I could probably get myself a pair of socks at a profit if I sold now.
Hello, Mike
But what about Mike Ashley once Group of Frasers drama? Frasers currently holds a 27% stake in bohoohoo. And the company sent an open letter to boohoo's board on October 24.
It is summarized as: “Frasers calls for a general bohoohoo meeting to elect Mr. Mike Ashley as director and CEO of boohoo and Mr. Mike Lennon as director of bohoohoo, so you can start working without delay. Frasers strongly believes that this appointment is in the best interests of boohoo, its shareholders and stakeholders.“.
The boohoo board doesn't seem to like the idea too much. Ashley can be a polarizing figure. But he has a good track record of saving (other) troubled companies.
If he gets his way, the predictions may all have to be rewritten. But I think it's worth revisiting them to help you hear the lies of the world.
There is no benefit
A big red flag is the lack of profitability in the next few years. Analysts are still projecting negative earnings per share (EPS) through 2027. Losses are likely to decrease at that time. But at a time when I can say that the competition is likely to be intense, I am not happy.
In terms of share price, there is a 32.5p average target out there. And the range is from 18.5p to 70p.
With boohoo shares trading at 29p at the time of writing, that high stake suggests an attractive 140% return. But is it enough to reduce the risk of loss of 36% if the bearish forecast is correct?
In any case, the wide range of opinions reinforces my assumption that the experts have no more clue than I do.
What to do
Despite my lack of excitement, I see interesting possibilities. Is it worth buying into the idea that the current management can pull the boohoo back from the brink? If Ashley sees long-term value in the company, that's a plus.
Or did you buy in the hope that Ashley will take over and guide the company to success? I really don't know.
But I decided one thing. There is too much entertainment value for me to sell my small part right now. Besides, I have enough socks.
Source link
