December 21st, 2021 | 12:18 CET
GameStop, Aspermont, Salesforce - What counts are facts, facts, facts!
Table of contents:
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
GameStop - Lack of a clear future strategy
Who does not remember that crazy January 2021? When after the entry of investor Ryan Cohen and the wave of short selling by institutional investors, small investors suddenly organized themselves via the subreddit forum WallStreetBets. And through their massive investment in the stock forced the short sellers to buy back the paper at horrendous prices via the stock exchange. The share price climbed from around USD 15 to USD 480 in the meantime. It was clear from the outset that this was a flash in the pan and that the share would soon fall again.
The fact that the share price had previously been low should not have surprised anyone. After all, GameStop lacked a clear strategy for the future for quite some time. While the world of computer and console games shifted more and more to the online world (Sony PlayStore, Microsoft Xbox Live, Steam), GameStop continued to rely on stationary retail. It was not until late that they decided to change things and therefore brought Ryan Cohen, the founder of the online pet food mail-order company "Chewy", on board. With his experience from building up Chewy, he was supposed to help GameStop position itself more strongly in online retail. But there was a mistake in thinking here because pet food and online video games are fundamentally different, not just in terms of target groups.
The sale of physical data carriers is also on the decline; increasingly, online platforms for video games merely sell codes that enable downloads of the programs or unlock certain features. And so it is no surprise that GameStop's current Q3 figures reflect just that: Despite a 30% increase in sales to USD 1.3 billion, losses climbed from USD 18.8 million to USD 105.4 million. Analysts are also disappointed and universally recommend divesting the stock as soon as possible.
Aspermont Ltd. - The success of digital transformation
The Australian Aspermont Group is an entirely different caliber to GameStop and an example of a successful transformation. The group started as a traditional newspaper publisher and still publishes the two mining magazines Mining Journal (founded in 1835) and Mining Magazine (founded in 1909), published continuously since their inception. Subsequently, the Company, which made its money mainly from print advertising and events, became a victim of digitization in 2014. In the maelstrom of moving more and more events and publications to the Internet and the cloud, Aspermont fast lost a quarter of its revenue. A radical turnaround was initiated in 2015 to become a digital media and service house to escape extinction.
And, as it turns out, with great success. The Australian Company is now the market leader by reach for B2B media in the commodities sector and operates a highly scalable service with its XaaS (Everything-as-a-Service) platform. Added to this is the provision of business data from an immense database that Aspermont has built up over the years and actively maintains.
The success is also reflected in the recently published annual figures for the 2020/2021 financial year: EBITDA exploded by 288% to over AUD 1.6 million. The data business stood out in particular: here, revenues tripled during the fiscal year, while XaaS revenues grew by an impressive 14%, returning to pre-pandemic levels. The analysts of GBC Research formulate in their current assessment a price target of around AUD 0.09, which corresponds to more than a quadrupling of the current price.
Salesforce - Sometimes better, sometimes worse
The world's leading cloud software developer exceeded market expectations in the third quarter, which ended in October. The US Company's revenue grew 27% to USD 6.86 billion. Although adjusted earnings fell 27% YOY to USD 1.27, they were well above analysts' expectations. The figures, meanwhile, are a reflection of the multi-billion dollar acquisition of Slack, the communications platform, from the summer. With this, Salesforce wants to catch up with Microsoft. However, the guidance for the next quarter was disappointing. The software giant held out the prospect of earnings per share of USD 0.73. Analysts, however, had expected an average of USD 0.82.
Financial ratios are usually a good decision-making aid when evaluating shares. But understanding the business model is also crucial, as this is the only way to identify any weaknesses and avoid joining the swarm. In this sense: Hands off GameStop. It is better to take a closer look at Aspermont. Here, the turnaround has a solid foundation. And the numbers prove it. As the market leader in a forward-looking growth market, Salesforce is also attractive.
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