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Yellow Media Inc T.YLO



TSX:YLO - Post by User

Bullboard Posts
Post by DoubleIndemnityon Dec 20, 2012 8:48pm
587 Views
Post# 20758756

why the stock price is so low

why the stock price is so low

1. Most of the shares are owned by entities that would rather not own common shares: banks, bond funds, etc. If they can get a vaguely reasonable price, they will sell.

 

2. The company has rapidly declining revenue (-17% per year top line revenue). The revenue looks better if you split it between print revenue (very rapid decline) and online (significant growth), but...

 

3. It's not clear how the company is distributing revenue between print and online or how sustainable this online revenue is. Many of their online customers seem to also be print customers. Will online growth continue once most of these customers have moved online? Revenue forecasts would look very different if many of their online customers are really just print customers who are getting an online service because it costs them very little extra.

 

4. None of the (large but declining) revneue will go to shareholders for several years until the existing debt is paid off (either from revenue or from future debt issues with less onerous conditions). Today's earnings have little relevance to today's common shareholders.

 

5. Management has driven this company into the ground but remains in charge. 

 

Allan's spreadsheet is a useful reminder that it's not all bad news. If Yellow Media can stabilize revenue, the common shares will eventually be worth much more than their current share price. But that's an "if".

This is a highly speculative investment. You could easily make a lot of money, and could easily lose everything. If you're OK with that, you may as well hold on to your shares and warrants. I'm holding on to mine.

 

 

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