FKA, still falling, LYLT

A little article on LYLT.
Actually useful information.

https://finance.yahoo.com/news/loyalty-ventures-high-risk-hi…

TL;DR Reports of their death are probably exaggerated.
With the price having fallen so far on the apparent assumption of death, there’s more upside than downside.

Jim

I saw that article too, and I noticed that the market price jumped about 10% on the subsequent trading day (and then fell back again the following day).

It wouldn’t surprise me if:

  1. The article caused the market price swings,
  2. The author of the article reads this board :wink:
  • David
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I agree: LYLT insiders do not have enough skin in the game. Spinoffs can be profitable investments but if the insiders don’t step up why should I? This stock traded at $98.95 on 11/4/21.
The parent still has another 19% of LYLT stock, so it will be interesting to see how that impacts.

What am I missing?

Down another 10-15%% since eaernings. Were they really that bad?
So much for my knife catching skills; there goes another finger or two.

Jim - have you had a chance to read the transcript of the earnings call. Did they say anything to change your opinion on this one?

Down another 10-15%% since eaernings. Were they really that bad? – pioneer valley

I sold my position because I didn’t like the cash burn as compared to the cash balance. It seemed they won’t be able to sustain that burn rate for many quarters before the bank’s revolver would have some broken covenant. (See their earnings presentation material, showing declining cash balance, existence of revolver and debt pay down. One of those 3 was alarming to me when I compared the same page to the prior quarter’s presentation).

It was a “good” loss though. Had me look at my last decade… and I concluded my searches for huge returns through buying something “overlooked” doesn’t see to work very well.

Will return to more boring stuff that provides multi baggers over longer timeframes. Excellent seems to beat insane. :slight_smile:

Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

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regarding the viability of the business going forward (especially vis-a-vis its debt load) the loss of Sobey’s seems material even though they can replace with other vendors. There is a downward spiral effect / network effect in reverse.
Maybe more importantly is the ageing of its Air Miles users - it seems new generations don’t even know Air Miles and its user base is getting pretty old. It wouldn’t be that important, since they probably have many years to go before feeling major effects from this, but for the debt-load due to slowly declining earnings power.
There are some temporary slowdowns in Air Miles business due to covid but wondering if there are longer-term effects due to consumer behaviour change (more grocery shopping needing less promotions?). Sobey’s pulled the trigger even though it knows it will cost quite a lot of $ to make the switch.
Any idea how to handicap these concerns, again mostly vis-a-vis its debt load?

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And now down to $2.13. No position yet, but considering a small bet…

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And now down to $2.13. No position yet, but considering a small bet…

Would you care to explain why you plan to put on a position except that the stock had fallen a lot?

Would you care to explain why you plan to put on a position except that the stock had fallen a lot?

Well, I suppose one argument for is that according to Yahoo!, the low estimate (out of 2) for next year’s earnings is $0.92/sh. That’s a forward PE of about 2.3.

John

Well, I suppose one argument for is that according to Yahoo!, the low estimate (out of 2) for next year’s earnings is $0.92/sh. That’s a forward PE of about 2.3.

EPS forecast for Q end Mar 2022 of 33 cents → actual 4 cents
EPS forecast for Q end Jun 2022 of 26 cents → actual -63 cents

That’s 2 for 2 since the spinoff.

Market Cap of 52.4 mil, LT Debt 630 mil. And $0.92/sh = forecast earnings of 22.6 mil for 2023 (by 1 or 2 analysts who had been missing the mark completely). The numbers don’t look stellar. Is there any insight re the business development that is exciting?

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If you look at this as a sort of binary bet, where either it is going bankrupt or will successfully continue as a going concern (and is likely worth a multiple of the current price–maybe the $10-$11 it traded at in early June), in the absence of meaningful news that changes the odds of the bet, the lower stock price can dramatically increase the upside of the bet.

Now reasonable folks can argue about whether there has been meaningful news that changes the odds (Moody’s downgrade, tone/facts from earnings release/conference call), as well as the upside (is the business fundamentally broken or did they just lose a meaningful client which at the same time allows for some other avenues that will just take time to explore). But if one doesn’t think the odds of success are dramatically different, I’d much rather have a bet that pays off 5x than 3x.

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If you look at this as a sort of binary bet, where either it is going bankrupt or will successfully
continue as a going concern (and is likely worth a multiple of the current price–maybe the $10-$11
it traded at in early June), in the absence of meaningful news that changes the odds of the bet, the lower stock price can dramatically increase the upside of the bet.

Though I tend to agree, in this case the stock price has been basically the normal/fair price of a call option for some time.
The common shares at this point are best thought of as a zero-strike call with an infinitely distant expiry date.
So it probably doesn’t really have to get cheaper for the rationale to hold.

But your comment about the binary nature of the situation is probably apt.
Some people are worried about their ability to manage the debt load without collapsing.
Without discussing whether they’re right or wrong to worry that much, it’s true that the most likely outcome in this case is that they’ll either go bust or they’ll be a going concern.
They don’t have to actually have a particularly bright future for things to work out well from this price…if they stay in business.
The cigar butt view: a butt you pick up off the street may only have a couple of puffs in it, but your cost basis is so low it doesn’t matter.

Jim

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The best strategy these days is to buy some shares and pump it up on the Reddit meme stocks board. If they go for it, you will have your 5-bagger in a day and then who knows what.

LYLT has failed.

“Loyalty listed assets of as much as $10 million and liabilities of as much as $1 billion in its bankruptcy petition.”

“The company’s deal to sell Air Miles to BMO is not final, according to a statement. An affiliate of BMO has also agreed to provide $70 million of bankruptcy financing to a Loyalty Ventures affiliate, according to the statement.”

“Its total revenue for the third quarter that ended Sept. 30 dropped by 4% year-over-year to $162 million, according to regulatory filings. A measure of earnings collapsed by 30% to $33 million.”

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From Yahoo! Finance LYLT page–
LYLT is delisted effective Mar. 21, 2023

Ticker Change

LYLT is trading under new symbol LYLTQ effective Mar. 21, 2023

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$0.22. Ouch. I briefly owned it. Glad it was briefly.

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quickly gets to 3.75 cents now! Below 1 mil usd market cap intraday. :face_with_peeking_eye:

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