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GW stock drops 10% after cryptic warning to investors


Kastor Krieg

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So, time for doom and gloom now? I forget the name of the Frater who does the usual financial analysis, but if you could shed a light maybe?

 

https://www.thisismoney.co.uk/money/markets/article-6289819/Games-Workshop-raises-alarm-bells-blue-warning-trading-uncertainties.html

 

 

 

Games Workshop spooked investors today with an unscheduled trading update warning of 'uncertainties in the trading periods ahead'.

 

 

 

The terse, 70-word announcement from the stock market darling, unsettled investors and triggered a 10 per cent slump in its shares to £30.15 - making it the worst performer in the FTSE 250.

 

[...] the Board remains aware that there are some uncertainties in the trading periods ahead for the rest of the 2018/19 financial year. A further update will be given as appropriate.' 

 

Retail analyst Nick Bubb pointed out that, having updated the markets just last month, it is unclear why the firm has issued another trading update today, 'bar the fact that its share have been under a bit of pressure'. 

 

'Make of that what you will,' Bubb said.

 

When This is Money contacted the firm for more clarity on the mysterious statement, a spokesperson declined to comment and said 'no one is available to speak with regards to your query.'

The new FW p+p pricing system plus brexit announcement I'd imagine, upsetting a chunk of fan base which led to many emails of a disgruntled nature and maybe noticing the come back of this in some spreadsheets. Not saying these fans just bought FW mind I'm saying these fans bought both and are now less inclined because it's just all super expensive in an already expensive hobby.

Plus the pound has been doing the slight falling thing again.

Guest Triszin

I think its a mixture of

 

1. uncertainty surrounding Brexit

2. US tariffs on china, might cause Box and book/booklet production cost to increase

3. lower than expected sales predicted for this holiday season. (could be too many boxsets, to fast)

Somebody wanted to buy a few thousand shares at a discount before Christmas. When everything proceeds as they have for the past year they will make a killing...

 

I got nothing...

 

I honestly would do that if I had the money ... unfortunately I don't.

Guest Triszin

 

Somebody wanted to buy a few thousand shares at a discount before Christmas. When everything proceeds as they have for the past year they will make a killing...

 

I got nothing...

 

I honestly would do that if I had the money ... unfortunately I don't.

 

Ya, IM just starting to put money aside for a brokerage account/retirement account. I feel like im starting late. also doesn't help I dont make much

Most likely it has nothing to do with GW and everything to do with the economic upheavals going around (tariffs, Brexit, impending implosion of US economy, etc).

 

No real news here, unless you have tons of money invested in their stock.

Most likely it has nothing to do with GW and everything to do with the economic upheavals going around (tariffs, Brexit, impending implosion of US economy, etc).

 

No real news here, unless you have tons of money invested in their stock.

Yeah I can definitely see why Games Workshop would be the only company that felt the need to warn investors due to the impending implosion of the US economy.

 

I may be way off base- but that seems like something of general versus specific importance if it were the concern.

Thanks for the update, was considering buying a chunk earlier in the week after the global dip in the markets.

 

 

'Some questions may also be asked as to the timing of former chairman Tom Kirby's £20.3million disposal of Games Workshop stock last month. Did he know something was up? One would suspect not, given that he retired more than a year ago and shouldn't be privy to information regarding the day-to-day running of the business.'

 

Hmmm. 

Most likely it has nothing to do with GW and everything to do with the economic upheavals going around (tariffs, Brexit, impending implosion of US economy, etc).

 

No real news here, unless you have tons of money invested in their stock.

 

It would be really weird to issue a warning one month after last report if the topics involved are mainly external. All the reasons you are listing are well known by the investors and should already be integrated in the stock price before the warning. Especially since dividends will be paid in a few days, what will lower again the stocks price. 

 

They are closing end of June and must have a clear vision of the performances for Q1. Maybe, these are not on par with a budget that may have been very agressive given the exceptionnal peformances last year (even if sales are higher than last year). The stability of profit they are claiming may be a hint. Moreover, I'm not sure if orders have already been placed by FLGS for the holyday season but orders lower than expected could be a reason for such a warning even if this is less than 40 % of their sales. They may be able to extrapolate their total sales based on the orders placed by their resellers.

The new FW p+p pricing system plus brexit announcement I'd imagine, upsetting a chunk of fan base which led to many emails of a disgruntled nature

 

I don't think it's related to FW at all, it's peanuts in main GW business. Well, unless it was a trial of the whole company going to that model thanks to pound doing rollercoaster thing of late and the feedback left them frantically looking for plan B they don't have.

 

My bet would be on Brexit.

I'm 99% certain this is external factors. I see no obvious step-change in GW's operations that would result in anything other than the growth they've enjoyed in recent years. 

 

At least I damn well hope, so or my portfolio is entirely Khorne Red...

The wording is not that different to the October 2016 caveat about future trading periods. I suspect that the reaction is more marked this time because the shares are trading at a rather aggressive price to earnings ratio that is probably assuming a lot of future growth.

Thanks for the update, was considering buying a chunk earlier in the week after the global dip in the markets.

 

 

'Some questions may also be asked as to the timing of former chairman Tom Kirby's £20.3million disposal of Games Workshop stock last month. Did he know something was up? One would suspect not, given that he retired more than a year ago and shouldn't be privy to information regarding the day-to-day running of the business.'

 

Hmmm. 

 

Tom Kirby's track record as GW chairman suggests he "knows" absolutely bugger all, and he's simply cashing in on the unbelievable good fortune he's had over the last year.

We did just have the government announcing that the transition period post-Brexit may take longer. It's more than likely that and a combination of other economic factors.
 

With regards to the news, I wonder if GW is worried about Brexit?

 
Any business with overseas trade that operates out of the UK is concerned about Brexit. I work for a smaller miniatures company, and one of our primary concerns is how it'll affect a. shipping tariffs b. supply/demand from our continental trade customers c. the cost of materials and d. our overall prices. Whilst Games Workshop is a monumentally larger company I imagine they'll be mulling over similar concerns and then some.

 

EDIT: Also, regarding Kirby; so long as he has acquaintances on Geedub's inner core he'll be unofficially privy to any financial/economic information regarding the company. In theory, he shouldn't, but in practice it's almost always the opposite.

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