PPH - PushPay (Church/donor software.)

[dodgy]

Posted Wednesday 17th...that was "code speak" for me selling half. I followed my gut instinct yesterday when the SP failed to rally on the back of booming U.S. markets incl Nasdaq and sold the rest.


Here's a summary of my concerns.
To annualize the peak December quarter of giving at first glance does seem a rather creative way to highlight the growth of the company. The fact that they have changed the basis upon which they calculate this ACMR several times to now show this in the best possible light and the fact that they have missed once already with a claim that they would be cash flow neutral by Q4 2017, now out to Q4 2018 does not give me the warm fuzzies. What if so called ACMR is well under $90m for Q1 2018...do they change the measurement basis again to show the current quarter in a better light ? Why not... they have done it so many times already ? Creative accounting 101. This bean counter, (who has a special dislike for creative accounting) is a little more cautious than I was previously.
I don't like the fact that future customer acquisition cost has been warned as being about 18 months revenue in the future, up from 12 months. Considering that customer growth per se was very modest for 2017 the inference here is one could conclude that the majority of the large low hanging fruit has already been picked ?
When one further considers that the vast majority of their growth in ACMR was from price growth per customer, not customer growth itself, (such price growth surely not being repeatable without customer resistance in the future ?), one starts to get a possible different scenario regarding future growth not being as robust.
Maybe they might miss with being cash flow neutral by Q4 2018 again ? Market may be far less forgiving the second time around in my view.
Someone told me they are capitalizing new customer acquisition costs, surely not ?

100 day MA is about $3.20. Very late last year this was about $3.40 before the inclusion in the NZX50 in early December forced a lot of institutions / fund index trackers hands in term of buying in. I don't think anything material has happened to the business since when it was trading around $3.40 apart from the arguably artificial price spike forced by the index inclusion.

Ironically enough we saw exactly this pattern of behavior when Comvita was included in the NZX50 some time back, an immediate price spike of 20% followed by it fairly quickly falling back to its earlier price. On those two bits of anecdotal evidence one might conclude that premiums caused by index inclusion are temporary in nature and a reversion to fair value usually happens fairly quickly. I guess at $4 I simply saw more short term risk than opportunity. Long term I am not so sure anymore. Most of the big Churches are already on board.

Hi Beagle
Creative account is now widespread. My support for this company relates not to facts but peoples perception in the market . In my mind Atm appears to me to be founded on an unproven science but the story promotes their sales growth. Surely these guys are doing a similar thing. And with an expanded audience on the Nasdaq ?
Have a happy weekend.
-dodgy




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[Nigelk]

Nothing has changed folks.

The current correction/adjustment brings the SP back to where it was a little over a month ago, that's all.
Yes, growth is seasonal due to Thanksgiving, Christmas and US Tax rebates falling in the December quarter.

Long-term, an amazing growth story though and one I predict to continue long-term.
People like me who have been in for years will now be overweight and I get selling a few to diversify.

My only concern is the prevalence of tithing vs. weekly donations in US churches. something I know to be common among Mormons and other major religions and something i've not seen referred to by PPH. Even then, they can easily diversify to other markets and pick up the low hanging fruit of weekly donors there, unless someone beats them to it.

I'm a long-term investor with these guys, so will stay in and may top up too

[Baa_Baa]

Technically the breakdown of the Sept-mid Jan steep trend line (daily) seemed certain to follow through to the downside, which it has. Hindsight is easy though, whereas foresight is not. I don't like steep trend line breaks, especially when there's ample room in the standard indicators to accomodate lower SP's.

Given the incredible rise during 2017 and notwithstanding some people will have been hurt by this down turn, technically there's a number of supports below here, beginning with the daily 50EMA, each providing an exit opportunity if broken. I wouldn't loose sleep unless it failed at the 2.60-2.65 support which seems highly unlikely at this stage. It could rebound anytime before then though. The question then, if you observe TA and are sensitive to large capital SP movements, is whether you have a trading plan, to mitigate losses by selling, or more optimistically when to buy back/in/top-up.

For those who recall me referencing weekly charts for a momentum trading perspective and to remove some of the daily SP noise, the weekly close today was the sell trigger closing below 3.885. The exit is a weekly close below 3.64. So some wiggle room left.

That's just a simple technical view, I agree with most of the longer term FA comments here and some of the concerns (albeit they seem minor in the scheme of things).

[Beagle]

It always amuses me how fickle some people are, when not a lot has changed. See you guys again in a couple of months probably.

Quite possibly I'd be interested again if as I suspect, it reverts to early December pricing around $3.40. Probably just got a bit ahead of itself. Pleased your amused, I simply see it as risk / capital management.

[RupertBear]

It always amuses me how fickle some people are, when not a lot has changed. See you guys again in a couple of months probably.

There is nothing fickle about preserving ones capital and I am not sure why you find it amusing

[winner69]

Those who know Push better than me a question - what you think ACMR will be for the December 18 quarter?

[Cricketfan]

There is nothing fickle about preserving ones capital and I am not sure why you find it amusing

Because everyone raves about its long term prospects and how much the shares will be worth in a few years time, and then on the slightest bit of doubt suddenly people change their mind and sell. Having seen this happen in several threads over the last few years, if people just held onto their shares then in the majority of cases they would still have healthy gains today. I'll come back to this post in a year or two and see if it turns out to be the case here as well.

[Baa_Baa]

Because everyone raves about its long term prospects and how much the shares will be worth in a few years time, and then on the slightest bit of doubt suddenly people change their mind and sell. Having seen this happen in several threads over the last few years, if people just held onto their shares then in the majority of cases they would still have healthy gains today. I'll come back to this post in a year or two and see if it turns out to be the case here as well.

You may be mistaking this ShareTrader site for a Share Investor site?

There are a lot of traders here, and watching, who don't give a toss about future prospects except in as much as they can capitalise on it, but are adept at leveraging the ups and downs for capital gain. That is despite perhaps the larger volume of normal discussion being fundamental, whereas when it turns ugly the technical discussion tends to emerge because many seem to like to have a perspective on the exits.

PPH is unlike most of the glory shares talked about here, as it relies purely on capital SP movements because it doesn't make a profit or pay a dividend and therefore doesn't qualify for any of the 'investor' ideals that many see as important decision criteria to put their money on the line

Just saying. See you in a year or two when you come back, but in the meantime the savvy traders will have made killing on PPH, more more volatile the better, while the investors (who hold) will have a very decent profit to justify their confidence and commitment.

Cheers
BAA

[Cricketfan]

You may be mistaking this ShareTrader site for a Share Investor site?

There are a lot of traders here, and watching, who don't give a toss about future prospects except in as much as they can capitalise on it, but are adept at leveraging the ups and downs for capital gain.

I was referring to the people going on about the company's long term prospects, so I assume they are investors? Or are they investors until the see some short term downsides and become traders? And then investors again when the share price recovers?

[peat]

From the 9th Jan

well I for one wouldn't buy right now, ... at some point things get very expensive for having no actual profits.
... the chart would indicate to me that there needs to be a period of consolidation

PPH.JPG