TradeMe Share offer

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heavenlywild

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#93042 11-Nov-2011 19:00

So looks like TradeMe is offering to sell shares to eligible TradeMe members. Here's the details:

Link

What do you guys think, a sure bet?

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#544365 11-Nov-2011 19:40

Probably a good investment if you're willing to be in and out within a year. I see the potential for a very cloudy future for TM.

heavenlywild

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#544367 11-Nov-2011 19:54

By cloudy future, what do you mean?

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tdgeek

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#544368 11-Nov-2011 19:56

I hear it is one third of the company, whats the offer? How many shares and at what value?

0verdose05

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#544376 11-Nov-2011 20:12

Clicking the link usually helps but ill copy and paste the info just for you.

Key Offer Statistics
Issuer Trade Me Group Limited
Offer Price per Share $2.70
Number of shares to be issued to new Shareholders under the Offer 134.6 million
Total proceeds from the Offer $363.5 million
Total number of shares on issue following the Offer 396 million Fairfax Media shareholding following the Offer261.4 million Shares, representing 66.0% of Shares on issue following the Offer

tdgeek

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#544404 11-Nov-2011 20:53

Just for me. Ok, fair enough!

Trademe was sold to Fairfax for $700 million. This share sale values Trademe at almost $1.1 Million, and values Fairfax's 66% shareholding at $727 Million

So you buy an asset, sell 1/3 of it at a 50% value on your initial investment. This leaves you with a theoretical value of the asset you just sold 1/3 of, the same as you purchased? This sounds like milking the cream to me, leaving the investors with a diluted valuation.

Investment advisors are 50% postive and 50% negative on this. Is the share value fair? Has Trademe reached all of its market, meaning that growth is unlikely to be high as you alreday have all of your customers onboard.

gardenman

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#544410 11-Nov-2011 21:42

Unfortunately NZ has little to compare TM to. But as a simple comparison the valuation is about 16 times the forecast earnings whereas ebays is about 12 times forecast earnings. Based on Ebays ratio TM would be valued at $822.

However if you consider Fletchers their valuation is about 32 times forecast earnings...

mattwnz

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#544413 11-Nov-2011 22:05

gardenman: Unfortunately NZ has little to compare TM to.? But as a simple comparison the valuation is about 16 times the forecast earnings whereas ebays is about 12 times forecast earnings.? Based on Ebays ratio TM would be valued at $822.

However if you consider Fletchers their valuation is about 32 times forecast earnings...

Fletcher does have a lot of guaranteed work, and they are very different companies in different fields. If Ebay came into NZ then that could be negative for trademe, and as people here know, things can change very quickly in technology. Look at Myspace, it was worth a few years a go, now it is worth very much less.
Before investing in anything you everyone should do their research. Many mum and dad investors, and advisors don't really know anything about how online companies work.

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heavenlywild

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#544437 11-Nov-2011 22:53

^Quite true, MySpace was the #1 social networking site a few years back and look at it now... doesn't even get a mention anywhere. That is the risk, and if eBay comes to NZ and starts advertising (with their billions) then there's bound to be negative effects on TradeMe.

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mattwnz

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#544441 11-Nov-2011 23:01

heavenlywild: ^Quite true, MySpace was the #1 social networking site a few years back and look at it now... doesn't even get a mention anywhere. That is the risk, and if eBay comes to NZ and starts advertising (with their billions) then there's bound to be negative effects on TradeMe.

Tell me about it, and I can't see why they wouldn't as Ebay is the biggest auction site in most countries so they have a very successful formula. Personally I prefer the ebay website too. There is also sella, , which could get a bigger market share if it was better marketed, as it is quite a good site, just doesn't have the number of users. My problem with trademe, is that I can't see too many growth possibilities, without coming out with new ideas. They have launched treat me, but that is really just a copy of these one day type websites, which is a very saturated market already.

Personally I am sticking with transport, retirement villages and utility stocks at the moment, which have all done quite well.

heavenlywild

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#544443 11-Nov-2011 23:04

Yes, retirement villages FTW! Haha, there are going to be more and more older folks around and this is going to be a booming industry for sure.

The way TradeMe's fee structure is heading, soon people may seek an alternative.

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catjones

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#544467 12-Nov-2011 06:28

You probably have to look at their financial statements before coming to a conclusion on whether it is a 'sure bet'.

NonprayingMantis

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#544472 12-Nov-2011 07:40

personally, I think it is a massive risk. IPOs and the like nearly always are. Sure, some pay off massively, but the vast majority will tank within a few years and you lose everything.
If you have some money you don't mind losing, then by all means buy the shares,but consider it more like investing in lotto tickets

ETA: and tech and web industry share offerings are particularly notorious for this.

graemeh

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#545068 14-Nov-2011 11:35

Wait three years and then look at their track record and make your guess as to how they will do in the future.

If you buy now it's just a gamble unless you get a discount on what others are paying.

richms

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#545270 14-Nov-2011 17:07

The thing is trademe is aweful to use both as a buyer and a seller. All they have are the user base - both sellers and buyers.

If anyone makes a decent dent in those with a better product (the better product isnt hard, ebay have one, sella sortof are getting there) then trademe will tank. They have had years to sort things out for sellers to do what has been there on ebay for years like combined sales, multiple purchases with usable shipping options and a search that actually works, not happened so IMO they are teetering on the edge of irrelevance.

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johnstbr

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#545347 14-Nov-2011 20:35

I think TradeMe will be a good short-term investment but thereafter it's a lot harder to gauge. My thinking is the TradeMe is a well-known, profitable company which will generate a lot of (rational and irrational) demand to own this stock. The media coverage has been high, and the brokers will be promoting it, and it does offer some diversification benefits - which is seriously lacking in the NZ market. And if demand is greater than supply then the price will rise (in the short-term at the least). My advise would to look to "flip" them for a 10-20% profit. Disclosure: Subject to availability I will buy some in the IPO.

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