myTaste: A new profitable focus area2017-10-04 07:30
The numbers during Q2 fell short of our estimates, both sales and profits. The most alarming in the report was the continued weakness in the visitor rate. myTaste is taking measures to handle their SEO issue, but we see no other way then adjusting our user base trajectory down quite significantly.
On the positive side the new focus area; Acquisitions of smaller e-commerce affiliates and including them in the Shopello segment, seems promising. Three acquisitions have already been announced and a rights issue to raise the capital needed. We find a market that is up for grabs. Creating a market leader in this field might generate significant value for myTaste’s shareholders.
We have revised our estimates for the myTaste segment downwards following the weak user development. However, the revisions are dampened by the new acquisitions within Shopello. We have also accounted for the coming dilution following the announced rights issue. Our new Base-case amounts 7.8 SEK per share. Our fair value range stretches from 2.8-17.4 SEK per share which signals the large potential but also the company has to prove the slightly new business model.