Author Topic: What companies won't survive  (Read 1544 times)

roark33

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What companies won't survive
« on: March 20, 2020, 03:31:37 PM »
I think the US might be under lockdown for the next 60 days.  Let's just assume that, what companies won't survive? 

Go....

Here are some of my ideas:

WTRH
APRN
OZK
NCMI
PLAY
AMC
LIND
BXC
CONN
CNK
CVNA
NCLH
ZG
CHEF
PLYA
HTZ


TwoCitiesCapital

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Re: What companies won't survive
« Reply #1 on: March 20, 2020, 06:44:45 PM »
Just curious as to why you don't think ZG would make it? Was casually looking at them the other day and it seems they have a few billion in liquidity to be able to operate for awhile without new needs for cash.

roark33

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Re: What companies won't survive
« Reply #2 on: March 21, 2020, 10:31:43 AM »
I think I forgot to remove them from that list. 

I think they will survive given their liquidity, but I think their iBuying is dead.  One big risk was always that they would stuck with inventory that they would have to dump at a loss and not even a year after they started to program that has come true.  Investors won't give them a pass on re-starting it without a clear road to profitability, which I don't think they have. 

In other words, I think this might damage the long-term viability of their growth engine in iBuying, same for redfin, etc. 

TwoCitiesCapital

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Re: What companies won't survive
« Reply #3 on: March 21, 2020, 12:15:57 PM »
I think I forgot to remove them from that list. 

I think they will survive given their liquidity, but I think their iBuying is dead.  One big risk was always that they would stuck with inventory that they would have to dump at a loss and not even a year after they started to program that has come true.  Investors won't give them a pass on re-starting it without a clear road to profitability, which I don't think they have. 

In other words, I think this might damage the long-term viability of their growth engine in iBuying, same for redfin, etc.

Agreed. I got called out of them @55 after their earnings. Felt dumb, but made excellent returns and was waiting for an opportunity to re-enter and glad I was called in my options.

I've been thinking of nibbling below $20, but have the same concerns about the stock of housing on their books which is why I was trying to see how much liquidity they had.

What I would love is for them to make a commitment during this period of uncertainty to constrain purchases to be less than the $ value of sales just to free up liquidity and shrink the balance sheet risk - even at the expense of growth right now.


roark33

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Re: What companies won't survive
« Reply #4 on: March 21, 2020, 03:23:29 PM »
Redfin has announced they have stopped their home buying, Zillow hasn't filed an 8K saying that, like Redfin, but I can't imagine they are even making offers on homes right now. 

The real estate market has come to a halt, just like everything else, I guess.

Jurgis

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Re: What companies won't survive
« Reply #5 on: March 21, 2020, 03:42:01 PM »
Redfin has announced they have stopped their home buying, Zillow hasn't filed an 8K saying that, like Redfin, but I can't imagine they are even making offers on homes right now. 

The real estate market has come to a halt, just like everything else, I guess.

I thought so too and even heard a buy falling through. But then I just heard from a friend that last weekend he got outbid on a house with 6 offers quite a few of them cash.  :o

Although now that open houses are presumably cancelled, I don't see houses being sold. People would not be stupid enough to buy houses after just a virtual tour would they?  ::)
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Gregmal

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Re: What companies won't survive
« Reply #6 on: March 21, 2020, 04:02:29 PM »
Yea Iíd agree that the housing market is on hold, but not for any reason other than the fact that you canít get a showing. Folks who buy homes for the most part will still have jobs when this shakes out. Rates are zero. Liquidity is and will continue to be pumped into the system. And we re starting to see much more liberal concessions made to help people out.

Thatís said, if youíve got cash and know an area, for instance I own multiple units in an specific HOA, now is a great time to start floating out some sucker bids. I donít need to see these units, period. Hereís my offer. Wait a week and see if anything comes in, and then make a decision... easy enough if someone really wants out.

Spekulatius

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Re: What companies won't survive
« Reply #7 on: March 21, 2020, 04:35:24 PM »
Yea I’d agree that the housing market is on hold, but not for any reason other than the fact that you can’t get a showing. Folks who buy homes for the most part will still have jobs when this shakes out. Rates are zero. Liquidity is and will continue to be pumped into the system. And we re starting to see much more liberal concessions made to help people out.

That’s said, if you’ve got cash and know an area, for instance I own multiple units in an specific HOA, now is a great time to start floating out some sucker bids. I don’t need to see these units, period. Here’s my offer. Wait a week and see if anything comes in, and then make a decision... easy enough if someone really wants out.

Do sucker bids really work in RE? price expectations from sellers are quite sticky and need to grind down, which takes a while. Public market rerate  much faster, as we have seen with SPG, VNO and pretty much everything else.

In the long run, I see the low interest rates as a tailwind at least for residential RE. Keep in mind that mortgage rates are still ~3.3%, so haven’t really followed down the treasuries all that much. I expect to see the lower 2% range some time later this year.
« Last Edit: March 21, 2020, 04:38:14 PM by Spekulatius »
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Gregmal

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Re: What companies won't survive
« Reply #8 on: March 21, 2020, 04:56:38 PM »
Yea Iíd agree that the housing market is on hold, but not for any reason other than the fact that you canít get a showing. Folks who buy homes for the most part will still have jobs when this shakes out. Rates are zero. Liquidity is and will continue to be pumped into the system. And we re starting to see much more liberal concessions made to help people out.

Thatís said, if youíve got cash and know an area, for instance I own multiple units in an specific HOA, now is a great time to start floating out some sucker bids. I donít need to see these units, period. Hereís my offer. Wait a week and see if anything comes in, and then make a decision... easy enough if someone really wants out.

Do sucker bids really work in RE? price expectations from sellers are quite sticky and need to grind down, which takes a while. Public market rerate  much faster, as we have seen with SPG, VNO and pretty much everything else.

In the long run, I see the low interest rates as a tailwind at least for residential RE. Keep in mind that mortgage rates are still ~3.3%, so havenít really followed down the treasuries all that much. I expect to see the lower 2% range some time later this year.

Depending on what you're buying, they can work in some cases. Examples where its worked for me are with older/wealthier folks who simply want to move on. In a stagnant market, realtors are hungry for a check and after a while, owners get tired of paying bills. Maybe 5 years ago I got a great rental simply because the previous owner was retiring and moving to the west coast. He owned the unit as an income property. Even later on said he didn't care about holding out for a 5-10% better offer.