Cettire Broker Roundup: Omnishambles Edition

What does a bloke have to do to get a ticket round here?

Despite Cettire butting up against the hard deadline of the end of August to file accounts, it utterly failed to get them audited on time. It then failed to get its conference call done on time, annoying everyone in the process, broadly admitted pocketing duties whilst deciding most questions were inappropriate, and generally proved itself to be the clusterfuck these pixels have long suggested them to be.

Having rallied as much as 30% on the squeeze resulting from its deletion from the MSCI small caps index and borrow shenanigans mentioned prior before settling up 20% from the lows, the subsequent two day 20% fall seemed understandable if a little underdone. Presumably a slow drift into new lows as the longs gradually accepted the reality that Cettire’s a busted flush was in order? Not with Cettire!

Rounding up the brokers

Friend of the show Ari at house broker Barrenjoey finally turned his sell note wrapped into a buy note into an actual downgrade, expressing his scepticism that Cettire’s recent margin weakness lacked a structural element, whilst Chami at Bell Potter made half a downgrade by rating CTT as speculative due to its audit issues and swingeing earnings downgrades.

Having already downgraded into results, Sam at Petra cut his target only modestly despite correctly pointing out on the call that weakness couldn’t be explained only by promotional activity, whilst Wei-Weng at RBC did the necessary to maintain his hold - a mere 36% cut and a slew of pertinent questions.

Person of Interest - Juliaaaaaaaaaaaaan!

We love Julian of E&P here at taxloss Towers - it’s hard to pick just one reason why, but if we had to its the enthusiasm with which he demeans himself in public in support of a stock that owes him nothing. And oh boy did Julian demean himself.

After asking a generally supportive question about when the stockpile of unsold inventory would be cleared out of the channel which the founder utterly failed to grasp prompting interventions from the CFO to attempt to make a coherent answer, Julian expressed his frustration with how hard it was to support the company, asking “was that question so confusing?”. It wasn’t Julian and you did just fine.

Anyway, Julian had to finally capitulate on his target price and hack it back, but exhorted his audience:

Well this gift horse is still valued at over half a yard and its teeth are blackened chalk, but don’t look!

Yes Julian, the quarter after that made all the changes to their checkout to make it all-inclusive, that we predicted here would increase their CAC at the very least. Just one quarter! Why did margins collapse in Q3 when all its KPIs were trending north? Wasn’t promotions luvvie!

Pick your audience!

It would be easy to just throw brickbats at Julian’s utter irrationality as an analyst, however this would be unfair to him since it’s clear that the rational investor is not his audience, which brings us to yesterday’s price action.

After printing tickets amounting to about $300k on Cettire over the entire quarter to date - Julian got a proper ticket today!!

I’m so proud, our boy got paid! I can only imagine him strutting round the E&P offices today shouting expletives at the shorts and the noise and whatever it is that he had to do to finally have this victory. Whoever gave the ticket for an entire day’s average volume must also have enjoyed the moment!

Party poopers

It would be easy to view this as unprecedented but of course with this stock we know that we have a major investor with an outsized ego who was probably annoyed I called him a self-entitled prick in prior post, but the fact is that it could be anyone who gave this ticket. Admittedly we’ve had a prior disorderly market only 2 months ago, when Cat Rock spiked the stock from $1.20 to $1.80 over a couple of days with their OPM fund, but that’s not proof. Tiger cubs gonna Hwang, but equally it would be silly not to be wary, especially when we have plenty of other candidates about.

That’s why the naysayers will keep digging. That’s why as even Julian predicted, the bears will find “something” in the unaudited accounts, having had the temerity to check the nag’s dental status.

Previewing the Toothipegs

I’ll put those somethings in the next post - including just how bad Cettire’s sales really were in the last quarter, how much their CAC has exploded as predicted, just how much their returns fees benefit their returns rate and maybe even quantifying how much duties have constituted of their revenues!