"....State Court of Appeals decision allows New York City to proceed with
medallion auction. The New York State Court of Appeals has ruled in favor of
New York City to allow the HAIL Act to proceed. Among other things, the HAIL
Act provisions for the city to auction off 2,000 new taxicab medallions. These
medallions are restricted to handicap accessible vehicles. With an estimated
market price today of about $800,000 per medallion, this equates to over $1.5
billion of new medallions to lend upon.
The windfall that TAXI has been waiting for. The medallion auction is a
positive event for TAXI, mainly because 2,000 new medallions could easily turn
into $200 million plus of new loans for the company, its bread and butter product,
over a 2-3 year period. This assumes that the company maintains market share
and represents 30% medallion loan growth, not including regular loan growth,
over the next three years. Also, historically the price of medallions has risen on
every medallion sale in NYC history. The reason for this is that fleets need to
increase their medallions in order to recognize synergies; there could be up to
5 bids per medallion auctioned off. The auction process will likely take place
over a three year period as to not flood the market with new medallions, and
could begin as soon as 4Q13. Depending on the timing and the success that the
company has during the first year of auctions, it is possible that the company
could want some additional capital to be able to fully take advantage....."
The money is needed for the new medallions being auctioned. 'Coming events cast their shadow before....' Nice!
I agree. With a revenue best and a yoy increase plus unbelievably low pe and an exciting product pipeline I would think investors would be crowing. Unless there's something to worry about in the report(other than their usual conservative guidance, I would think this would be to the moon, baby!