Announcement today of a new finance product for Medallion financial -royalty streams. I don't know much about it but it looks to me like a product to consider along with mezzanine finance. A few million to start and I am sure they will get a good commissions. I also saw some mention of annuity and insurance products. I think the point is to expand their small business offerings for proprietors in the $10M to $50M bracket and share the exposure.
I also read that in china the big leaders are apps that work with the legal taxis. In China and other smart cities around the world they are prosecuting illegal taxi service. Uber is organized crime. It is a huge mistake to let them take hold of a city.
'Conspicuous in it's absence' is the phrase. Have you called IR?
I might today. The only good reason I could think of would be the M&A inquiry mentioned in the 10Q. That could also explain IR silence but it just seems so unlikely that an attractive deal will be achieved.
I can justify buying based on buyback support but cannot buy based on some deal .
I don't doubt your ability to mark your loans above market value. Back to the discussion of TAXI, if they are entertaining a sale, the loans MUST be valued at book or better, or they would not be talking.
Regarding the ongoing business, it has additional value. Would you give up your customers and business relationships for next to nothing? Fine, I'll take your customer list for nothing.
I honestly do not expect any sale of MB. I am only projecting what it would have to be to be worth mentioning. A bank that has high interest low default loan generation like MB does has very valuable sales generation.
I don't claim any ability to sell and I am only speculating that if TAXI has an interesting offer as reported, the loans would be priced over book, and the banks forward business would bring additional dollars reflecting the ongoing business generated.
You are the one off base thinking that you could buy a profitable lenders business for zero. If you are in the business and you have anywhere near the profit MB does you are saying you would sell all your clients for nothing? Sign me up!
Presuming your comment is sarcastic -the buyer would be getting the loans at around book, and paying a premium for the forward business, customers and relationships. Medallion would not be able to go after those customers for years -if they sold for a premium. Medallion would be able to immediately, even concurrently start a new bank going after new customers.
The market is tanking, TAXI has outperformed but could easily be pushed either way. These are the changes to outlook as I see them -feel free to propose your own if I missed any.
-the biggest positive I see is that the company can buy back nearly a third of it's float, months of avg volume. The biggest disappointment is that we have not seen any indication that they are. Why?
-The fed is less likely to raise rates -this results in interest rate curve flattening. This will be a negative for financial shares in general but likely a positive for medallion in particular because TAXI has a very attractive spread relative to competitors. I should also mention the super high yield will be valued much more but this clearly must be evaluated against risk.
-Risk (real or perceived) is the reason TAXI trade at seventy cents on the dollar. If this is the beginning of a recession and not just a market correction there will be loan losses. Today we don't have any indication the US will fall into a recession -indications are the opposite.
Likely the biggest change in the perceived risk of TAXI will be due to uber's expected encroachment. This is THE BIGGEST CHANGE in the past week. The likelihood that uber will no longer be able to finance losses and buy growth has flipped completely. It is nearly certain that uber WILL NOT be able to issue equity at anything near past valuations -not even half past valuation. My prediction is that we will look back to this week and see that it was the day the bubble popped for uber and 'the uber of...' companies. 'Uber' will be synonymous with 'overpriced equity'. There is a tweet from Bill Gurly today questioning valuation that will be on their tombstone.
SO GLAD YOU JOIN MY OPINION! -of course it is just a refinement of yours.
The key fact is that the TLC must establish equal regulation of all the taxis on it's streets. The city has taken money to sells rights to operate taxis in perpetuity, and now there is a desire to offer some rights on demand, which could be a service improvement.
Setting a price they are willing to buy back medallions, as well as the number and conditions by which they will rent rights can be set by the market, and will only be 'fair' if they are. The net result is that the city MAKES MORE MONEY, the citizens get expanded improved service, and the investors have no case against the city for breach of contract.
I question your assumption that the remainder of TAXI would be in trouble if it sold the bank at a premium. Bank assets are not that different from the rest of the company, and TAXI can create another bank as soon as it sells the first.
I don't see it as a big win for company in operating, but given that the whole is trading at a 30% discount, turning the majority of the company into cash at a premium to book is a massive gain. The company could buy back the majority of it's shares with the cash it has left after seeding a new bank subsidiary.
The crazy uber valuation is based on uber having license to steal taxi licenses. uber will never agree to pay the same as competitors. They need to cheat to justify valuation.
That could work but I think you have to start by demanding the same rules for all taxis. Then let uber in with medallion rentals from the TLC.
uber is too strong politically to give money to competitors.
Buying back a few medallions will not bankrupt any city. I am not suggesting they buy a large number. The entire exercise is just to establish a value for the static medallion and the city will MAKE MONEY renting a larger number of on-demand medallions. My plan is very realistic and if you consider it you will see that cities are giving up MILLIONS of dollars each year that they do not charge uber the way they have legal taxis.
The flaw is in the number of permitted taxis on the road. The entire reason for the medallions IS to regulate the number of taxis on city roads. The right number is about the number of medallions currently outstanding. 5X that number is too many. The delusion of uber is that there is demand, but that demand is based on a price that does not include taxes, regulation fees, insurance, maintenance, parking....
What is right about your suggestion is that the city MUST make ALL taxis pay the same, and be regulated the same. Medallions should be rented by the city, not owned. I think the TLC should acknowledge this, set a buyback price for medallions, and begin a program to rent additional medallions as needed based on real-time demand. The buyback and the rental prices should make owning worth the risk of holding during slow times.
I make this suggestion for the cities sake. It is not what is best for TAXI, it is what is best for the city and it's citizens.
Short interest is DEFINITELY a factor. 20% more investors own TAXI than there are shares! Management stands poised to buy back that 20% if prices remain low and given the high dividend the cash flow available to buy back more would increase. The short position is a huge burden, but going forward the shorts have to pay big just to stand still.
To maintain today's low price shorts pay
-short interest rate ~5%
-they would need to match the $26M the company is purchasing to keep the price low and the volume up. Failure to do so will see share price rise and volume fall back to normal.
So let's say the shorts hold in there and $26M goes from the company to the short interest at today's price. At that point there are 21M shares outstanding. Earnings, cash flow and revenue/share are all up 12% just on the reduction plus the organic growth over 10%. 22%! That's outstanding in a slow growth economy! Meanwhile the short position has doubled to 6.2M shares in a float that is down to 17M ~36%!! At that point brokers will jack up the rate to borrow shares into the teens. So the short position will be paying over 30% just to maintain a bet against a company growing earnings faster than the vast majority of stocks, and yielding 12%. That SUCKS!
I know the shorts are still spouting about the taxi world is going to end, but I have to say I don't think it will end in the next six months and that the short attack on TAXI is a bust! All the screaming now is to allow the smart shorts to screw even stupider shorts into letting them cover cheap!
They have been planning a BS campaign to attack ex-div. There are fools who still use stop orders and don't adjust for the dividend.
Shorts care about the dividend. They are using it to fake a fear induced selling wave.
I think there is at least one case organized by a credit union. I am not sure when it will be heard.
It is crazy that the TLC would screw over everyone that pays and listens to them. Now uber is the biggest lobbyist in most major cities in the US. Chicago was bought through tens of millions funneled to Rahm E.'s brother -blatant corruption.
At the present price I would not report buying activity. The price is also pretty stable so reporting is not beneficial for stability.
On the other hand I sure hope they are buying back share at this depressed level. I think they have been far too timid with buying to date.
It may be time for a call to IR.
There has been a pattern of dumping shares daily just before 12 eastern -presumably so retail holders would have disappointing news when they check their portfolio at lunch break. Today this pattern seems to have failed -too much buy volume to work through to paint the tape. I am not sure if the buyback has returned or it is just the institutional investors recognizing value. It could be retail momentum shorts recognizing the game is over and using these manipulation attempts to cover at the lowest price -smart move.
It would be nice for the buyback to duke it out with the shorts for a while. I would be happy to see the company buy 10% of the float back at these low prices.
The question in my mind is why the cities would permit these illegal uber taxis to start with. Regulations have a purpose -or they don't. Those that don't should be eliminated. Those that do should be enforced. The days of uber breaking any rule it likes while the cities hold back and kill the legal taxis must stop. uber must pay for clogging city streets for profit.