Name of opportunity: 👀
Manchester United plc
Waiting for Wednesday: ⌚
On Wednesday this week, Manchester United will release its quarterly earnings statement. The stock’s value could go up or down by 2.8%.
Adding further context to the earnings report, the football club announced 5 days ago that it would be making up to 250 staff redundant, bringing its total headcount of staff below 1000.
These redundancies are partly driven by the new co-owner INEOS which is keen to take cost-cutting measures. Billionaire Sir Jim Ratcliffe of INEOS now owns 25% of Manchester United’s class A shares, as well as the same percentage of the club’s class B shares.
How hot is this investment opportunity? 🔥🔥
It’s been estimated that the 250 job cuts would save nearly US$13 million. INEOS hopes that these redundancies will streamline the operations of the club, which up until now had the highest employee count in the Premier League. Some sources close to the club have said the reason for the job cuts is that there are simply more staff than are required to
Last quarter, sponsorship revenue had gone down by 22.2% over the prior year quarter. However, the club said this was down to a one off sponsorship credit last year that was particularly lucrative. In contrast, the club’s retail revenue (selling sportswear and merchandise) had gone up by 15.2%. The Q3 results will give more indication of the current situation at Manchester United - will it have continued to profit from its recent sportswear contract with Adidas?
Analysts predict the price of Manchester United plc will increase from $16.23 to $19.08 in the next 12 months. If you invested $1000, you might profit $175.47.
Manchester United plc is currently rated as a ‘Buy’ but as you can see in the image below, is leaning quite far towards ‘Hold’. One reason for this will be that the company is considered to be in ‘below average’ financial health, with a low cash flow per share figure. In the last quarter, the cash flow per share was $0.49 - a drop from the figure from over the last twelve months, $1.47. These numbers could suggest that Manchester United plc may be struggling to generate sufficient cash.
Goal!: ⚽
Manchester United plc and its subsidiaries are a men’s and women’s professional football club. It is one of the world’s most popular football teams and competes in the Premier League, the top tier of English football. Its home stadium is Old Trafford, which has 74,240 seats - the team has been playing there since 1910. Manchester United was taken over by US investors Joel, Bryan and Avram Glazer in 2005 - in 2022, they announced they were open to a full or partial sale. Investors from the UK, US and Qatar competed to acquire the club, and ultimately it was Jim Radcliffe of UK firm INEOS whose bid was successful. Radcliffe now partially owns the club.
Which neme?: 🔍
‘Sports’, ‘This Week’s Earnings’
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