Getswift (GSW) is a hot topic and is polarising. You believe or you do not. Nothing breeds passionate opinions like having your money on the line, probably the only thing more motivating to defend this opinion is having your ego attached. No one wants to be wrong, right?
If you are a believer in GSW you will be committed to the trade and you will do everything to defend your position. If you believe GSW is not the real deal you will be committed to this belief and defend your position, and you may be short.
The more you defend your position the more emotion and ego you invest into this belief. Sunk costs go up and you are more likely to dig in and stick with your belief regardless of any new evidence.
In my experience if you disagree with someone there is a good chance that neither of you are right or wrong, rather that both parties believe in different things.
Ozan Varol wrote a great article awhile back on this topic. This extract from the article gives a good break down of how we treat new evidence we need to consider against our currently held opinions or beliefs:
The non-believers in GSW had some evidence appear in an article by the Australian Financial Review over the weekend. The article called out the company for not informing the market of announced deals that were not continued and were subsequently ended. It also called out the company for a proposed pilot program with the CBA which the CBA stated is not in pilot phase. Below is a table summary provided by the AFR.
The believers also had some evidence that the product is being well received by some clients. TuckerFox and Red Rooster where big advocates.
So What fact(s) would change my opinion?
At the end of the article by Ozan Varol he asks a question that I use whenever I want to challenge a belief or opinion on a share or any other aspect on my life where I feel I am getting too overconfident:
I have an opinion on Getswift. I believe it is heavily promoted with vague and ambiguous announcements and does not justify its valuation based on its history and what it promises to do. This has been reinforced by management hubris, hinting at the potential of being taken over, threatening legal action on short sellers, aggressive and us/against them management style, limited cashflow, non-existence development budget, key staff resignations etc.
The company has a history of making announcements in regards to deals that then seem to go cold and quiet. Here is one from the early days in 2015 in relation to a rumoured deal with a large US based delivery company.
But I do not want to be a fundamentalist. So here are some facts or evidence that if it were clear and transparent and were not “shallow updates” would change my opinion on Getswift.
1. Disclosure of trials to paying contract conversion ratio. As the AFR article pointed out GSW announced a deal in Feb 2017 signing an exclusive commercial multi-year agreement with Fruit Box. There was no indication from GSW that this was a trial. If you update the market and announce a signed client indicate if this is a trial, the trial period and then at the end of the trial period inform the market of the terms and metrics of this deal.
Note that Q1 FY2018 Appendix 4C the company included the following paragraph. An improvement on this corporate disclosure would be to indicate whether these multi-year agreements are trials are what state they are in.
Transparent announcements that indicate milestones and less on unapproved “shallow market updates”. It is too convenient for a company to say they can not disclose details of a contract due to confidentially.
1a. Do trial deliveries count towards the performance based share compensation or are they excluded?
2. Evidence of client retention rates and churn. If we can estimate this we could build a picture of the lifetime client value.
3. Evidence of support from Amazon or an announcement as to what their working relationship is with GSW. I have contacted Amazon Investor Relations on this but have not had a response. If anyone has Jeff’s mobile let me know so I can ask the big cheese.
4. NA Williams and how the company is monetising this deal. What is the pathway to 1 billion transactions? What are the milestones? Are you dealing direct with Autozone or O’Reilly’s or is NA acting as an agent?
5. Evidence to support the claim they have or were in the past a takeover target. Disclosure not suggestion.
6. Why the CTO Keith Urquhart resigned early last year and why this was not announced. As a follow on why did Ms Gordon resign recently.
7. What happened between GSW and venture capital firm Blue Chilli.
8. Finally Revenue or cashflow appearing in the Appendix 4C to justify the market cap.
To be honest none of this stuff really matters and I am sure there is a heap more I would ask. But it is a good exercise for anyone, whether you are a believer in GSW or not. Challenge yourself to argue the other side of your belief.