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Post by diversifier on Jun 26, 2020 13:48:04 GMT
RS wouldn’t reject fresh funds. But they couldn’t accept opening their doors, no fresh funds arriving, and that fact being publically visible (unlike in a bank), because the investing volumes are visible. That would make them unbuyable by anybody who wanted it as a going concern, which in turn reduces the transaction market value to Metro. I'm not sure I understand this logic (nor your previous post). Businesses don't like uncertainty. If a buyer did potentially want RS as a going concern (maintaining a retail offering), I don't think just gambling as to whether new investors might want to join RS would be much more attractive than seeing them re-open and not many joining. I mean, these people aren't stupid. They're not going to look at the current situation and say "oh I'm sure it's fine" only to have this impression destroyed by RS struggling to attract new investors. The goal is to look as credible as possible as a going concern to Metro, not because anyone wants to buy it now as a going concern, but because the negotiating lever is always to walk away and come back to the market in a years time, when things are better. If RS visibly demonstrate that it currently *isn’t* a going concern, that threat of RS walking away looks less credible. Plus, marketing to attract new customers is expensive. It’s a big product re-launch. Whats the revenue ROI of that sales & marketing spend? If no extra revenue expected, don’t relaunch.
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chris1200
Member of DD Central
Posts: 827
Likes: 508
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Post by chris1200 on Jun 26, 2020 14:14:45 GMT
I'm not sure I understand this logic (nor your previous post). Businesses don't like uncertainty. If a buyer did potentially want RS as a going concern (maintaining a retail offering), I don't think just gambling as to whether new investors might want to join RS would be much more attractive than seeing them re-open and not many joining. I mean, these people aren't stupid. They're not going to look at the current situation and say "oh I'm sure it's fine" only to have this impression destroyed by RS struggling to attract new investors. The goal is to look as credible as possible as a going concern to Metro, not because anyone wants to buy it now as a going concern, but because the negotiating lever is always to walk away and come back to the market in a years time, when things are better. If RS visibly demonstrate that it currently *isn’t* a going concern, that threat of RS walking away looks less credible. Sorry but I really struggle to follow this logic. Currently, any potential buyer will be operating under the assumption that right now RS would struggle to attract any new retail investors for obvious reasons. So, were RS to re-open to new investors very soon, such a likely event materialising wouldn't change the potential buyer's estimations. Your point about RS 'visibly demonstrating' assumes that everyone isn't already entirely aware of this reality - like you think Metro Bank or others somehow have less information than you do! (It's like when a stock market prices in something negative that is very likely to happen well in advance, and on the day it actually happens, the market doesn't move - maybe it even goes up a little.) As you suggest, the question is whether RS can recover from the current difficulties (likely dependent on global events well outside its control) and be attractive to retail investors in the future. This potential improvement (and potential attractiveness of RS) would not be affected by what RS is able to do while things remain as bad as they are. If things get better, it doesn't matter much what happened right now; if things don't get better... well, no one was ever going to be attracted regardless.
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Post by diversifier on Jun 26, 2020 16:13:09 GMT
The goal is to look as credible as possible as a going concern to Metro, not because anyone wants to buy it now as a going concern, but because the negotiating lever is always to walk away and come back to the market in a years time, when things are better. If RS visibly demonstrate that it currently *isn’t* a going concern, that threat of RS walking away looks less credible. Sorry but I really struggle to follow this logic. Currently, any potential buyer will be operating under the assumption that right now RS would struggle to attract any new retail investors for obvious reasons. So, were RS to re-open to new investors very soon, such a likely event materialising wouldn't change the potential buyer's estimations. Your point about RS 'visibly demonstrating' assumes that everyone isn't already entirely aware of this reality - like you think Metro Bank or others somehow have less information than you do! (It's like when a stock market prices in something negative that is very likely to happen well in advance, and on the day it actually happens, the market doesn't move - maybe it even goes up a little.) As you suggest, the question is whether RS can recover from the current difficulties (likely dependent on global events well outside its control) and be attractive to retail investors in the future. This potential improvement (and potential attractiveness of RS) would not be affected by what RS is able to do while things remain as bad as they are. If things get better, it doesn't matter much what happened right now; if things don't get better... well, no one was ever going to be attracted regardless. I understand your point - efficient markets etc. Perhaps our difference is that I think the long-term reality is worse than consensus hopes, and therefore I prefer underlying situation not quantified, reducing the feedback. Whereas you think the long-term reality may be better than consensus fears, and therefore would prefer underlying situation opened up to be quantified by the market.
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chris1200
Member of DD Central
Posts: 827
Likes: 508
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Post by chris1200 on Jun 26, 2020 17:31:32 GMT
Sorry but I really struggle to follow this logic. Currently, any potential buyer will be operating under the assumption that right now RS would struggle to attract any new retail investors for obvious reasons. So, were RS to re-open to new investors very soon, such a likely event materialising wouldn't change the potential buyer's estimations. Your point about RS 'visibly demonstrating' assumes that everyone isn't already entirely aware of this reality - like you think Metro Bank or others somehow have less information than you do! (It's like when a stock market prices in something negative that is very likely to happen well in advance, and on the day it actually happens, the market doesn't move - maybe it even goes up a little.) As you suggest, the question is whether RS can recover from the current difficulties (likely dependent on global events well outside its control) and be attractive to retail investors in the future. This potential improvement (and potential attractiveness of RS) would not be affected by what RS is able to do while things remain as bad as they are. If things get better, it doesn't matter much what happened right now; if things don't get better... well, no one was ever going to be attracted regardless. I understand your point - efficient markets etc. Perhaps our difference is that I think the long-term reality is worse than consensus hopes, and therefore I prefer underlying situation not quantified, reducing the feedback. Whereas you think the long-term reality may be better than consensus fears, and therefore would prefer underlying situation opened up to be quantified by the market. Sort of, but I guess I'd say more that - regardless of what actually happens (better or worse than consensus) - any potential buyer would currently be having to operate under the assumption of the worst case scenario (for right now) whether or not RS actually prove that to be true. This could change in the future, of course, if things improve.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
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Post by beagle on Jun 29, 2020 21:27:09 GMT
Are RS and LW (lending works) the only two p2p to have reduced "historic" interest rates and also closed to new lenders (not new money)? New lenders means onboarding costs, money laundering checks, etc and I just assumed such staff/activity had been put on the ice to keep costs dow. Then add in the whole conduct risk of how do you communicate the reduction to someone new, it seemed easier for them not to accept new members but I might just be naive. I have not RYI'd and I do still have money in RS albeit they don't want it. I think you may well be right on the this, RS dont want your funds? OR the cost of funds you offer are too high for the lending the need to do for a credit worthy borrower to be worth lending to?
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coogaruk
Hello everyone! Anyone remember me?
Posts: 703
Likes: 463
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Post by coogaruk on Jun 30, 2020 11:56:22 GMT
Are RS and LW (lending works) the only two p2p to have reduced "historic" interest rates and also closed to new lenders (not new money)? New lenders means onboarding costs, money laundering checks, etc and I just assumed such staff/activity had been put on the ice to keep costs dow. Then add in the whole conduct risk of how do you communicate the reduction to someone new, it seemed easier for them not to accept new members but I might just be naive. I have not RYI'd and I do still have money in RS albeit they don't want it. FC have not only turned their back on new lenders but existing ones too!
(I am only watching them from the sidelines these days as my portfolio continues to wind down)
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starfished
Member of DD Central
Posts: 296
Likes: 216
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Post by starfished on Jul 1, 2020 22:16:21 GMT
Are RS and LW (lending works) the only two p2p to have reduced "historic" interest rates and also closed to new lenders (not new money)? New lenders means onboarding costs, money laundering checks, etc and I just assumed such staff/activity had been put on the ice to keep costs dow. Then add in the whole conduct risk of how do you communicate the reduction to someone new, it seemed easier for them not to accept new members but I might just be naive. I have not RYI'd and I do still have money in RS albeit they don't want it. I think you may well be right on the this, RS dont want your funds? OR the cost of funds you offer are too high for the lending the need to do for a credit worthy borrower to be worth lending to?
You are quite correct. My rates are too high for a credit worthy borrower. They always were but others were happy to go lower so it averaged out. These days I suspect all those staying, have raised their rates so harder to average out...
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