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I explained on Friday why the Manchester United (NYSE:MANU) IPO was, at $14, a joke. I am asked what I think that the stock is worth? I am not sure that there is any terribly scientific answer to that as there are so many imponderables/unknowns, but since most are on the downside I would happy to start with a prediction that the shares could well halve to a share price of $7.
The unknowns? What will the Glazers do in terms of corporate governance/running the company for shareholders? I suspect not a lot. How will the brand and thus revenues be damaged by a) the Glazers and the shambles that is the PLC and b) by on the pitch failure. What would happen if Man United finish not second in the League to City but third or fourth? It is possible.
I explianed all the other risk factors on Friday HERE.
Trading this stock long or short will be tough as the free float is so small. Thus small volumes could see a sharp movement either way. But overall, I suppose 12 times historic operating profits over the past couple of years call it £720 million ($1.1 billion) is not overly harsh. That works out at just under $7 a share. But frankly it is anyone’s guess what this is worth. But I do think the risks are on the downside.
While i am here I note thanks to a tweet from @primrosebill that you can pick up hospitality packages for 2 forthcoming Manchester United games at DealCloud (a site like Groupon). Normally crummy brands use this sort of service to offload hard to sell surplus stock. It is odd to see HERE a club with is the Premier sporting brand in the world and which has enjoyed sold out games every year since 1997 featuring on such a site. I wonder if the tide is already turning?
