The Evil Diaries: Just Eat and Blinkx

The chairman draws my attention to the SunTimes article on Just Eat (JE.). This now stands at 425p or so and is on a prospective PE of 80 for 2015. Tnav is nothing about which to write home. So it is all in the earnings story.

Forget that one of its big backers, Index Ventures, is selling out. The point upon which to concentrate is that JE enjoys a 12% commission rate on orders placed through its site. The June 2015 half year figures disclosed turnover (i.e. commission) received of £108m as against admin costs of £75m. Given that this latter figure includes what are in effect start up costs it can readily be seen that the business would still make a profit at 10% commission and, quite possibly, 8% commission. That being so, the competition are on their way. Even if that is not so, the competition are still on their way. Therefore JE cannot justify a price of 425p.

*****

Blinkx (BLNX) reported this morning on the six months ended 30th September 2015. These figures are appalling. There is the persistent declaration of intentions to make money but there is no sign of it actually happening. At 24.5p Blinkx is capitalised at £100m whereas, after stripping out intangibles, tnav at 30th September was £65m and declining since the company is still losing money heavily. Given that one can buy a growth company which is making money and stands at a heavy discount to tnav quite why Blinx stands above 15p is beyond me. 10p looks closer to the mark.