The healthy conversation on Pointerra got me thinking of other companies in the pain cave.

One such contender is Camplify, who just hit a new 52-week low today. The share price is down about 50% from its high in February.

The interesting thing here is that there’s really been no news flow in the last month when the bulk of the pain happened.

- The descending trajectory began when THL announced they were selling out. That whole blunder never made any sense to me. The CEO’s comments are outright strange: “Just over a year on from the merger with Apollo Tourism & Leisure we have reviewed our position on our Camplify shareholding and have decided to divest, given our focus on return on funds employed at THL and the fact that the shareholding is not currently delivering a return on funds.” What company invests in another company hoping for a return in 1 year? Are THL turning themselves into a fundie with a 12-month price target? The only true reason I can see them selling out is that they actually needed the cash, and were uncomfortable to say it directly.

- And speaking of the devil, just today THL goes on a trading halt, suggesting, “THL requests this trading halt to allow it to finalise its updated expectations for FY24 earnings and to provide updated guidance to the market, which is likely to be materially lower than its existing guidance.” Well, that’s a nice punch in the stomach for holders.

- It’s no surprise to me to think that investors are looking at THL as a proxy for what one could expect for Camplify. But the problem with doing this is that we have fundamentally two very different business models. One (THL) that’s extremely capital demanding. If you’re running a fleet you have to put up cash first to buy the thing and get that money back slowly over the years. If you’re Camplify, then you have to put out cash to get a hirer on to your platform. That’s money nonetheless but it’s much less of it, for a very quick payback too.

- Of course, Camplify is far from perfect. It’s continuing its journey to making acquisitions, and entering a questionable realm. The rent-a-tent acquisition to me is very questionable. They need to prove out this works very tangibly. Otherwise, I’ll keep thinking; why in hell did you do this?

- Also, investors are now hungry for free cash flow companies. Camplify has been dancing around this topic for a while, suggesting the mid-term goal would be to get there. But the cash hasn’t necessarily been gushing it just yet, and investors that have held it for 3 years (like me) may have lost patience now. Especially in a market where we’re seeing a lot of companies start to move.

-A marketplace company trading at less than 2x EV / Revenue could be an opportunity. Could be. The high take rate of Camplify should lead to very healthy margins. So there’s an opportunity for the brave investor to me a contrarian here and achieve a good outcome. For now, I’m not that brave investors, but I might become if this continues. 

In the end, I don’t really have a point to make for writing this. I’m really just processing my thoughts out loud here. Part of the events unfolding with Camplify make me think back to @Wini’s point about "When share price drives the narrative”. I was lucky enough to have lunch with Luke when he was thinking about writing of this topic, and this point resonated with me deeply, just like many of the other points he made that day. A smart guy he is.