A year makes all the difference (apparently). Investors were petrified by New Zealand’s dominant online classifieds company Trade Me as it plummeted towards its final results release in August 2015. Undeterred, our ‘Buy’ was about as forceful as we get. In Trade Me: Result 2015 we declared: ‘On a 2016 forecast PER of 16, the stock is one of our better buying opportunities’.
Since then, the share price has jumped 77%, including 5% yesterday (or 44% since our initial 2014 upgrade). But why was the market so excited by a paltry 4% increase in 2016 underlying net profit (see Table 1)?