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Shares of Best of the Best plc (LON: BOTB) plummeted 33.7% after the company, which organises dream car competitions, warned of declining customer interest as the UK heads towards a full reopening.
The company noted that interest from potential customers had declined following the easing of lockdown restrictions in the UK. As a result, many people are probably focused on other activities instead of participating in competitions to win their dream cars.
Regardless, the company reported a 156.77% jump in 2020 revenues to £45.68 million from the £17.79 million recorded in 2019, with its profits up 235.56% from £4.19 million to £14.06 million.
Best of the Best closed its airport competitions business in 2019, which in hindsight was a great decision given the negative impact of the coronavirus pandemic on businesses that rely on airport traffic.
The company transitioned into a fully digital business, which did exceptionally well in 2020, driven partly by the lockdown restrictions that forced many people to stay at home. However, its business has slowed down after the recent easing of restrictions in the UK as more people spend time away from their homes.
Today’s selloff in BOTB shares appears like an overreaction, given that nothing much has changed about the business. Moreover, the waning interest from consumers can be fixed via aggressive marketing campaigns to attract new customers.
BOTB is flush with cash given that it upped its full-year dividend to 5p and paid a special dividend of 50p as part of efforts to return cash to shareholders. As a result, despite today’s selloff, BOTB shares are still up 32.27% in 2021.
Nobody knows whether the recent change in consumer preferences will last and have a long-term effect on BOTB’s business; only time will tell.
BOTB share price.
Best of the Best shares fell 33.65% to trade at 1745p, falling from Tuesday’s closing price of 2630p.
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