One observation that could be wrong but...
if you look at a loaded contract, banked points, (full points for the next year) it doesn’t seem the points get as much value as they should compared to the price point
Meaning, (I’m making this up) where a loaded 100 pt SSR contract might sell for $110, a stripped SSR contract (no 2017/18/19) won’t sell for much lower than say $95 in today’s ROFR market
That 100 points X $15 on price point discount is $1,500 difference in aggregate price for the contract
However, those 300 points stripped from the contract would be almost double that as rental points on open market
It’s early and I am not fully caffeinated so please forgive me if my math is totally wrong.
However, this seems to indicate an inefficient market as ROFR sets the floor on these contracts regardless of true value to the consumer...
The seller can’t discount a stripped contract any lower than the expect rofr price even if it has lower value than the price.
Without a “true floor” the market by definition is being propped up.
It would be like the government buying Apple stock as soon as it dips below a certain point. Investors would buy as their risk would be mitigated (perception anyway) and Apple would be overvalued.
Think how overvalued the stock market would be if there was an rofr...
It completely mitigates a lot of risk unless a terrible recession and Disney has problems...
I concede there are other market factors and supply and demand does play a part, but I would argue having a market floor is very large in this market valuation.
if you look at a loaded contract, banked points, (full points for the next year) it doesn’t seem the points get as much value as they should compared to the price point
Meaning, (I’m making this up) where a loaded 100 pt SSR contract might sell for $110, a stripped SSR contract (no 2017/18/19) won’t sell for much lower than say $95 in today’s ROFR market
That 100 points X $15 on price point discount is $1,500 difference in aggregate price for the contract
However, those 300 points stripped from the contract would be almost double that as rental points on open market
It’s early and I am not fully caffeinated so please forgive me if my math is totally wrong.
However, this seems to indicate an inefficient market as ROFR sets the floor on these contracts regardless of true value to the consumer...
The seller can’t discount a stripped contract any lower than the expect rofr price even if it has lower value than the price.
Without a “true floor” the market by definition is being propped up.
It would be like the government buying Apple stock as soon as it dips below a certain point. Investors would buy as their risk would be mitigated (perception anyway) and Apple would be overvalued.
Think how overvalued the stock market would be if there was an rofr...
It completely mitigates a lot of risk unless a terrible recession and Disney has problems...
I concede there are other market factors and supply and demand does play a part, but I would argue having a market floor is very large in this market valuation.