A slightly different point of view on the current market



  • I’ve been quietly reading all of the posts on the current state of the platform, and the general fear around the way things seem to be developing. I’ve been here since September 2017 and have just over tripled my money, so can’t really complain in any way whatsoever - what other platform could I realistically have achieved that in. But I do find myself having sympathy for those who are showing genuine concern over the direction this platform is going in and are contemplating withdrawing funds.

    A lot of people point out that this is not an investment platform, but a gambling site. I think the answer lies somewhere in the middle. When I joined FI it was on the logic that I saw a product that I thought would appeal to the masses, as it allowed you to make consistent profit for football knowledge with a significant militant to downside risk (you wouldn’t make the equivalent of 5-1 on a weekend, but you also wouldn’t lose your stake if you got it wrong). Add on dividends and you had an investment style product (with true underlying value due to dividend potential) with the investment rationale based on your football instincts. Simple economics - more people join, more money flows in, prices increase. It’s just inflation. My bet was on inflation of the product, which means my bet was really on the FI teams ability to attract and retain users, rather than any particular player. That is what the footie represents, and to be fair, that hasn’t performed too badly (!) over the past few months and years. With all their marketing, partnerships and exposure, FI have thus far met their side of the deal in regard to growing and maintaining the user base of the platform.

    The problem I now have is simple. The lack of transparency from management in terms of strategic direction means that I don’t know whether I have a future in this market anymore (as a fairly passive trader). I would wager that the majority of early users (the majority, not all, before I get jumped on!) are longer term, mainly pretty passive investors who got involved in this platform on a not dissimilar basis to me - long term growth potential as a platform. We can afford to be at the prices we bought in at. That absolutely requires short term gambling - the long term growth isn’t sustainable without the volume of users that new mentality brings with it. Maybe we shouldn’t be able to profit anymore - the gravy train has stopped and it is only right to accept that - but let’s assume for a second it hasn’t and think about how it could continue.

    The real question is whether FI are able to sustain a business which supports both the short term gambling mentality and the longer term investment mentality. To do that, they need to enhance MB and PB, and probably increase commission (it is that and IPO proceeds which pay for dividends, and (would you believe this is a consideration.....) actually enable FI to make a profit and establish themselves as a long term, sustainable gambling platform). So how do they do that? They aren’t a money tree...

    There is an argument to remove the IS option. I love this option - for all the talk of spreads (which I don’t think are OTT given the level of growth in these “shares” historically), it provides guaranteed liquidity in the market which should command a huge huge premium. BUT - it is a threat to the FI business model. Most of the MB, and (albeit to a lesser extent) PB is generated by a comparatively small group of players. These players therefore rocket in price. Let’s run a simple analysis (these numbers are dummies as I don’t have the real ones to hand - if anyone wants to input the actual numbers, I would be really interested to see the results):

    Pogba IPOs for 50p. FI get 50p
    Pogba generates £4.50 of dividends over 3 years.
    Pogba price increases to £7 over 3 years.
    You IS one day before the 3 year period expires at 6.50.

    What is the economics for FI there? They receive £0.5, and have paid out £11.00, before their commission) over 3 years. To break even as a business, they need to have IPOd another 20-odd players who haven’t increased in price or earned any dividends. Put in that context, that seems pretty rough on FI.

    And...., it shows the issue with IS. For FI, the reserves they need to hold to ensure that they can meet their role as liquidity provider are crazy. All because of the top end of the market. If that wasn’t an option, maybe they could be a bit free and easier with cash and increase dividends. I wonder what the reaction would be to this....

    Clearly though, people who right now want to bail out of the top end players by using IS are effectively making the situation worse for both FI and users. These are exactly the players who FI shouldn’t want to be IS’d - that commission and spread are pretty meaningless in the context of the overall loss FI are seeing on the bet (and the decrease in their liquidity reserves). And that risk has to weigh heavy on their shoulders - if there was a possibility that FI couldn’t pay out on IS in the medium term (I mean for longer than and IS suspension), I think the resultant impact on the confidence in the market could end up with this platform going away completely.

    What is the point of this excessive ramble, you might ask? To be honest, I’m not 100% clear myself - was just putting my thoughts down on the train on the way to work (so apologies if it is a little disjointed!). But I do think it raises the fact that, as long term traders, we need to question HOW FI can make the changes that work for us, and what we are prepared to forgo to help them do that. Just moaning isn’t the way forward, even if the moaning is hitting the relevant point. Also, a degree of collective positive action towards the platform will ultimately reap profit for us all. Jumping ship now probably isn’t the best thing to be doing - event if an awful lot of us are considering it. Right - I’m done. Thanks for reading and apologies for boring you all!!



  • @ciarans good post agree with it all except your maths on pogba and how much FI make.

    Using the same numbers... For him to reach a higher price it means FI are reselling pogba all the time at the higher price. So whilst they got 50p from investor 1, they are getting 51p...52p...etc x900

    They want a players price to rocket because that means people are buying from them rather than other traders and that's their most profitable product.



  • @Vespasian32 you’re 100% right. That being said, the maths look progressively better but still not great. Agree it’s great if people are buying from each other. But the IS risk still remains from them, and I guess that is more my thought / concern.



  • @ciarans

    A couple of points; for every Pogba there are a hundred players or more that will NEVER earn their IPO in dividends so the FI economic model relies on the whole market not specific individual players in terms of revenue & dividend payouts. I agree IS is unsustainable in the longer term which would be solved by the introduction of order books which involves trader to traders player movements & no guaranteed exit route.

    Their model is now self sustaining, with positive EBITAD according to their latest shareholder reporting with monthly trading volumes of £25m+ (not clear if that was an average or a peak month but certainly very healthy) & free cashflow even after accounting for all future dividend commitments. So long term I think the outlook is very positive but I do have residual doubts about Senior managements ability to handle the transition from here to there & whether the level of communications to both shareholders & platform users has kept pace with the growth & size of the business but either way it could certainly do with significant improvements.

    Overall I'm happy with my experience as a trader & look forward to future platform growth with optimism & as a shareholder am comfortable that the model is both sustainable & scaleable so should be a solid investment for years to come. I would like to see the management structure strengthened & communications improved but neither are massive impediments to success just at present.



  • How many times will top players have been bought by other traders though over the years making FI 2%.



  • @NewUser159387 agree with you, and this isn’t a scaremongering thing at all. Ultimately I also see a good future for the market - otherwise I wouldn’t still be here. I guess I wanted to stimulate a discussion on IS and also a framing of the arguments around what FI could do to change the current trend. They are profitable and there are enough players who don’t earn anything to support the Pogbas and the Neymars. But if there was (in an apocalypse!) a mass IS of Pogba and Neymar (for example), my gut feel is that would create a problem for FI from a liquidity perspective. Removing that risk through order books (as you say) should change the dynamic a little bit and allow further expansion of the platform.

    Glad to see I’m not crazy with my principle argument from the first couple of comments (even if my numbers were wrong!)



  • @Vespasian32 said in A slightly different point of view on the current market:

    @ciarans good post agree with it all except your maths on pogba and how much FI make.

    Using the same numbers... For him to reach a higher price it means FI are reselling pogba all the time at the higher price. So whilst they got 50p from investor 1, they are getting 51p...52p...etc x900

    They want a players price to rocket because that means people are buying from them rather than other traders and that's their most profitable product.

    Good point easily forgotten. When demand outstrips supply they issue new futures so when players increase dramatically such as Haaland and Malen last week that is pure gross profit for FI.

    Yes, they have to account for the Instant Sell "risk" on their balance sheet but that risk is controlled by them by widening spreads and cancelling the ability to IS.



  • @ciarans its quite complex, like when you are 10 having sleepovers discussing space or big bang vs creation theory, like all 10 year olds do!

    in my mind... the last Pogba peak - meaning people were buying from FI not each other was £8.30 or so... and current IS price is £5.75 ish… so FI should have a cash stockpile perfectly capable of dealing with it. Also remember as people start to sell the IS being paid will reduce exponentially and also the IS will become disabled periodically. I genuinely don't think liquidity is an issue in that sense.

    Everything coming out of FI has been paid in... so i guess the only worry during a mass exodus, is how much of their profit the company would watch dwindle away. They could disable IS permanently and just close down if it looked like the market was dead. It would have to be a major crash on all fronts tho, not one or two players.



  • @ciarans said in A slightly different point of view on the current market:

    But if there was (in an apocalypse!) a mass IS of Pogba and Neymar (for example), my gut feel is that would create a problem for FI from a liquidity perspective.

    Short term liquidity possibly but no one player or group of players should effect the medium or longer term platform financial viability as there would be plenty of money to back them up (only technically becomes an issue when cash is requested to be withdrawn from the platform as simply numbers on a screen up to that point) but any such apocalyptic crash would probably have a far greater effect on sentiment & confidence which is always paramount in ANY investment product. I would hope that FI might act in mitigation (should already have contingency plans in place for such an event) should any such scenario occur. Things like a cyber hack spring to mind as possible threats, however a short term market suspension would be a practical response until the cause could be identified & explained.


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