RiverCity Motorway’s security price is down about 27% since I wrote Traffic Trouble for RiverCity last week. Remarkably, the business is still capitalised at more than $100m. It should be close to zero.
Yesterday’s apparently non market sensitive traffic numbers were bad. Workday traffic fell from 74,230 on the opening day to an average of 61,799 during the first three weeks. Granted, the week leading up to Easter would normally be weak but, if you remove the first four days when the novelty factor was high, workday traffic has averaged only 57,875 cars per day since. Most importantly, it was still free.
The first tolls were charged yesterday and they’ll announce the traffic numbers for the first tolled week next Tuesday. But it’s going to take a miracle for this toll road to meet it’s interest obligations and I can’t understand why anyone is buying the stock. The $100m market capitalisation is $100m too much.
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