They've been quite small as well, with the cumulative positive operating cash flow of those four quarters coming in at just $24 million. In the past 11 quarters, Drive Shack has managed four quarters of positive operating cash flow. The two metrics above, cash from operations and capex, are the two primary components of free cash flow, and the picture isn't pretty. In addition, the company's history on cash generation is absolutely abysmal, so I wouldn't be optimistic about this situation turning around anytime soon. The problem is that Drive Shack still has $106 million in current liabilities, so in other words, where it had nearly double the cash it needed for a years' worth of current liabilities 2.5 years ago, it now has maybe a month or two. The cash pile has fairly quickly dwindled and is now down to just $17 million as of the end of June. All of those sources of cash have a tangible cost, excluding cash from operations, so there is only so long any business can rely upon those external sources of cash before investors will cease lending to the business.Īs we can see below, that is a problem for Drive Shack, as it has burned through the huge cash pile it had a few years ago, with no end in sight.ĭrive Shack had $173 million in cash and equivalents at the end of 2017, with $104 million in offsetting current liabilities. That cash can come from the operations of the business (ideally) or it can come from debt, stock issuance, preferred stock, etc. Cash burn remains a huge problemĪny company needs to produce cash from somewhere to continue operations. To that end, the below will take a look at Drive Shack's financing situation, and determine what to do with the stock based upon its prospects for surviving. After all, growth potential doesn't matter if the company isn't around to realize it. While Drive Shack has a compelling business model with plenty of future growth potential, the key question today is whether or not it can survive this crisis. That's about double the low that Drive Shack put in a few months ago, but after a parabolic spike to just over $3, investors have unloaded the stock in big quantities. Shares have fallen from more than $5 at this time last year to just $1.60. One stock that certainly hasn't adapted or recovered is Drive Shack ( DS), a purveyor of outdoor golf experiences. Some have recovered, while others haven't, depending upon how well the companies have adapted to a COVID-19 world. Consumer discretionary stocks were, of course, crushed earlier this year.
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