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I’m eager so as to add a number of FTSE 250 shares to my portfolio of largely FTSE 100 shares, however I’m questioning the place to start out. So I made a decision to ask ChatGPT.
Synthetic intelligence (AI) goes to be working our lives quickly sufficient, I’m advised. So why not let it run my portfolio at the moment?
Really, there are causes. ChatGPT’s first choose was Warhammer-maker Video games Workshop. It exited the FTSE 250 on 5 December, and now resides within the FTSE 100. Oh properly. Even robots aren’t good.
So I requested ChatGPT to provide it one other shot. I should have aggravated my AI chum as a result of it plumped for on-line vogue retailer ASOS (LSE: ASC). Now that was a courageous name!
By courageous I imply mad. ASOS? Actually? Of all of the shares on the FTSE 250, I didn’t count on that.
If AI does personal the longer term, it’s going to be risky.
ASOS is a high-risk play
ASOS may very well be the last word falling knife. On-line vogue retail hope turned vogue sufferer. And AI would purchase it in a heartbeat? Simply be grateful it doesn’t have a coronary heart. But.
The ASOS share worth is down 88% during the last 5 years. Buying and selling at 385p, it’s again right down to 2009 ranges.
It is a good storm of a inventory, hammered by all the pieces from the cost-of-living disaster to powerful competitors from Chinese language-owned quick vogue rival Shein, which pressured it to dump piles of unsold inventory at a reduction.
In full-year 2023, losses hit £296.7m. That elevated to £379.3m in 2024, whereas group revenues slumped 16% to £2.9bn. CEO José Antonio Ramos Calamonte nonetheless claimed to have hit his key priorities by lowering inventories and “producing constructive adjusted EBITDA and free money move”.
Gross sales have been up too and ASOS nonetheless boasts 20m clients, he added. However neglect Calamonte. He’s solely the boss. What does AI suppose?
ChatGPT admires the group’s “sturdy on-line presence” whereas praising its “strong e-commerce platform that appeals to a world buyer base”. That line might have been written by a pc. Oh, it was.
As was the bit about how ASOS’s worldwide growth plans might “diversify income streams past the UK”. The place is it nicking these things from? And why didn’t it point out the mothballed £110m fulfilment centre in Lichfield?
The worst could also be over
In its defence, ASOS shares have stopped falling. Actually, they’re really up 2.62% within the final yr. Is that this the long-awaited restoration?
The shares received a small increase on 2 February when two credit score insurers reinstated cowl for its clothes suppliers, withdrawn in 2023 on account of issues over earnings. This implies ASOS has higher monetary stability.
ASOS has additionally made some progress in addressing its stock challenges. It’s halved unsold inventory and transitioned to a extra agile ‘Take a look at and React’ mannequin. This could assist it reply swiftly to new tendencies, driving full-price gross sales and boosting margins.
Promoting its 75% stake within the Topshop and Topman manufacturers for £135m will increase liquidity and permit administration to deal with the core enterprise. So perhaps ChatGPT hasn’t gone haywire.
After its horrible run, ASOS is again on my radar. However with customers nonetheless strapped for money and inflation sticky, there’s no manner I’m going to purchase it at the moment.
I’m mad sufficient to request inventory suggestions from a pc. Not mad sufficient to behave on them.
