Today’s Small-Cap Disasters: Concha PLC, Circle Oil plc And Audioboom Group PLC

Concha PLC (LON: CHA), Circle Oil Plc (LON:COP) and Audioboom Group PLC (LON: BOOM) are today’s small-cap losers.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in Circle Oil (LSE: COP) are sliding today after the company said that following the plunge in oil prices, the group may be forced into a debt restructuring or rights issue as it struggles to reach an agreement with one of its lenders. Clearly, this is a huge blow for Circle and the company’s shareholders. 

Indeed, only a year or so ago, Circle seemed to have a bright future with a market cap in excess of £100m and a cash-rich balance sheet. But the plunging price of oil and an expensive exploration programme have taken their toll on Circle’s balance sheet.

At the end of September, the company reported that during the first-half its net debt pile had ballooned to $64m, and sales had fallen 50% year-on-year.

Circle’s market cap has slumped to £16.6m at time of writing, or around $25m. So Circle’s net debt now exceeds the company’s market value by two-and-a-half times. As a result, it could be wise to avoid Circle for the time being. 

Continued sell-off

It’s also shaping up to be another bad day for Concha (LSE: CHA). Shares in the company have fallen 16% on the day at time of writing, adding to last week’s declines. Over the last three business days, Concha’s shares have lost 65% of their value, although there’s been little in the way of news to explain the decline. 

Concha’s shares slumped 52% last Thursday, which prompted the company’s management to issue a statement saying that the group was “not aware” of any press speculation that may have contributed to the recent volatility in its share price.

The company’s last market update was back in September when management revealed that the investment company was evaluating a “specific global opportunity within its investment scope.” Last week Concha’s management confirmed that “discussions are continuing” although “there can be no guarantee that this investment will be successfully completed.” It seems as if the market has taken this statement badly.

Unfortunately, there could be further declines to come as, Concha’s book value is only around 0.35p based on year-end 2014 figures. Unless the company makes a high profile investment soon, its shares could fall back to the 0.35p support level. 

Profit warning 

Shares in Audioboom (LSE: BOOM) are also under pressure today after the company reported its full-year results for the year to November. They fell significantly short of market expectations. What’s more, the company doesn’t expect to become cash flow positive until 2017 implying that two more years of uncertainty and fund raisings could be ahead for the group. 

According to today’s year-end trading update, Audioboom’s real revenue growth only began towards the end of its fourth quarter, with revenue in the period more than double the previous three quarters combined. And the company expects this trend to continue into Q1 of the next year. As a result, management expects the shift in timing and pace of adoption will hit its expected full year revenues for 2016. 

All in all, this was a pretty dismal trading update from Audioboom and it was, in many ways, a multi-year profit warning. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »