Quindell's slide continues despite response
Quindell's (QPP) detailed response to allegations made by Gotham City Research last week did not seem to reassure investors on Monday, with its share price down by over 20% on Monday.With a market capitalisation of £1.4 billion, Quindell closed at 19.5p on Monday. Before the publication of Gotham's research note, Quindell was trading at around 40p. The shares nose-dived to 23.75p at Tuesday close, but had recoverd to around 24.5p by Friday's close of play.
Gotham published a damning research note last week, claiming that the outsourcing company’s share price is worth "no more than 3p", with between 24% and 80% of its profits were "suspect".
Quindell called the note a "coordinated shorting attack" and said it had initiated legal action.
Interactive Investor tried to contact Gotham last week via its website, but no response was given. On Monday, the research company took to Twitter to respond to Quindell's reaction.
"Quindell and CEO Robert Terry, do not seem committed to a free society, democracy, or free speech," the company said.
"In fact, their behaviour seems far more consistent with that of despotic and totalitarian regimes. Make no mistake: Truth is Quindell's greatest enemy, judging by their actions."
It also took to attacking some of Quindell's shareholders who have supported the company through the claims, and said "This Quindell and some of its misguided shareholders dare to accuse us of malfeasance, when their blatant deceptions are revealed?".
Yet the research company praised other citizens and said "on a positive note: we are encouraged by the nobility & strength of character that many of Great Britain's citizens have demonstrated".
"When faced with adversity & tyranny, it takes moral courage to stand one's ground. To turn your other cheek, and not return evil with evil," the company added.
In what was most probably an effort to instil investor confidence in the company, three directors shareholdings were increased on Monday afternoon. Robert Burrow purchased 150,000 ordinary shares, Anthony Bowers purchased 131,579 and Robert Terry bought 500,000.
Investor viewon the Interactive Investor discussion board, users were broadly still supportive of the company, with many users unsatisfied with Gotham's defence of "free speech".
'Andy0000' said: They really need to think of a better defence. Their free speech claim is tantamount to admission of guilt. They had to be robust and rebut the rebuttal or all credibility is lost. Sue them with indecent haste is my view. It's a warning shot that needs firing for all."
'Don Van Vliet1' said: "This is no more than a euphemism for 'We have no defence, M'Lud' and tantamount to a clear admission of guilt."
Others were less than impressed by the form of Gotham's response and the market reaction to it.
"So this is what the world of investing has come to. Ramblings on Twitter by someone you can't trace moves millions," said 'Palspurs'.
Some users were optimistic of the stock’s recovery after Gotham's response. However 'Pickles Rabbit' warned that it could take a while.
"Sadly that [recovering to 40p] will take some time. There is enough of a smell around Quindell now that there won't be enough volume buyers to drive the price forward.
"There might be some special situations funds willing to punt, but all eyes must be on cash generation and most will wait for evidence that Quindell can turn the biz model into bank notes. Hopefully Robert Terry is spending his time with the client base, not with existing and potential investors, as a stampede by them will prove Gotham correct".
Some users were concerned about how the news will impact on Quindell's FTSE listing.
'Mjolnir1' said: "I understand the move to main market was due to be announced last week, then the GCR story was published.
"Latest is the board of directors are continuing to work towards a main market listing. Does anyone know when this could be announced or why the wait in announcing now? Would LSE be holding back now in light of the bad coverage in the last week?"
'Goodflyingduck' replied: "It's entirely likely that the move to the main market will be delayed until the allegations made by Gotham have either been retracted or rejected by a court of law. For the LSE to admit the company to the main market could, in these present circumstances, be sub judice."
'Palspurs' put "a little perspective" on the situation on Monday afternoon.
"The company is still as it stands worth £1.2 billion. It’s the same price as 14 January. Gotham are still silent but we will see what happens at as it is now morning in the US. However the market in these shares is febrile so impossible to know where it will go but it will not zoom back up in a week in my honest opinion but what do I know.
"This happened before and rebounded back over time as Quindell delivered . I think Quindell will deliver again but this very annoying but may well be the best thing that has happened in hindsight. As like a year ago I think the collaborative model will win out in the end and telematics will bring icing to the cake.
"Rampers/derampers bulls or bears it’s just an opinion in a point of time. This time yesterday Liverpool were nailed on to win the league and Man City were out. Today the bears/derampers are winning but the game isn't over in a morning or a month," the user added.
Yet 'daverob82' does not believe the share price will recover until the company confirms its move to the main market. "In my opinion we won't see significant progress until there's clarification on the main listing date, audited accounts, US expansion, director buys etc," the user said on Monday morning. "At the moment there's an understandable nervousness around Quindell and, although the fundamentals are good, that nervousness will dampen the upside.
"Still, I'm happy with my average (a tad over 21p) and am happy to sit tight for the next few months while things settle and the confidence returns. I feel that a return to 30p is realistic within a few weeks (rather than hours)."
Before news of the director shareholding hit the market, 'wdelboy2' thought the falling share price would be good to take advantage of.
"Got to be a good buying opportunity ... for the brave. Let’s hope Quindell give some reassurance to bring the share price back. Didn't think we would drop below 20p."
However, of the increased shareholding, one user said: "I'm sorry, but that level of purchases is chicken feed to these directors. It's purely done here as a psychological calming exercise and doesn't convince me or exude confidence by them. Now if they each had spent over £1m on shares that might begin to re-assure. me that they're putting their money where their mouth is.
'Nick2009' threw out a word of caution to investors.
"This is gambling not investing currently, sit back and see how things pan out over the next month or so. It looks like it could easily go lower from here." |
