Well, we begin to discuss the report Revolution Beauty again – but this time the story is a little more cheerful than in previous weeks and months.
Because the online makeup group has found an ally in Boohoo, the clothing store that owns the NastyGal and PrettyLittleThing brands.
While the exact details of the transaction have not been disclosed, Boohoo has taken a 7.1 percent stake in Revolution, which rocked investors last week after noting troubles from accountants.
Revolution Beauty shares are up 65% this week, but they are down 84% since last July’s IPO
The Boohoo investment provided a much-needed boost to beleaguered investors as the stock rose 65 percent.
The shares were listed for 160 pence last July and are now trading at 26 pence each – that’s an 84 percent loss for investors who bought into the IPO.
Revolution wasn’t alone among the losers of the 2021 class, with many of last year’s debutants leaching money for those backing their IPOs.
Analysis by Proactive showed that while the average performance was good until early February, with the AIM contingent alone averaging 21 percent, the carpet has been pulled in recent months.
A common theme for companies entering the market last year was to put a digital spin on what was essentially a traditional business.
The success of Zoom, Netflix, the food delivery services and online retailers during the lockdown seems to have started the pumps.
Clive Black, the veteran retail analyst at Shore Capital, reminded us this week that there are some very sensible rules for investing in IPO stocks — guidelines that may not always have been followed by the pros.
‘To keep [your] feet on the ground, applying common sense to market valuations and asking the simple question: is this company really worth it? [valuation]?’ he told Proactive this week.
“Greed is a powerful force, as is hyperbolic language about addressable markets and the like,” he added.
“While there is money to be made riding on top of the waves, relatively few win…and so they’re pretty dull foundations that tend to fall out.”
As for the broader market, the AIM All Share was up 1.2 percent to 921.93 this week, as it underperformed the FTSE 100, which rose 0.5 percent over the same period. At the peak of the summer break, volumes traded were light in both the blue-chip and small-cap markets.
Friday was a daylight on company news, so it made the pain felt even sharper joulewhich sounded the income alarm.
Shares fell 36 percent after the clothing and homewares group said trading had “softened significantly” in the past five weeks since it updated the market.
That July statement spoke of pressure on the company’s profit margins, while the latest announcement said its core categories – outerwear, rainwear, knitwear and wellies – were hit by Britain’s hottest summer since 1976.
The misery was exacerbated by “sustained subdued consumer demand due to the well-documented crisis in the cost of living.”
All of this will make for a tough introduction for Joules’ new chief executive, Jonathon Brown, when he joins on September 7.
Super yacht maintenance group GYG sank another 33 percent when it offered a good trip to the public markets.
It’s also been a rough week for Strip Tinning (down 28 percent), which makes connectors used in the automotive industry.
The pain was caused by an ‘alleged’ (their word not ours) contract cancellation by a Croatian customer.
Finally investors in Power metal reason to be happy after a more than decent week – a period in which the share price has risen by 87 percent.
This followed exploration drilling at the Molopo Farms complex in Botswana, which the company says has reached the edge of “very large-scale and strong magnetic conductor” rich in nickel.
Chief executive Paul Johnson called the announcement the most significant in the company’s three-year history.
“As a result of the findings, multiple boreholes planned for the 2022 program will target the center of the magnetic conductor, where we believe there is potential for a more strongly mineralized system where the conductive response is significantly stronger and greater,” he told investors. .
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