We all know mobile commerce is big business, and getting bigger by the day. Faster networks (4G) and smart handsets are driving this inexorable mobile shopping bonanza. This should all be great news for London-based enabler MoPowered (MPOW:AIM), but what we get is yet another AIM upstart that has massively disappointed that market.
MoPowered joined AIM in December, pricing the shares at 100p for a £16 million valuation. Today's revenue warning has seen the share price smashed, cut in half from 62p to 31p, otherwise valuing the business at less than £5 million.
With half-year to June sales expected at £750,000, some might argue that the valuation is still too steep. 'Growth of over 60% from the second half of 2013 represents less of an increase than had been anticipated,' the company says.
Apparently, several large contracts have slipped the first half net, and MoPowered's confidence that they'll come through between now and Christmas should really be taken with a large pinch of salt.
'After a strong first quarter, some of the larger deals which the Group had expected to complete in the second quarter of 2014 have now slipped into the second half of the year which will impact the expected results for 2014 as a whole.
The apparent contradiction, why sales still expected this year should harm full year hopes is simply down to the transactional nature of MoPowered's revenue streams, where it takes a cut on client sales. Ergo, less time to book sales for clients equal lower revenues shared with MoPowered.
But the big question now is cash, does it have enough. £2.8 million was on the books at the year end in December but the company is clearly burning through the readies rapidly. Interestingly, neither the company nor its broker feel the need to clarify the cash position today. As one analysts told me this morning, MoPowered looks like a company that has joined AIM too early. That's hard to argue with today.