Invoice finance platform and technology start-up Tungsten (TUNG:AIM) has taken a beating, falling 22% on the back of a well known private investor opening a short position.

The stock also has six institutional short-sellers, according to data published by the Shorttracker website. They are short around 6.6% of the company’s stock.

TUNGSTEN CORPORATION - Comparison Line Chart (Rebased to first)

Tungsten is down 43% so far this year, a sell-off which accelerated following a 14 January first half update when management said the financing and spend analytics products it has developed were launched later than planned.

After the announcement, analyst Bob Liao at Canaccord Genuity pushed back by a year his forecasts of profitability at Tungsten.

The business is forecast to generate £2 million in earnings before interest, tax, depreciation and amortisation (EBITDA) and £54.1 million of sales in the year to April 2016, according to Liao’s estimates. This year, an EBITDA loss of £29 million is forecast, on sales of £22.5 million.

‘We believe the long-term potential of the business remains unchanged,’ Liao wrote in a January research note. ‘We continue to believe Tungsten can offer cheaper, simpler and more flexible financing to its large and growing captive market.’

As well as some high profile short-sellers, Tungsten also has a heavyweight backer in Odey Asset Management, one of the UK’s most respected hedge funds, which has a 13.01% stake. Chief executive Edmund Truell is the largest shareholder with 14.9%.

Liao has a 369p price target and a ‘buy’ rating on the stock. Tungsten trades at 157p.

We said to take some profit in Tungsten last September when it traded at 399p. At that time, our Plays of the Week trade on the stock had increased by 90% in value since we first highlighted its potential (29 May 2014).


Issue Date: 24 Feb 2015