Investors must be hoping they’ll soon wake up from the nightmare that is Snoozebox (ZZZ:AIM), the portable accommodation provider that offered so much hope yet has completely failed to deliver.
Shares in the £4.8 million cap crash 31% to 1.1p on news its chief executive Lorcán Ó Murchú has resigned. Three years ago the stock traded at 73p.
The board has been conducting a review of the business and will publish its findings shortly, but we are not pinning any hopes on a positive outcome.
We like the idea behind Snoozebox – providing temporary beds at festivals and semi-permanent accommodation at places like the Eden Project – but the business has been very poorly managed.
The company has spent an extortionate amount of money on expansion and marketing. Administrative expenses alone totalled £2.2 million in the six months to 30 June 2015, which on top of a fourfold rise in the cost of sales completely overshadowed its 300% revenue increase.
In November, Snoozebox warned it would make an EBITDA (earnings before interest, tax, depreciation and amortisation) loss of £5 million in 2015 due to higher operating costs. The group raised £5 million via a share placing in December to support its 2016 events season and is exploring other sources of funding to support its development.
The chance of Snoozebox becoming a profitable company increasingly looks like a pipedream.