Sondrel – Another Disappointing IPO, and Grant Shapps Appointment

This morning saw the share price of Sondrel (SND) collapse by over 60%. It only listed in October 2022. Revenue forecasts are shot and losses will no doubt be substantial. This is what Camtab had to say on it on Stockopedia: “I am just amazed that people wonder why the City of London is losing credibility in the world. Sondrel are a fantastic example of the duplicity, stupidity and greed inherent. Float October 22 mentioning semi conductor (oh must be good then!) lots of prospects (brilliant) loads of opportunity (great!!). Less than a year later a profits warning on this scale. I gave up investing in IPOs years ago recognising that you only list on UK markets now if its a sh&tshow. Sorry to be so down about but it is so depressing and I don’t think people do hit brokers or markets enough for devaluing one of our main income providers in this country. Still keep devaluing it on this scale and we can always fall back on our resources (oh!) well we have some fantastic multi-national businesses (didn’t we sell those to someone)…………oh, well perhaps we could bottle fresh air then”.

There are several key messages here: 1) never trust a company with a volatile financial history; 2) recurring revenue is very important; 3) the semiconductor market is particularly tricky due to rapid obsolescence; all IPOs are risky as it’s easy to spin a good story about future prospects.

This was a company lined up to fail in my view and could well now be taken private again. Why do people invest in such dogs? Because there are lots of people who are suckers for a good tale is the reason.

The other surprising news today was the promotion of Grant Shapps to Defence Secretary. Someone who had made a hash of his previous job of Transport Secretary by promoting LTNs and then backtracking when they proved so unpopular (and impractical), a supporter of the impossible Net Zero policy and managed to change jobs so rapidly that his mistakes never caught up with him. His profile on Wikipedia also makes for interesting reading.

UK politics is beyond salvation if Rishi Sunak could not find someone better to take on the job.

Roger Lawson (Twitter  )

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