Tom Winnifrith says sell - today26 Nov 2019 14:21
Versarien, Bidstack & AFC Energy - short now or later reviews Tom Winnifrith
All three are concept stocks and shares in all three will at some stage slide towards zero. The core business at Versarien (VRS) has pitiful sales and burns cash. The company will need more cash to keep the promote on the road by next summer. Bidstack (BIDS) is well overdue a lack of sales and profits warning, its revenues are pitiful and it will run out of cash well before next summer. AFC Energy (AFC) has no sales and will also run out of cash in H1 2020. Yet all three have sky high market caps - £144 million at 94p, £54 million at 22.5p and £87 million at 19.5p respectively. All three are where they are as folks buy into the dreams of graphene, ads in video games and green energy. I am sure all three industries have the scope to grow massively but whether itty bitty players from the UK can grab even a small slice of that pie and do so on margins that are acceptable and within their scope to invest as required is a very different matter.
All three shares trade on multiples of any sane value on the basis of hope. A good story has been well spun. Bidstack has clearly lied to investors, AFC has fully aged its pudding and Versarien’s statements on, for instance, its US hub appear also to be utter lies. In all three cases there are no institutional investors (except for legacy reasons Roman Abramovich at AFC). That is telling. If these were real companies with real prospects they would have attracted at least one II. It also means that there is almost no borrow, so almost no ability to go short. And that means the market is driven entirely by private investors. Check out the bulletin boards and you will see that in all three cases the “believers” here would have fitted in well at Jonestown Guyana (younger readers, google Jim Jones). That is not to say that they a have a financial death wish although they clearly do, just to say that they will believe anything, lash out violently at anyone who questions some of the corporate lies or valuations and have clearly lost grip on reality.
That Versarien, Bidstack and AFC shares will collapse towards bugger all is a given. But the question is when and the danger of being short now is that with crazy disciples driving the share price and regulators allowing management to get away with murder (think Tesla on a bigger scale), you could lose an awful lot being short before the final collapse gets underway. I might hope that when Bidstack eventually does ‘fess up to missing 2019 targets by a country mile then in light of recent boardroom sales that may trigger a collapse.
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