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GeoOp slides to record-low as investors cautious on growth stocks

Shares in GeoOp [NZX: GEO], whose software allows mobile businesses such as builders to manage their workforce, dropped to its lowest price since listing last year, as investors shunned growth stocks in a shift to more cautious sentiment.

The NZ Alternative Index listed stock fell 7.8 percent to $1.06, before all trading halted on the NZX due to a technical glitch with the stock market operator, well below its debut price of $2.40 in October last year and have plunged 76 percent from its high of $4.49 in November. The company raised $10 million at $1 a share in a private offer before listing, which it said at the time was more than three times oversubscribed.

"It's simply a reflection of a bit of caution creeping into that whole space with those tech companies," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Those sorts of stocks can power ahead pretty agressively when things are going well and when people are really upbeat on their prospects, but because of their volatile nature and because they don't really have any earnings or profit behind them, when things turn cautious they fall harder as well."

Growing geopolitical risk including increased conflict in Iraq, rising interest rates, and global markets trading at all-time highs had investors more cautious across the world, while upcoming listings of tech-based companies had investors pulling cash from the stocks to fund new investments, Lister said.

Xero [NZX: XRO], the cloud-based accouting software firm, rose 0.4 percent to $26 but has slipped 43 percent from its March high of $45.99. Pacific Edge [NZX: PEB], the Dunedin-based biotech company, was unchanged at 81 cents, more than half of its Feburary high of $1.76. Diligent Board Member Services [NZX: DIL] slipped 0.3 percent $3.98, and is 43 percent below its June 2013 high of $7.06.

"All of those stocks which are really exciting growth stories, but at the moment aren't very profitable, are the ones that have been star performers over the last couple of years, and have had a pull back lately," Lister said. A more cautious tone was in the market after what had been a turbo-charged first-half, which saw the NZX 50 Index reach all-time highs, he said.


Comments and questions

This looks like its going to be the first of the new listings to fail? Will it go all the way to zero, or delisted and taken private?

You only have to read their latest reports to see that this company is built on fake growth. Average monthly revenue per user of $6.25 when it ought to be $20 so either they are giving it away or resellers are taking a massive margin. In either case, there's not a lot left to turn a profit and it amazes me how anyone can think turning $10m investment into $600k revenue is anything but a total failure. The reports show some rather odd financial manoeuvres as well, interest free loans to directors and $400k payments to one of Leanne Graham's other companies, I doubt investors got told/sold that story.

Too many people have been sucked into the hype slipstream left by Xero. Even that company is a long way of making money and it only needs 1 or 2 serious competitors to pull the rug out from underneath it and expose the flabby belly underneath bloated with funding rounds not customer revenue.

Don't be so negative. They may be losing lots of money on every transaction but they are making up for it by selling more licenses....

How is selling more when losing money on each transaction going to achieve anything?

I don't think they will disappear but this is a long shot. No unique proposition and very low cost.

They are heading to zero. It just a matter of how long it takes. Here in NZ Plumbing World is backing their rival Fergus and plumbers tell me it is cheaper and better than Geoop. I am surprised that Mark Weldon is associated with this looser of a stock.