Quindell
2014 has been nothing short of a disaster for investors in Quindell (LSE: QPP). Not only has the company’s share price fallen by 88% since the turn of the year (versus a 4% fall for the All-Share), its Chairman and CFO have decided to leave following a scandal involving the reporting of sale and repurchase agreements, and it is also the subject of an investigation by the LSE regarding company disclosure rules.
A recent update by Quindell confirmed that PwC will conduct an independent review into the company. This could mean more bad news for investors in the short run (or Quindell could, of course, be given a clean bill of health) but should help to confirm whether Quindell’s accounting practices are solid and without issue.
Until the report is completed, shares in Quindell may remain volatile and, as a result, it may be worth waiting until the review is released before contemplating buying a slice of the business.
ASOS
Also having a tough 2014 has been ASOS (LSE: ASC) (NASDAQOTH: ASOMF.US), with shares in the online fashion retailer falling by 57% since the turn of the year. The performance of the company can be split into two halves, with the UK division performing well and, as its recent update showed, it is continuing to deliver excellent sales growth. However, the international division is not meeting market expectations, with sales being down 2% in its most recent quarter, and margins coming under pressure too.
Although ASOS is not doing anything particularly wrong as a business, its expansion outside of the UK is simply a more challenging step than was priced in – hence its savage share price fall. However, looking ahead, its share price could come under further pressure, since it trades on a rather heady price to earnings (P/E) ratio of 60, and progress in 2015 may be no faster than it has been during the course of the past year.
Blinkx
Having risen by over 200% in 2013, Blinkx (LSE: BLNX) has gone from ‘hero to zero’ and is down 87% year-to-date. The key reason for this is quite simple: it released a massive profit warning earlier in the year, with its guidance for the full year being slashed so that Blinkx is set to move from a respectable profit last year to a loss in the current year.
As with ASOS, Blinkx seems to be doing the right things as a business. It is transitioning from focusing on desktops to mobile revenue and, although the company expects it to be a ‘year of transition’, it would be unsurprising for it to take more like 2-3 years to shift the focus of the business. After all, Blinkx is not a start-up and it generally takes longer than expected to effect change within an organisation.
So, with more changes ahead, Blinkx could be worth avoiding for now. Certainly, it has long-term potential, but a lower price may be on offer during the course of 2015.