2015 has turned out to be a year that Tungsten (LSE: TUNG) and Monitise’s (LSE: MONI) investors would rather forget. Indeed, both companies have made some mistakes throughout the year, and it has become apparent that the market no longer trusts Tungsten and Monitise. Year to date, Tungsten’s shares have lost 75% while Monitise is down 76%.
However, over the past month there have been some signs that the market is starting to trust these two companies once again. Tungsten and Monitise could be on the road to recovery.
Regaining trust
Invoicing, analytics and financing company Tungsten has continually disappointed since its initial public offering in 2013.
Over the past 12 months, the company’s shares have lost 82% of their value as the company has consistently failed to meet the growth targets set by management. And as the company’s cash balance has dwindled, earlier this year Tungsten was forced to conduct a placing to raise £17.5m.
Nearly six months on from the placing and Tungsten hasn’t released much in the way of news to suggest that trading has improved. Nevertheless, the company’s preliminary results for the year ended 30 April 2015 showed that its key performance indicators were all moving in the right direction. The number of buyers using the company’s electronic invoicing network jumped by 39.5% and the number of suppliers using the system increased by 7.7% to 181,000. The total value of transactions over the network ticked higher by 10% to £121bn.
Moreover, since the end of July some of Tungsten’s directors have taken the plunge to add to their holdings of the company’s shares. So, things could be looking up for the company. Only time will tell.
Disappointing
Monitise hasn’t issued any news releases during the past few months, but that doesn’t mean there’s nothing going on behind the scenes. Under the leadership of new CEO Elizabeth Buse, the company has been working to reduce its cost base over the past year, which should improve margins.
Further, according to the company’s latest press release, Monitise is still on track to meet its goal of achieving profitability on an earnings before interest, tax, depreciation and amortization basis next year. Also, management believes that the group has enough cash on hand to finance the company through to break-even and beyond.
Still, Monitise has a lot to prove before the company can regain the trust of shareholders and head higher. However, investors don’t have long to wait for an update on the company’s progress. Monitise is scheduled to release its full-year 2015 results this Wednesday.
Unfortunately, in my opinion, Wednesday’s results will be Monitise’s last chance to prove that it really is on the road to recovery. If the company warns on profits once again, reveals yet another surprise fundraising or lowers its outlook for growth, it could be time for investors to give up on the company. On the other hand, if Monitise surprises to the upside, the company will be on the road to recovery.