London Capital Group shares drop 20% following 1H report

While we wrote earlier that the first half 2015 report from LCG should be read in the context of a ‘startup’ which has seen heavy investment over the 8+ months since the company was taken over by Charles-Henri Sabet and his team, the stock market sure didn’t show a lot of patience or understanding.

London Capital Group Holdings plc (LON:LCG) shares dropped 20% in Thursday trading on the London Stock Exchange in fairly heavy volume, closing at a new 52 week low of £0.1450. LCG shares had already drifted down about 28% since the beginning of June prior to Thursday’s drop.

LCG price graph Sept 2015

LCG share price past six months. Source: Google Finance.

While we certainly understand why management is doing what it has been doing – changing up personnel, investing in IT, consolidating the company’s brands, all in preparation for a ‘relaunch’ of the LCG brand in Q4 – it seems as though LCG management will need to show actual financial results from its investments before it can recapture the confidence of stock market investors.

As much as the £7.3 million net loss reported by LCG, what seemed to spook investors was the company’s 42% drop in first half revenues. While the revenue fall was not unexpected as the company consciously cut its marketing budget in 2015, keeping its ‘powder dry’ for the relaunch, the extent of the drop certainly worried LCG shareholders.

We expect LCG’s relaunch to occur fairly soon, and we’ll have more on that for LeapRate readers when it happens. Should be a very interesting Q4 at LCG.

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