I wonder if the AFR are a PR arm of the litigation partners...pretty damning article...first line
Shareholders in software provider GetSwift could be forgiven for feeling ripped off
can it get any worse publicity than that....?
http://www.copyright link/brand/cha...ave-reason-to-feel-ripped-off-20180219-h0wbw6
Shareholders in software provider GetSwift could be forgiven for feeling ripped off after the company admitted half its contracts are not earning revenue.
This revelation, which saw the stock lose half its value, came five weeks after The Australian Financial Review revealed slack compliance with ASX disclosure rules covering price-sensitive information.
On January 20 the Financial Review questioned the lack of disclosure by GetSwift in relation to two material contracts and raised doubts about claims the company made in relation to a contract with the Commonwealth Bank of Australia.
This earned the Financial Review plenty of abuse from day traders using the HotCopper online chat room and on Twitter. "Simon" on Twitter said: "The article is misleading and deceptive with intent to damage the reputation of an emerging company."
That sort of criticism continued on Monday on HotCopper as traders tried to blame someone for a 55 per cent share price decline.
GetSwift responded to the Financial Review articles in January with an ASX release saying it refuted "the negative claims made in The Australian Financial Review articles and categorically denies that it has failed to report material information in any of the circumstances suggested therein".
Of course, we now know that GetSwift failed to report material information, had inadequate compliance and needed help from PwC to fix it.
In hindsight, GetSwift played fast and loose with the disclosure rules. But it had a receptive audience.
Retail and institutional investors wanted to believe what they were told. There was implicit trust in the company's announcements and a tendency among day traders to damn those who asked searching questions.
The GetSwift disclosure incident, which saw the company lose about $300 million in market capitalisation on Monday, put the spotlight on the ASX listing rules and the obligation on companies to take responsibility for their own actions.
It would be impossible for the ASX to vet every announcement made by every listed company. It is up to companies to be aware of their obligations and to abide by the law.
It is good that the ASX listings compliance division pulled GetSwift into line to help preserve the integrity of the equity capital markets.
Investors must be able to trust ASX announcements, whether they are made by top 10 companies or fast-growing tech stocks.
GetSwift benefited enormously from its sloppy disclosures. It rode the hype and raised $75 million in December last year through the issue of 18.75 million shares at $4 a share.
The stock closed on Monday at $1.325 a share. But retail and institutional investors need not despair just yet.
GetSwift has $100 million in the bank, which means that at current cash burn rates it can survive for another three years.
Also, it is possible that GetSwift will benefit from the global trend toward the outsourcing of last mile software logistics to specialist providers.
Leading companies offering software-as-a-service have enterprise values five to six times their revenue. If you apply this multiple to GetSwift's $138 million a year contract with US automotive sector group N. A. Williams (announced in September) then GetSwift could be worth 2½ times its current value in 18 months.
This assumes the company will earn nothing from every other contract. But it also assumes the revenue forecasts underpinning the five year N.A. Williams contract will be "fully captured" by GetSwift.
Shareholders will have to take a punt that GetSwift has management execution skills superior to their legal and compliance abilities.
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