ADULTSHOP.COM managing director Malcolm Day yesterday told the Australian Stock Exchange the company could not explain the recent slump in its share price, pointing to media speculation on expansion plans and a depressed market as possible triggers for a slide which has seen the stock fall almost 35 per cent in two weeks.
The exchange shot off a "please explain" notice to the Perth-based online porn broker this week, querying why its share price had dropped from 36¢ on July 23 to an intra-day low of 23.5¢ on Tuesday.
AdultShop shares eventually closed on Tuesday at 23¢, their lowest point since May 10. Yesterday, they recovered slightly to close at 24¢ on a relatively high turnover of more than 13.7 million.
In a statement to the exchange yesterday morning, Mr Day said AdultShop was "not aware" of any unreleased information which could explain the share slump.
However, he said the company noted media reports on its June quarter cash report could have been a factor.
"The company is aware of some recent conjecture in the financial press with respect to its future expansion plans and, in particular, its plans for the use of the significant ($17.5 million) cash reserves as at June 30," he said.
"The company is not presently investigating acquisitions in the online gaming industry as may have been misunderstood. The company confirms that its current focus is on its core adult businesses and the successful achievement of financial projections up to 31 December, 2002."
Mr Day told The West Australian last month AdultShop was exploring online business opportunities outside its "adult entertainment" core, including online gambling and sports betting.
Yesterday, he said the company had conducted "preliminary feasibility studies" into online sports betting as a way of leveraging the high volumes of online traffic visiting its websites.
"Business models examined to date are cash-flow positive and profitable from the outset," he said.
Mr Day also suggested AdultShop's share price had been a victim of market turmoil in recent weeks.
