As for the negative comments, I think it is because many shareholders are underwater now and are therefore, understandably, frustrated.
Many of your points are spot on.
If we look back 18 months or so ago, the market was demanding/rewarding companies for increasing market penetration and chasing top line revenue growth. Interest rates were low, capital was cheap and profitability was an afterthought. How things have changed!
The market now demands small cap companies to be profitability or in sight of near term profitability (and able to articulate how you are going to achieve profitability). A shoot first and ask questions later mentality has also taken hold.
Similar to your line of thinking, the problems currently with Alcidion are:
Opportunity cost - I also think Alcidion will be in a holding pattern (in the absence of any significant positive news) for at least 6-9 months. Are shareholders prepared to wait (and not being compensated in the form of dividends like some other companies) when there are better places to park their monies? Kate has also been upfront noting that the pipeline would be delayed by a minimum of 6 months due staffing issues in the UK because of the industrial actions.
Concentration risk - rightly or wrongly, Alcidion placed most of their eggs in the UK market. Of course, it is easy to criticise their strategy in hindsight but I still think it was the right strategy to pursue back then. Who had the foresight to foreshadow all these issues, political chaos leadership/ministers merry-go-round etc in UK? If things had not turn pear shaped in UK and contracts were won, we would be singing the praises of the board/management. Alas... it was not to be.
Tax loss selling - as you explained, we should be expecting many retail shareholders (especially those who participated in the capital raises) to strongly consider tax loss selling, knowing that the share price is unlikely to do much in the short term.
Forecast/guidance goes wrong - Since FY22, Alcidion has been resolute in forecasting for an underlying positive EBITDA in FY23. A combination of changes in market conditions and its biggest market has shot it to bits and even delivered the management/board a 'shit sandwich'. While it is commendable that Kate tried to explain why the forecast/guidance is unlikely to be met, the market is in no mood to listen. I would even argue that the market has lost quite a bit of trust and the management now needs to do/achieve even more to earn back the market's trust.
However, I also think that these current issues will come to pass and the situation is not insurmountable.
Things that the board/management can consider/do in the near term include:
Minimising operating costs - keeping a close eye on costs and using the opportunity to ensuing the company is as lean as possible while not comprising future growth. Simple things like diverting resources to other geographical locations (should be relative easy in a remote working setting), deferring discretionary expenses, etc.
Minimise concentration risk by diversification - I am not implying that the company should consider discarding its strategy but to take action steps to increase its market penetration in ANZ. However, this might be difficult as Australia is more of a follower than a leader in health digital adoption. This also why I believe Alcidion aggressively expand into the UK market in order to provide ANZ with that 'reference point/market'. Nevertheless, there is a lot happening in NZ right now and Kate even hinted as such in the webinar.
Re-establishing trust - given that the market has already lost some trust, it is even more imperative that Alcidion do not do/say stupid things. If the managing director is on the record as ruling out a capital raise, please please please don't f#$% it up! Part of improving trust is also ensuring all its communication is clear, honest and upfront. Being wishy-washy gives the impression that the company is trying to gloss over bad news. Hint to the CFO/investor relations: If payments are delayed to the next quarter, please only point out the proportion that are attributable. Do not repeat what you did with the use of the $5.2M figure in the Q2 4C. It confused many retail shareholders (as evident by the posts here in the forum and the question asked to the CFO in the latest webinar).
Securing support of cornerstone investor(s) - if the investment thesis in Alcidion is persuasive (long term structural tailwinds), the current share price should be very attractive, We know there are willing sellers, we just need buyers to step up. Not suggesting management should take their eyes off the many operational challenges, but they should also continually stay attuned to existing/prospective institutional investors.
Just my two cents worth.
ALC Price at posting:
9.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
