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Phorm – Why I disagree with Evil: This is not a buy & is probably a short

Tom Winnifrith
Tuesday 4 March 2014

I noted at the weekend that bear raider Evil Knievil had gone long of AIM Cesspit listed internet company Phorm (PHRM) at 13p. Having considered the matter, I certainly would not buy the stock and am almost tempted to open up a short. I serve up a few red flags for you to consider.

  1. This company’s technology is old. If it was going to make a breakthrough it would have done so years ago. I am not sure that I understand what exactly has changed.

  2. The company raised £10 million in November but is – quite incredibly burning its way through between £2 million and £2.5 million a month. That means that it will be out of cash sometime between end March and end April. It is quite clear to me that the company is on an active roadshow at a time when markets are jittery. I would thus expect its next placing to be at a material discount to 13p. So even if I believed it, which I am not sure I do, I would buy after the placing not before.

  3. The company claims

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About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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