In May 2000 sentiment in the markets turns violently against internet stocks. The collapse of two well known dot.coms, and the high cash burn of the survivors, sees prices falling as fast as they rose in the previous six months.
Country Bumpkin feels this cold wind of change. To make matters worse, it is forced to make a statement about the e-Bumpkins website which has suffered repeated system failures. Admitting that it has made only 83 sales since launching on 1st April sends CB shares into a tailspin.
The price falls throughout May and June, reaching a low of 68p, equivalent to a pre-split price of £3.90. At 68p, the capital structure looks like this:
| Shares in issue: 85 million Current share price: 68p Market Capitalisation: £57m Net assets: £25m Net asset value per share: 29p |
With a market cap of £57m, membership of the FTSE 250 is like a bad joke. The tracker funds that were forced to buy when CB entered the index will be forced to sell when it leaves in the next reshuffle, potentially losing investors huge amounts of money.
Despite everything, you are sitting on a handsome profit. Each of your 3,500 shares cost you the equivalent of 20p and are now worth 68p.
What no-one yet knows is how the underlying CB business is performing.
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