Metro Bank, Indivior, TalkTalk and other news
Shareholders in Metro Bank (MTRO) could be forgiven for thinking they had unwittingly booked tickets on the Oblivion vertical-drop ride at Alton Towers.
On 23 January the shares collapsed 39% to £13.45 as the company missed its profit target and chief executive Craig Donaldson confessed it had wrongly accounted for some of its loans. The next day they rallied to £14.81 and the storm looked to have passed.
However it has since emerged that the accounting blunder was uncovered by the Prudential Regulatory Authority (PRA), a regulator, rather than the bank.
In a statement Metro admitted that ‘ongoing supervision by the PRA helped to identify potential inconsistencies in certain loans which were raised with the bank’.
Cue another gut-wrenching slump to £10.87 leaving shareholders nursing a 50% loss in just seven trading days. Hedge funds and lawyers smell blood, and the bank is now bracing itself for a law suit from disgruntled investors.
Shares in pharmaceutical company Indivior (INDV) fell by as much as 25% on 5 February after a US court refused to rehear a case to stop rival Dr Reddy’s Laboratories from launching a generic alternative to one of its opioid treatments.
Up to 80% of Indivior’s market share for this treatment is now at risk, according to the company, as the ruling may allow Dr Reddy’s and others to start selling generic versions of its Suboxone film.
Lowering profit guidance is the charitable way to describe the thrust of TalkTalk’s (TALK) third quarter trading update on 1 February, but a plain old profit warning is arguably more accurate.
The company trimmed between £10m and £15m off its guidance for full year earnings before interest, tax, depreciation and amortisation (EBITDA). That news saw the share price decline 5% on the day and it has kept falling since to a year-low of 102.7p.
The company says it remains on track to beat its 150,000 target for new broadband customers but sceptics may wonder for how long it can continue to subsidise new subscribers and give them cheap deals.
YU GROUP RELIEF
Investors voiced a sigh of relief after business energy provider Yu Group (YU.:AIM) confirmed no further black holes had been found after October’s shock accounting fiasco revelation.
The stock’s near-100% gain since the update on 30 January suggests that investors are increasingly optimistic that there is a going concern to salvage, unlike the calamity at AIM peer Patisserie (CAKE:AIM), where shareholders are facing complete wipe-out.
However, the fact that Yu’s broker Shore Capital has yet to reinstate forecasts shows that little can be taken for granted.