Cyber-security company Darktrace sank to a two-month low after a major investor dumped a chunk of its stake on the cheap.
The stock dropped 5.1 per cent, or 32.5p, to 600p after private equity firm Vitruvian Partners sold 11m shares at 580p each, an 8.3 per cent discount to the previous closing price, for £63.8million.
As a result, its stake has been cut to just under 3 per cent from around 4.6 per cent. The move followed the end of a 180-day ban on share sales from investors that backed the company when it listed in April, known as a ‘lock-up’ period.
Darktrace sank to a two-month low after private equity firm Vitruvian Partners sold 11m shares at 580p each, an 8 per cent discount to the previous closing price, for £63.8m
Darktrace floated at 250p and soared in value. However, the price has declined sharply since late October after Peel Hunt published a note saying it was overvalued. Before the broker’s assessment, the shares were changing hands at around 945p.
They are still well above their listing price, meaning Vitruvian made a gain of over 130 per cent.
But the sale is likely to increase fears that a wider sell-off could begin if other early backers cash out. Among these is controversial tech investor Mike Lynch, who, with his wife Angela Bacares, owns around 16 per cent. Lynch is facing an extradition battle to the US to face fraud charges which he denies.
Stock Watch – Zotefoams
Zotefoams, a maker of specialist foam and insulation for the industrial and defence sectors, bounced higher yesterday after posting record quarterly sales.
Revenues in the third quarter of 2021 were up 11 per cent year-on-year and 35 per cent above pre-pandemic levels.
They were boosted by a rebound in demand and higher prices.
The group did, however, see sales of its footwear products hit by the shutdown of one of its customers in Vietnam due to the Covid-19 pandemic.
Despite this, shares in the group jumped up 13.9 per cent, or 50p, to 419p.
‘Investors will need to decide if these [share price falls] are just teething pains or if there are genuine questions about the credibility of the company’s AI-based technology’, said AJ Bell director Russ Mould.
‘Those who remain believers in the underlying story will probably be able to dismiss the recent volatility in Darktrace as noise, however the longer the shares keep falling, the more difficult it will be to tune out.’
The FTSE 100 fell 0.4 per cent, or 25.92 points, to 7248.49 while the FTSE 250 slipped 0.1 per cent, or 23.03 points, to 23,116.97.
Software and IT firm Micro Focus was one of the biggest risers in the mid-caps after inking a deal to sell its archiving and risk management business to US firm Smarsh for £275million.
The proceeds of the sale, which is expected to complete in the first quarter of next year, will be used to pay down debts.
The shares were up 10 per cent, or 36.5p, at 399.9p.
Royal Mail rose 1.5 per cent, or 6.5p, to 439.2p, after being upgraded by analysts at UBS. The investment bank raised its rating on the stock to ‘neutral’ from ‘sell’, saying the market was now pricing in concerns over the UK’s labour shortages and wage pressures caused by inflation.
Brickmaker Ibstock climbed 1.7 per cent, or 3.4p, to 206.2p as strong demand from builders and the repair and maintenance market lifted performance in the third quarter. It plans to invest £50million in a new factory in Yorkshire.
Morgan Sindall, the FTSE 250 construction group, upgraded its full-year forecasts amid strong trading in the last three months.
Its secured workload at the end of September rose 11 per cent year-on-year to £8.9billion. The shares rose 1.4 per cent, or 30p, to 2260p.
Drinks bottler Coca-Cola HBC flagged up a ‘sharp acceleration’ in revenue growth in the third quarter as the reopening of restaurants, pubs and bars following lockdown boosted demand.
Sales were up 17.1 per cent year-on-year alongside volume growth of 13.1 per cent. However, the shares dropped 3.4 per cent, or 89p, to 2516p.
Meanwhile, the Irish packaging group Smurfit Kappa highlighted a 10 per cent increase in earnings to £1.1billion in the nine months to the end of September, which was boosted by higher costs being offset by increased prices for its corrugated cardboard.
It has also approved £508million worth of projects over the period to meet growing demand bolstered by the surge in online shopping and a shift towards sustainable packaging. Shares dipped 0.5 per cent, or 20p, to 3846p.
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