SMALL CAP MOVERS: Chipmaker Sondrel Suffers While Arm Enjoys Nasdaq Debut

Given all the talk surrounding Arm Holdings’ blockbuster debut on the Nasdaq, you might be surprised to hear that London’s junior market is home to another, albeit significantly smaller, fabled chipmaker in the US. Sondrel (Holdingen) plc.

Sondrel deals with application-specific integrated circuit (ASIC) designs, which is what nerds say for computers designed with just one task in mind.

For example, Bitcoin miners use an ASIC built to mine Bitcoin and nothing else. You get the point.

In any case, while New York’s Arm Holdings is taking off, adding 20 percent on its first day of trading, Sondrel has had a bump.

Shares fell another 15% this week as the company continued to reel from project delays and customer order cuts. So far, Sondrel is down a crushing 76 percent.

In its latest earnings call, the group admitted that full-year revenue will be ‘substantially below current market expectations’, with a corresponding impact on full-year losses.

On Wednesday, Joe Lopez agreed to step down as Chief Financial Officer effective immediately, with non-board interim CFO Nick Stone taking on the interim mantle.

Maybe a coincidence of timing?

Turning to the broader small-cap market, the AIM All-Share Index got off to a worrying start after losing almost 1 percent on Monday.

This is despite the blue-chip index starting the week on the front foot ahead of a busy week of macroeconomic news.

Fortunately, junior stocks moved in the right direction as UK unemployment met expectations, as did the European Central Bank’s 25 basis point interest rate decision.

US inflation figures were a bit on the high side, but not enough to scare the markets.

The AIM All-Share eventually erased these Monday losses to end the week flat at 746.42, although this was a clear underperformance against the FTSE 100, which rose more than 3 percent.

A large portion of the value of shares in a distributor of disposable vapes supreme were thrown in the bin after damning research into the environmental impacts of cheap, single-use vape kits. Shares fell 16.6 percent this week.

Ocean Harvest Technology Group plc, one of AIM’s few debutants in 2023, suffered a minor blow in the wake of its first interim earnings report as a listed company.

The group, which specializes in researching, developing and selling seaweed products for use in the animal feed industry, reported a slowdown in acquiring new customers in Europe due to rising prices of feed ingredients, sending shares down 18 percent.

Shareholders made their opinion clear about the medical technology company Belluscuras interim results, with shares down more than 18 percent this week.

The sales and profit figures objectively justified this response, with sales falling by a third year on year to $400,000 (£321,000) and adjusted EBITDA down 30 percent to $2.9 million.

It’s never a weekly recap without discussing the latest delisting news. This week it is brought to you by Sportech.

You may be aware of it Sportstech Through the pool betting site 123Bet, or perhaps Connecticut, US readers visited one of nine licensed gaming entertainment venues in the state.

Monday’s solid results – which showed a three-fold rise in underlying profits – were not enough to stop the group from going ahead with its plan to delist from London’s junior AIM market.

“Despite the improved operating results announced today, the significant financial costs associated with maintaining a stock exchange listing, given our current size, and the increasing volatility in market valuation are having a negative impact on net returns and future prospects,” said executive chairman Richard McGuire.

Not exactly an unusual sentiment in the capital markets of 2023.

Heavy industries proved to be AIM’s savior this week, thanks to an upturn in sentiment for China-exposed industries and rising commodity prices.

Research and development minnow Critical Mineral Resources (formerly Caerus Mineral Resources) had a banner week, rising almost 50 percent after confirming the completion of an asset sale in Cyprus.

Other leading industry movers saw it Synergy energy, Pantheon Resources And Cadence Minerals plc were all up more than 20 percent, while Atome Energy and Coro Energy rose in the high teens.

LoopUp group led the charge in the communications sector after achieving revenue and margin targets in its interim earnings results. Share prices rose about 40 percent week after week.

Finally, Keystone Law plc attracted attention on Thursday after confirming that its full-year results will be ‘comfortably above market expectations’. As a result, shares ended the week more than 10 percent higher.

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