The world of telematics is expanding at an impressive rate right now, which is why it’s bizarre that telematics firm Quindell is struggling, especially when it comes to its share price. Just yesterday, its shares fell to a 14 month low, prompting the higher ups to issue a statement to try and calm concerns that the company is in free fall after it had to back out on its deal with RAC last month.
“The Board of Quindell…notes the recent share price performance and confirms that it knows of no reason for such falls,” said a spokesperson for the telematics enabled insurer. That seems unlikely to do much to calm those worried that the share price will continue to fall.
It’s odd that the board remains so clueless on why it might be tumbling though, as the RAC deal fallout was hardly unnoticeable. Similarly, the break up came off of the back of a 75 page report that criticised Quindell from Gotham City Research. Since that report was released, Quindell has lost over a billion dollars in share value, an amount it’s unlikely to recuperate any time soon.
Rumours about the firm have also begun to circulate, some suggesting that workers at Quindell are unhappy due to low pay and hard hours, as well as some unconfirmed issues with its telematics service. These rumours were address by Cenkos analyst Andy Bryant earlier this week, where he said:
“There have been a couple of mis-rumours floating around, specifically that Quindell is coming under competitive pressure in telematics and around its decision to change the date it is paying staff… to try and suggest this is a sign of anything is wrong as they are merely standardising the date they pay employees.”
This is all a very different story than what Quindell was dealing with last year. In Spring of 2013 it reached a high of 656p per share, but that wasn’t likely to last. Just a few weeks later it was hit by the scathing report from Gothan City Research, which alleged that Quindell’s profits were largely manufactured and even went so far as to compare it to a company that collapsed in 2012 after it was revealed to be a glorified ponzi scheme.
Quindell of course denied the claims, suggesting instead that Gotham City Research was slandering its name and was attempting to short the telematics firm’s stock. It may have a point too, as whether the report was true or not, the stock did certainly tumble and has continued to do so for some time, especially as of late.
Today Quindell stock is worth just 136 pence per share, some 80 per cent less than it was just over a year ago.
Fool points out some interesting points about the company though, suggesting Gotham’s claims may not have been fictitious. Quindell has made strange acquisitions in the past, having consultants it wants to hire form companies, which it then buys out.
What do you guys think? Is Quindell a shell of a company just looking to make a quick buck for the executives, or is Gotham City Research slandering a decent telematics firm? Either way, Quindell’s shares are suffering.