WANdisco (LON: WANdisco) shares are down an incredible 96% in London this morning. The WAND share price collapse has long been obvious, something that was definitely going to happen. The only question was when - that is, when would the shares be relisted so that it was possible for the price to fall like this? The background problem was simply that we'd all been told fables about what was happening within the company. The problem with financial fables is that at some point the cash has to turn up on the books. When it doesn't then some explanations are required. And that is, to a certain level of accuracy, simply what happened here.
As we've said before about WANdisco: “That story has been changing a bit over time too. It started with perhaps the one individual overstating sales: “ significant, sophisticated and potentially fraudulent irregularities with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee, have been discovered.” The result of that was that perhaps sales had in fact only been $9 million, not $24 million as reported. That seriously impacts the cash position and so on. Worries - and at this point it is all worries, thoughts, rumours and so on - have expanded from that into wondering whether there're more gremlins in those accounts. How much of the past is true at all in fact?” The shares had already been suspended by this point.
WANdisco share price from London Stock Exchange
Given the hole in the accounts they were also going to need to raise new capital. So, as we also said about WANdisco: “WANdisco (LON: WAND) shares are going to plummet upon relisting. The only question is how far down they're going to go. For the new management has brought in a plan which has the potential to cause a negative feedback loop. Not that they really had all that much choice in the matter but that relisting is not going to be a pretty sight when it does happen.”
And what has just happened? Well, yes, we think 96% down can be described as a “plummet”. So, nice to be right and all that.
The difficulty now is over whether there is in fact, a real business within that husk of what used to be WANdisco. Was it all just talk? Or is there something useful there. We could take comfort from the fact that new capital has been raised - we should assume that these new investors did actually run the slide rules. But how much comfort to take from that, well, that's the question, isn't it?
