OPINION9 May 2019

A dangerous point in the cycle

x Sponsored content on Research Live and in Impact magazine is editorially independent.
Find out more about advertising and sponsorship.

Finance Impact Opinion Trends UK

Lorna Tilbian, Impact’s finance columnist, looks at the recent spike in profit warnings and a financial market that’s at a dangerous point in the cycle.

Bull versus bear financial market_crop

Bear markets ignore good news and bull markets ignore bad news, but what do highly volatile markets do? They punish any profit shortfall or disappointment by slashing and burning the share price. It has been a harsh pattern of market behaviour, which has been regularly repeated over the past quarter.

The latest to join the list of casualties is online estate agency Purplebricks, which warned on 21 February that its full-year revenues would be £35m lower than expected – between £130m and £140m against previous guidance of £165m and £175m. And the market’s response? It marked the shares down severely: 40p – or 24% – to 125p. In March 2018, the management had sold stock to German publishing giant Axel Springer at 360p per share – nearly three times more than the currently prevailing share price. Hell hath no fury like Mr Market when blue-sky expectations turn into a flood of red ink...

Elsewhere, McBride, the own-label cleaning products company, issued ...