The share price of Perform Group collapsed yesterday (December 12th), after the company announced a profits warning as part of its latest financial results.
In a statement, the firm revealed that it has downgraded its profit forecast this year. It took the decision to do so after revealing a significant deterioration in its advertising and sponsorship revenues in the fourth quarter.
Perform, which provides sports videos and data to consumers and betting companies including Bet365 and William Hill, lost more than £600 million from its stock market value as shares fell by more than 50 per cent.
Simon Denyer, joint chief executive of Perform, explained that the firm has done a "hell of a lot" in terms of organic international growth and acquisitions since its initial public offering. Perform had previously been one of the best-performing stocks of the year in the UK before yesterday's crash in its share price value.
Mr Denyer said: "We now need to have a much more prudent approach about what that means for our bottom line. We're not going to slow down in our strategy. There's nothing broken about the overall strategy and the business plan."
Where did Perform go wrong?
Some of the main mistakes made by Perform were highlighted by Jefferies analyst David Reynolds, who accused the firm of trying to do too much in 2013, which has harmed its results.
Jefferies has therefore downgraded its full-year 2012 profit forecast for Perform Group by 27 per cent, from £52 million to £38 million, as well as down 32 per cent next year, a drop from £74 million to £50 million.
"In such a high growth model perhaps … the real mistake here is not being brutally prudent and conservative among a plethora of unknowns," said Mr Reynolds.
The share price of Perform is already bouncing back from the huge losses sustained by the company, with the firm's stocks up by almost 15 per cent by 09:01 GMT this morning.
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