Iqbal Survé-linked Ayo Technology Solutions' share price slumped 29.45% on Tuesday morning, the first move in its price for more than a week, as the company continues to face scrutiny over alleged financial manipulation.
There had been no news flow regarding Ayo, said independent analyst at Small Talk Daily Research Anthony Clark.
The move probably reflected that Ayo Technology was not faring so well in an ongoing inquiry into the affairs of the Public Investment Corporation (PIC), he said.
Rob Pietropaolo, equity trader at Unum Capital said there’s very little participation in the stock.
“I don’t think anyone wants to touch it...at all.”
Pietropaolo said Ayo’s share price had fallen as low as R6 in the past and he does not see anything at the moment that will keep it from going back there.
It is likely that the volatility reflected the scepticism in the market towards the share, given that it is also been asked by the JSE for an external audit opinion for its 2018 interim results, Clark said.
The JSE has requested external audit opinions from both Ayo and African Equity Empowerment Investments (AEEI), due to evidence presented in the PIC inquiry. AEEI holds 49.36% of Ayo, according to its website.
Pietropaolo said the market is likely trying to price the stock relative to its underlying assets. This is despite it having R3.5bn in cash and cash equivalents on its balance sheet, according to the company’s latest financial statements.
In December 2017, the PIC controversially invested R4.3bn in Ayo for a 29% stake, allegedly at an inflated valuation. The PIC has vowed to recover its investment.
Without this cash balance, Ayo's assets amount to R1.64bn.
Ayo’s former chief information officer Siphiwe Nodwele, has testified at the inquiry that the company had exaggerated its value at the time it was seeking an investment from the PIC and had given the market misleading information on its revenue prospects.
An allegation of accounting manipulation was previously put forth by Ayo’s previous CEO, Kevin Hardy, in his testimony before the commission.
Ayo has denied the allegations, saying it would comply with the JSE's request for an audit opinion.
Ayo pared its earlier losses and 12.73% down to close at R12. AEEI had added 41.45% to R2.15, after its 40.39% slump on Friday.
gernetzkyk@businesslive.co.za and gavazam@businesslive.co.za
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