Early in 2014 investors made a snap decision that a number of expensive-looking tech and small-cap stocks were, in fact, too expensive. The result was a 7% fall in the NASDAQ composite of tech stocks and a plunge in the share price of many Australian and U.S. small cap stocks.
Companies that were both small, and tech related, fared particularly badly and a number are yet to recover. Here are three companies that were smashed in April and June and are yet to return to their early-2014 glory days:
#1: Technology
Mobile Embrace (ASX: MBE) is a profitable mobile payments and mobile marketing company specialising in tailored advertising solutions for agencies, brands and publishers. The share price fell 20% in April and May, culminating in a close at 18 cents per share in early June. The company has since recovered to trade at around 23.5 cents but with net profit forecast to double this year and increase another 50% the year after, we should see the share price recover quickly in early 2015.
#2: Chocolate
Yowie Group Ltd (ASX: YOW) is a little different. It produces and sells the Yowie chocolates made famous by Cadbury nearly 20 years ago. A crazy series of events saw Yowie be granted an exclusive patent for the production of Yowie-type chocolates in the U.S. until 2018. Yowie has ambitions to sell 500 million Yowie chocolates per year between now and the expiration of the patent, which will allow rival Kinder into the market.
The share price at one point fell 40% between April and June and has since recovered to be 'only' 25% below its April 1 share price. Yowie remains very speculative but the recent agreement with Walmart could be the start of great things!
#3 Gambling
Finally, small casino operator Donaco International Ltd (ASX: DNA) owns the profitable Lao Cai International Hotel and casino in northern Vietnam. The group's boutique casino has been successfully expanded but investors are concerned about tensions between China and Vietnam that threaten to slash Chinese tourist spending at the resort.
Donaco shares are 30% cheaper now than they were in April but could remain at similar levels until investors regain confidence in the cross-border relationship.
