The chart below perfectly summarises the pain that Vocation Ltd (ASX: VET) shareholders are feeling right now:
Source: Google Finance
The stock – which listed on the ASX less than 12 months ago – is now trading at just 19.5 cents per unit (it traded as low as 13.5 cents on Thursday) with a market capitalisation of $44.9 million. Drawing a painful comparison, the stock boasted an impressive $650 million market cap as recently as September at a time when its shares traded as high as $3.40. That represents a 94.3% decline in just three months.
In other words, a $10,000 investment at its peak would be worth just $570 today. Vocation now expects earnings for 2014-15 to be around $27.5 million, down from the original expected amount of $64 million just six weeks ago.
Considering the circumstances and the speed of the stock's fall from grace, it's clear that this is a stock to avoid. Aside from the fact that management has lost the faith of the investing community, the company is also left with unsecured net debt of $65 million ($20 million more than its market worth), while its ability to borrow more money or raise more in equity is now zero.
