Why the 1-Page Ltd share price has fallen 40% this month

The 1-Page Ltd (ASX:1PG) share price has fallen almost 73% since September 2015.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The local share market has found some form in March after a horror start to the year. Unfortunately, the same cannot be said for shares of the speculative 1-Page Ltd (ASX: 1PG) business, which have crashed almost 40% so far this month.

From $2.55 at the end of February, the shares have since retreated to just $1.54. They've also fallen more than 56% since the beginning of the year and are down nearly 73% since peaking in September…

What's happened?

Based in Silicon Valley, 1-Page is a business that provides cloud-based human resources from a software-as-a-service (SaaS) platform. It debuted on the ASX in late 2014 via a so-called "backdoor listing", which occurs when a company (often a struggling mining business) acquires another business (often in the technology sector), and then changes its primary business focus accordingly.

According to Yahoo, there have been more than 123 backdoor listings on the ASX since 2013 with almost half of them occurring last year.

While this trend could give Australian investors the opportunity to invest in up-and-coming technology companies, there is also a high level of risk in doing so – and 1-Page isn't immune.

I personally believe that 1-Page offers an attractive product that could play a significant role in the human resources field in the future. However, I am also aware that this is a company still in its infancy – it has very low revenues while its operating cash flows are negative as it focuses on research, development and marketing.

It recently said it would increase its cash burn from about US$1.3 million a month to US$2 million a month, which may have gotten some investors offside.

It raised about $50 million in a capital raising last year which should support its operations for a while, but based on its sheer value (even at $1.54 a share it boasts a market value of around $237 million), it's getting to the point where investors need to start seeing some more solid results from the business.

Speaking of which, another reason why 1-Page's shares might be falling so heavily could relate to the recent correction in the share prices of US technology companies, including LinkedIn, which is a business-oriented social networking service and a rival of 1-Page. Share prices have rebounded since then, but some investors still remain uneasy.

What happens now?

1-Page is a highly speculative business and carries plenty of risks. That's why I haven't increased my stake in the business, despite the heavy falls endured by its shares recently, and I will likely refrain from buying anymore unless they fall to a price that I deem too good to pass up.

Still, if everything can go according to plan, 1-Page could be a considerably larger business in the future than it is today. Investors willing to take a risk should certainly keep their eye on the business, while those investors who have a lower temperament for risk could also look at SEEK Limited (ASX: SEK) instead.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of LinkedIn. Motley Fool contributor Ryan Newman owns shares of 1-Page Ltd and LinkedIn. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »