The Motley Fool

Smashed: Why Gage Roads Brewing Co Limited and Surfstitch Group Ltd are sinking today

Shareholders of Gage Roads Brewing Co Limited (ASX: GRB) and Surfstitch Group Ltd (ASX: SRF) are feeling the pain today after both shares were slammed on the back of disappointing market updates.

Shares of Gage Roads have fallen by more than 45% after the company announced a highly dilutive capital raising that will look to raise $10.1 million at an offer price of 2.5 cents per share. The proceeds from the capital raising will be used to pay down debt and buy back Woolworths Limited’s (ASX: WOW) 23.5% stake in the company.

More than 400 million new shares could potentially be issued under the capital raising and the 2.5 cents per share offer price is a massive discount to the last closing price of 6.8 cents.

Although it is probably of little consolation to shareholders at the moment, Gage Roads did manage to deliver an improved operating results for FY16. The brewer increased revenue by 5% to $25.5 million and swung to a net profit of $0.61 million.


Shares of online clothing retailer Surfstitch have crashed more than 50% today to a new all-time low of just 10 cents per share after the company revealed a FY16 underlying net loss of $19.3 million. The result was marked by a huge decline in profit margins from 46% to 39% and clear underperformance from recent acquisitions.

Investors would have also been disappointed with SurfStitch’s outlook for FY17, with management forecasting single digit sales growth and an underlying EBITDA loss of $2m to $3m. Investors can, therefore, expect another hefty loss in FY17 along with a deterioration of the balance sheet with cash from operations forecast to decline by $6m to $7m for the year ahead.

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You’ll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an “emergency low.” Simply click here to uncover these stocks.

Motley Fool contributor Christopher Georges has no position in any stocks mentioned. 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.