Planning software company Aconex Ltd (ASX: ACX) is one of the larger software companies on the ASX, with a $774 million market capitalisation.
It's also one of the most heavily short-sold. 12% of its total shares on issue are short-sold, which means that investors are betting heavily on the company's share price declining. The Aconex share price is down 52% for the year, and the upcoming full-year results could see either shareholders or short-sellers vindicated.
At the half-year results, Aconex reported international revenue growth of 11% overall, plus a big contribution from a recent acquisition, which gives the company a greater platform in Europe:
Ultimately an Aconex 'buy' hinges on the company's ability to continue to grow revenues, market share, and generate a 'network effect' where Aconex software becomes effectively the global industry standard. Should this happen, Aconex will likely prove a nicely profitable investment.
Short sellers are conversely betting that the company's software is not that good, and that it will fail to scale up its software over a reasonable time frame. Alternatively, they could also be betting simply that the company is overvalued given what it has achieved. Key things to watch will be revenue growth and customer acquisition, and we'll have full coverage of the results when Aconex reports in the next few weeks.
