Two to sell
Brand Architekts
Investors’ Chronicle
Beauty product retailer Brand Architekts’ merger with haircare and skincare company InnovaDerma “has a lot going for it”. The group will be able to offer a range of 18 products to a larger customer base and accelerate growth. However, the £13.6m acquisition equates to six times InnovaDerma’s net asset value of £2.2m, and is a 70% premium to InnovaDerma’s closing price before it was announced. That’s lofty considering the company’s operating loss of £950,000 and 10% lower revenue for its latest half-year. Brand Architekts’ share price fell 15% after the announcement, reflecting its own first-half operating loss and deeper revenue decline due to delayed product launches. While the company is making the right strategic moves, the board has overpaid at a time when consumer spending is most likely to decline and inflationary pressures are liable to stick around. Sell. 92.5p.
The Times
The social network has seen a sustained spell of underperformance against rivals Meta Platforms and Alphabet, partly due to scepticism about its ability to “monetise its millions of users”: its advertising revenue was $4.5bn compared with over $209bn at Alphabet and $69.7bn at Meta. Investors have seized on Elon Musk’s investment in the hope that he would “drive product and service innovation”. However, while his arrival “makes for good headlines… the battle lies in keeping users interested and better translating that audience into advertising sales growth”. Avoid. $46.23.