The data analytics business spun out of property giant Westfield by billionaire scion Steven Lowy is facing pressure from investors after it lost a key contract and burned through $56 million in cash in just over a year.
OneMarket has been trading at a large discount to its asset base since it listed on the ASX last year at a price of $1.53. The stock closed last week at 70¢.
The company has $120 million in cash on its books, but investors are concerned it is being “burned up at a rapid rate”.
One fund manager, who declined to be named, said many former Westfield investors who took up entitlements from the float have sold, leaving the register dominated by more tech-related shareholders.
“The issue is that is it burning cash at a big rate and may have to have a capital raising at some point and that has spooked some of the market,” the fund manager said.
“It is still in its infancy and it needs to build market confidence that it can get the promised contract.”
The fund manager said OneMarket is an ‘unknown quantity and will have to prove itself before it can attract more investor interest”.
OneMarket said in a trading update last week its contractual arrangements with US deparment store giant Nordstrom would be terminated in August.
But the company said the termination of the Nordstrom contract would not materially impact its forecasts with respect to its cash reserves.
Despite losing Nordstrom, OneMarket still has contracts with UK retailer Marks & Spencer; Denmark based jeweller Pandora; JackRabbit, a sportswear business and Joseph LTD, a luxury brand and specialty apparel retailer based in London.
“As previously forecast, OneMarket has sufficient cash resources to meet anticipated cash needs without additional financing until at least late-2021,” the July 1 update says.
Mr Lowy is chairman and tech expert, Joe Polverari was appointed chief executive last December to stem cost blow outs. He replaced Don Kingsborough who resigned for health reasons.
The company is listed on the ASX, but run out of San Francisco. Since listing in May 2018, OneMarket has burned through about $56 million in cash, although the group says it has sufficient cash resources to last until late 2021.
The Sydney Morning Herald and The Age contacted the company, but it is believed Mr Lowy is travelling overseas and was unable to be reached.
OneMarket was borne out of the previous Westfield Lab Silicon Valley business and collects a vast array of data that can passed to tenants to help them better “curate” their offerings for customers.
The largest shareholders include the Lowy family, Samuel Terry Asset Management, and Sandon Capital/.
In a prescient note to clients last year, CLSA Australia head of real estate research Sholto Maconochie, said “we expect OneMarket’s share price could come under pressure, post listing on the ASX”.
He cited the firm’s estimated cash burn of US$6.9 million per month, and the fact some Australian real estate investment trust (A-REIT) managers cannot own the stock, for this view.
At the time of its float, Mr Lowy’s vision for OneMarket, was to build a digital platform that links shopping malls around the world with their retail tenants.
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