Why this AIM share is up 471% in three weeks
27th December 2018 13:29
by Lee Wild from interactive investor
Investors who bought shares in AIM-listed Earthport recently are now sitting on massive profits. Lee Wild explains why they've rocketed after the Christmas holiday.
The FTSE 100 has sunk another 90 points, or 1.3% Thursday as traders continue to digest their Christmas excesses, but there are some good news stories around, particularly on the junior AIM market.
Visa, one of the world's largest payments technology companies, has launched an all-cash offer for Earthport, the AIM-listed provider of cross-border payment services to banks and other businesses.
Earthport shares have almost halved in price since the summer to a low of 5.25p at the beginning of December, but a new executive team has been put in place since, and we now know that Visa approached the firm in November. After some haggling, a price of 30p per Earthport share was agreed by both sides two weeks ago. The share price hasn't been that high since March 2017.
"The offer allows Earthport shareholders to crystallise in cash the value of their holdings at an implied multiple of 5.3 times Earthport's revenues for 2018, at a premium of 250% to Earthport's six-month volume weighted average share price to 24 December 2018," the company said Thursday.
Investors lucky enough to buy at the 4 December low and sell at the 30p offer price would have turned a profit of 471% in just three weeks. Even those who bought ahead of today’s announcement would have made over 300% profit!
Source: TradingView Past performance is not a guide to future performance
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