Cab Payments Share Price Plunged 72.7% on Q4 Profit Warning

The Cab Payments Holdings PLC (LON: CABP) share price plunged 72.7% in the past week after issuing a profit warning regarding its fourth-quarter revenues. The fintech company expects its Q4 revenues to fall 17% below previous forecasts, triggering the selloff.

CAB Payments, headquartered in Sutton, garnered significant attention when it achieved unicorn status with its debut on the London Stock Exchange in July. The company’s IPO had raised hopes of ending the prolonged initial public offering (IPO) drought at the London Stock Exchange. 

However, the fintech payments company has since witnessed its market capitalisation dwindle to approximately one-quarter of its initial value as investor expectations for its rapid global expansion were dashed.

Specialising in the processing of business-to-business cross-border payments and foreign exchange, CAB Payments disclosed that its fourth-quarter revenue was anticipated to fall 17% below the previous guidance due to deteriorating market conditions.

The company also expressed uncertainty about when and to what extent conditions in these markets might improve.

The company stated, “In recent weeks, the company has witnessed several shifts in market conditions within some of its key currency corridors, in addition to ongoing uncertainties related to the Naira, which have impacted both trading volumes and profit margins.”

“These market conditions are squeezing profit margins and decreasing trading volumes. These challenges are recent but ongoing, and they coincide with what is typically a strong fourth quarter.”

Despite these setbacks, CAB Payments indicated that its revenues were still expected to increase by at least 20% compared to the previous year. The company is actively exploring new growth opportunities, including pursuing a regulatory license to operate within the European Union.

This downturn in CAB's fortunes marks a significant departure from the optimistic tone the fintech company had struck when it published its half-year results just over a month ago. At that time, it had anticipated rapid growth in its market and had reported a 50% increase in staffing levels over the past year to meet rising demand.

Back in June, CEO Bhairav Trivedi expressed confidence in the company's high-quality offerings and robust financial profile, with the IPO seen as a testament to this confidence in CAB's capabilities.

Cab Payments (CABP) share price. 

The Cab Payments share price has fallen 72.67% in the past week after slashing forecasts.

Following the update, analysts at Canaccord downgraded Cab Payments to Speculative Buy from Buy, slashing the price target to 246p from 585p per share. The firm said the company reported a “surprise and significant negative trading update.” The analyst added that the company noted various adverse changes to market conditions in the Central African franc and West African franc corridors.

Elsewhere, Liberum also downgraded shares of CABP to Hold from Buy, with a price target of 100p per share.