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Vela Shares Barely Moved After Releasing Its Half-Year Trading Update. Is It a Buy?

Simon Mugo trader
Updated 31 Dec 2021

Key points:

  • Vela Technologies released a trading update for the first half of its fiscal year.
  • The markets barely reacted to the release as its share remained stable.
  • Many hope that its performance in the new year shall be much better.

The Vela Technologies PLC (LON: VELA) share price barely moved after releasing a trading update for the first six months of its current financial year ended 30 September 2021.

The technology investing company revealed that it had assets worth £8.06 million at the end of September with zero debt on its balance sheet.

The company reported an operating loss of £496,000 driven by asset impairments worth £377,000.

The impairment was driven by its disappointing investment in Cornerstone FS plc, trading at 61p during its AIM debut in April 2021 and trading at 27p at the end of September 2021.

Vela made a significant investment in Northcoders Group PLC of £750,000 in cash from its reserves to secure a 6.01% stake in the coding company.

The company made very few investments during the review period and ended with £2.52 million in cash and cash equivalents.

After the period ended, Vela invested £250,000 in Skillcast during its IPO funding round during its AIM debut, which raised £3.5 million.

As we end the year, investors were largely unmoved by the company’s trading update, as reflected in Vela’s share price trading sideways.

Vela intends to make more investments in 2022. Still, the companies selected as great investments must meet strict criteria as Vela looks to grow its investment portfolio and generate more significant returns in the new year.

The technology investment company’s share price is set to close down 42% compared to its price at the start of the year. Most investors hope that the company will do better next year, but only time will tell.

*This is not investment advice. Always do your due diligence before making investment decisions.

Vela share price.

IG chart of Vela share price 31-12-2021
Source: IG

Vela shares barely moved and kept trading around yesterday’s closing price at 0.04p.

Should you invest in Vela shares?

Vela shares are traded on the London stock exchange’s AIM market (the alternative investment market), the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Vela shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading