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Vela Technologies Share Price Has Fallen 27.6% Since January. So What’s Next?

Simon Mugo trader
Updated 19 Nov 2021

Vela Technologies PLC (LON: VELA) has fallen 27.6% since the start of 2021 despite multiple positive developments. So what’s next for the investment company?

The company, which invests in firms with promising disruptive technologies and products, has seen its shares fall steadily from their recent September highs as investor sentiment shifted.

Vela shares have had a rough year as investors reacted negatively to most of the announcements made by the investing company regarding its investee firms.

The latest announcement made by Vela was regarding the acquisition of WeShop by a special purpose acquisition company (SPAC) known as Boanerges Limited in an all-share transaction.

Vela owns 71,429 of WeShop shares and is set to benefit from the recent move over the long term despite the temporary dilution of shareholders that occurred as part of the transaction.

We Shop issued 9.59 million new shares to convert debt worth £9 million and the accrued interest leading to the dilution of existing shareholders.

While investors chose to focus on the dilution, they ignored the crucial fact that We Shop eliminated £9 million in debt and is now debt-free.

Some of the company’s investments, such as its $1 million investment in Northcoders during its IPO, have paid off, given that the coding company is now up over 22%, but the markets continue ignoring such investments.

Vela Technologies recently revealed that its investee firm St George Street Capital Holdings began discussions with potential licensees of its AZD1656 drug candidate in mid-September.

There is a significant chance that St George Street Capital could license the drug and start earning some revenues before the drug is commercialised.

Vela also noted a partnership between its investee company Aeristech Limited and Sprintex, which intends to use Aeristech’s designs in manufacturing activity within the hydrogen energy sector in China, where it has built a new facility.

Therefore, it is clear that there are some positive aspects to Vela Technologies that may not reflect in its current share price, which may make it attractive to long term investors.

However, there are no guarantees that we will get higher prices in the future given the lacklustre response to previous announcements.

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

Vela Technologies share price.

IG chart of Vela Technologies share price 19-11-2021
Source: IG

Vela Technologies share price has fallen 27.61% since January. So what’s next for the company?

Should you invest in Vela Technologies shares?

Vela Technologies shares are traded on the London stock exchange's AIM market (the alternative investment market), which is 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