Online deal lifts Energy Mad shares 75 per cent
Energy Mad shares have rocketed after the Christchurch-founded company announced an agreement with the world's largest online retailer.
The energy-efficient light bulb manufacturer's shares rose 75 per cent to 60 cents after the news it had an agreement with Amazon to sell its light bulbs.
The shares have steadily fallen over more than two years since they were issued at $1 each and listed on the NZX in October 2011. They reached a low of 23 cents last week.
Sharebroker Hamilton Hindin Greene's director James Smalley said the leap in share price was a "flow-on effect" from confidence in tech-sector companies Xero, Wynyard, and SLI, and buyers were looking for the "next hot stock".
While the Amazon announcement had been a catalyst for the rise in Energy Mad's share price, it was was "no guarantee of cash in the door".
"Investors are looking past fundamentals and are just really going on announcements and potential growth," Smalley said.
This was "very risky territory" for investors, and he urged caution.
"Yes, the stocks have gone up very quickly, but if the fundamentals don't justify it, what goes up can come down just as quickly as it went up. If the fundamentals don't justify the share price, then things can get rather nasty, rather quickly. But at the moment, the momentum is certainly in the favour of the buyer."
Energy Mad managing director Chris Mardon said, "Our job is to focus on delivering as much value as possible to our shareholders by way of growth and profitability, and let the share price take care of itself."
Three of Energy Mad's spiral compact fluorescent lamps and one reflector LED (light-emitting diode) were now available online, the Christchurch-based company said in a statement released through the NZX.
The products were being sold under Energy Mad's US Ecospiral brand.
Energy Mad plans to boost the range of light bulbs it sells through Amazon. In 2012, Amazon had online sales of US$61 billion. The electronic commerce and online retail company was experiencing 22 per cent year-on-year growth. It also has a distribution relationship with US retailer Walgreens.
In its unaudited results announced in mid-December, Energy Mad delivered operating half-year revenues of $4 million, down from $4.5m for the September 2012 half-year.
A search for the Ecospiral brand on amazon.com today showed no results.
Mardon said the bulbs had been available for sale online yesterday, but the site had experienced technical difficulties, with the bulbs not appearing in Amazon search engines.
He expected the problem to be fixed quickly.