RC Fornax shares are down heavily since listing in early 2025 after a string of unconvincing updates and a warning about revenues. RC Fornax’s IPO valuation was far too rich, and the company has failed to live up to expectations.
In April, when the company released half-year results, we warned that the company was overvalued and growth didn’t justify the share price at the time. Revenue grew just 8% in their first half despite promising ‘rapid growth’ by disrupting the defence contracting industry.
RC Fornax shares are down two-thirds since then.
With the market now valuing the firm at around £7m, is it time to buy RC Fornax shares? Possibly, but we’d argue that RC Fornax is nothing more than a short-term rebound opportunity.
Any strength in the stock will likely be sold into by investors who wish they’d sold earlier. Traditionally long-term investors are already dumping their shares.
There may be money to be made for swing traders, but the outlook for the company is badly damaged. And there is a severe lack of evidence to suggest they are turning a corner.
The group put out a trading statement in June that effectively said it had misjudged the key drivers of the sole market it operates in, and the COO responsible for sales wasn’t up to the task, and was taking a career break.
Revenue guidance issued in the statement suggested the company would generate minimal revenue in the second half of the year.
Since June’s disastrous trading statement, the company has said very little, apart from the CEO being up for an award and an MP visiting their HQ to discuss the Strategic Defence Review (SDR), following the company’s admission in June that their analysis of the impact of SDR on the defence market was badly wrong.
The biggest asset of consultancies such as RC Fornax is their people and the expertise they can deliver to their clients. On this front, RC Fornax has demonstrated that its asset base is subpar, especially from a strategic perspective.
There is a lot of hype around the defence sector currently. But there are probably better ways to play the uptick in defence spending than this over-egged consultancy.