Cupid (CUP) - why is the price falling?

The most salutary aspect of the tradingpoint article is the web analytics - compared to its peers, CUP has much poorer quality traffic to its sites with very few users lingering for any length of time. Ominous for a web-based business.

Cupid (LON:CUP) shares plunge further today to around 138p.
The company has issued a statement today.

It seems to have just about arrested the decline in share price, but not given the market any confidence for a rebound.

They refer to a consumer radio programme conducting an investigation into the online dating world, and that Cupid are co-operating with the programme makers.

I came across this clip from Channel 4 News, which is well worth watching, as it implies that the whole sector is scammy, with websites creating fake profiles to dupe customers into renewing their subscriptions.

Not something I'd want to risk, so I'm deleting Cupid from my possible buys list.

I bought more today after reading the bear article and just before the RNS to reassure the market. I expected a bounce when January trading and 2012 profits were issued.
The radio prog is transmitted Sunday http://t.co/cvAfaSWX

I then sold out after reading some of the links and reviews found by googling Cupid's UK brands:
http://bit.ly/YJMQ8s

I suspect that getting people to subscribe and keep them there by sending fake messages is endemic in the industry.

In reply to MrContrarian, post #3

Good find on the terrible online reviews for Cupid's UK brands.
It does indeed look very much like a scammy company, hence I won't be buying the shares at any price.

Regards, Paul.

Cupid (LON:CUP) being absolutely hammered today. Tom Winnifrith this morning here - http://uk.advfn.com/newspaper/tom-winnifrith/17481/cupid-i-was-wrong-sell-go-short

I did tell 2 fund managers last summer that the earnings quality needed investigating according to the risk flag on the Beneish M Score... they smiled rather condescendingly.

Cupid is being treated with disdain by the market - I dearly hope that Stockopedia members aren't caught up in this debacle.

Hi Ed,

Well I've been outspoken with my bearish comments on Cupid in my morning reports for about six weeks now, linking to the evidence, so people had plenty of warning to get out!

Cheers, Paul.

Cupid statement out now - http://www.investegate.co.uk/cupid-plc--cup-/rns/comment-regarding-press-speculation/201303221446536938A/

The Company can confirm:

 

•              The Company does employ a motivation team of 24 people working across three shifts, covering a range of websites and companies.

•              The team does not communicate with free members.

•              The team does communicate with new paying subscribers to help them get the most out of the site.

•              The team also communicates with subscribers to monitor and interrogate the sites in order to detect and identify any technical or product issues proactively. The team also moderates chat rooms and forums.

Don't forget my follow up piece:

http://www.investorsintelligence.co.uk/forums/#/discussion/27/cupid-results-better-and-worse-than-expected
(where you will see in my comments I'd posted on the Kyiv Post article a while ago!)

What I highlighted in that article is that whilst they announced that they had 533k monthly average subscribers the likelihood is that they only had circa 406k subscribers at the end of the period, compared with 486k for the end of the previous year.

If it is true that the company has been using its Motivation Managers to entice subscriptions - something that they have not actually denied... then it is not too much of a leap to imagine that they might try to mislead shareholders?

Were that to be the case then one might question all the other red flags that this company has....

The M-Score being one!

Also the increase in payable days as reported at last accounts.
It is possible that they could have postponed many payments until January. I can not imagine that it would be hard to postpone payments such as rent which is owed to the CEO. Were that to be the case then that calls into question how much of that 14m of cash is left on the balance sheet? especially after earn-outs, dividends, buybacks, the extra £2m of marketing, all those uniform dating ads, the cost of all those motivation managers etc...!

Also I would love to get my hands on the Investor Presentation that they are not making available to the public.
Apparently it refutes all my arguments. I also gather that they have been accusing me of being in the Shorters payroll. This is absolutely not true, it is a complete fiction invented to try and discredit my research.

Aubrey
www.brocklebank.cc

In reply to Aubrey Brocklebank, post #8

Hi Aubrey,

Absolutely - you got the ball rolling on this one for sure, with your detailed research.
Then the BBC Radio investigation raised more warning flags, and the massive Director selling aroused my suspicion. Also, MrContrarian flagged up the appalling results from doing a Google search for many of Cupid's websites.
Just shows how investors working together, and sharing research on the internet, can do a very effective job in sniffing out problems with a company's business model.
Will be interesting to see what happens next.

Regards, Paul.