Shares in Cupid fall ahead of documentary

SHARES in Cupid – one of Scotland’s most successful Aim flotations of recent years – fell sharply yesterday ahead of a documentary investigating the wider dating industry and after a critical post on an investment blog.

SHARES in Cupid – one of Scotland’s most successful Aim flotations of recent years – fell sharply yesterday ahead of a documentary investigating the wider dating industry and after a critical post on an investment blog.

The Edinburgh-based company, headed by serial technology entrepreneur Bill Dobbie, was moved to put out an announcement to the stock market after double digit falls in morning trading.

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Although it said it knew of “no material reason” for the sell-off, it did say it was co-operating with an unnamed radio programme, thought to be one due to be broadcast on BBC Radio 5 Live tomorrow.

“Cupid is currently co-operating fully with the programme makers to respond to their questions and to clarify that the group only acts in a legal and appropriate manner.”

It added that it was trading in line with expectations and that at the year end had approximately £14 million in cash on its balance sheet.

The reassurance failed to halt the share price slide and by the close of trading the company, which boasts 54 million members across its network of sites, had lost more than 13.5 per cent of its market value.

Cupid, behind brands including UniformDating.com, BeNaughty.com and Indian Dating.com, has also this week been the subject of a negative post by financial blogger Aubrey Brocklebank who said he believed its business model was “fundamentally flawed”.

He argued that the “fragmented nature of the Cupid network” could prevent it from achieving the scale required to be sustainable.

“Whilst it does have many paying subscribers, they are diffused across the various different brands and geographies. This means that they all risk failing to gain the critical mass,” he wrote.

He added that although the business was “priced for growth” it would not take much for the share price to “fall a long way very quickly”.

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Paul Morland, an analyst with joint house broker Peel Hunt, said yesterday: “Unfortunately, the Cupid share price is susceptible to scare stories and one blog in particular has done some damage this week. We are confident that nothing has happened in the last month to undermine the buy case and investors should use this
unjustified weakness to top up holdings.”

Analysts at joint house broker Numis said that, while negative stories about the business were circulating, “they all seem familiar and ill-founded”.

Referring to Cupid’s recent share price performance – down around a third since the beginning of the year – they admitted the “share price chart looks awful”.

Despite the falls in recent weeks, the company’s shares are still trading at more than twice the price they were when the company floated in 2010 at 60p. They rose as high as 223p last April.

Cupid was founded in 2005 by maths graduate Dobbie and Max Polyakov, a Ukrainian doctor.

Dobbie, a serial technology entrepreneur, had previously co-founded the Glasgow-based internet firm Iomart and was a director of Demon Internet.

Last year Polyakov announced he was stepping down from the firm so he could move to California and set up an online social gaming firm. Both men still own significant stakes in the company. Cupid’s full year results are due on 5 March.

Shares in the company closed down 21.25p, or 13.58 per cent, at 135.25p, valuing the company at £113.6m.

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