Phoenix Group is part of a growing band of tech and AI focused entities to list on ADX. The extent of the stock's drop on May 22 has taken all by surprise. Image Credit: Supplied

Dubai: The over 7 per cent decline in ADX-listed Phoenix Group’s stock price on Wednesday (May 22) seems to have caught everyone by surprise – including the company.

The stock has closed nearly another 7 per cent down today. It’s now priced at Dh1.68.

The crypto mining firm immediately issued a statement after trading hours, noting that ‘we would like to assure all our shareholders that Phoenix Group has no recent developments or material information that could have any negative impact on the share price or that has not been shared with the market’.

The stock closed Wednesday at Dh1.8 from Dh1.95. Its shareholder base shows nearly 75 per cent are foreign nationals, with UAE citizens accounting for 18.22 per cent. (The stock’s peak to date has been Dh2.56 since its ADX listing in December.

According to market analysts, there has not been a noticeable spike in social media chatter about Phoenix or its stock to warrant a sudden 7 per cent drop in the price. (Stock trades remain heavily influenced by what's being said about them in social media, and companies in the Gulf have often pointed to this as reasons for a stock suffenly shooting up or down.)

A triple-digital profit gain
In its latest financials, Phoenix Group reported profit gains of 166 per cent.

In this context, how the stock fares when ADX opens today will be of particular importance. It was early December that Phoenix listed on ADX after an IPO that drew in a solid 33 times over-subscription. It was part of a growing number of UAE based hi-tech entities that went public, along with the likes of Bayanat and Presight.

On its debut, Phoenix’ stock shot up more than 30 per cent, and through recent months, the company had delivered healthy financials. More recently, it also bought a 12.5 per cent stake in the Web3 gaming startup Rekt Studios. (The stock’s peak to date has been Dh2.56 since its ADX listing in December.)

All this and the fact that Bitcoin plus other cryptocurrencies continue to trend price-wise. (Currently, Bitcoin is at $69,428, down by around 1 per cent.)

In the statement, Phoenix added that it is monitoring the price movement and decline in share price. “We have shown solid results beating market expectations and have several positive developments in the pipeline which will be announced in due course,” the company added.

“Phoenix board members, management and founding shareholders continue to be extremely optimistic about the company’s future and firmly believe in its continued success.”

Q1-2024 numbers

For the first three months of the year, Phoenix revenues were at $68.93 million (against $81.94 million a year ago. But it's the profit after tax that will have caught investor attention - $66.15 million from $24.87 million.

Higher transparency

One positive from the Phoenix statement is the hands on approach to disclosure after the stock's sudden slide. "With increased listings we have seen an increase in company disclosures, which is always healthy for retail and institutional investors," said Sameer Lakhani, Managing Director of Global Capital Partners. "This is ideal to counter market rumors and speculative commentary.

"That said, capital market volatility will be dependent on the underlying company activity and will always reflect an agglomeration of investor sentiments. The key for the long term investor is to continually keep a close eye on valuations - absolute as well as relative - as the bedrock for decision-making."