Possible Reasons For Decline1) CTS Financial Statements dated June 30, 2022 (see SEDAR):
- Too much debt, which can be devestating to small cap tech companies in a rising interest rate environment.
- Goodwill (422M) represents 24% of total assets1751M). This is what happens when a company is a serial acquirer of other firms. Writedowns in future.....?
- Shareholder dilution (26% more shares outstanding in one year):
June 30, 2021: 171M shares outstanding
June 30, 2022: 215M shares outstanding
2) Other Canadian small cap tech stocks still down more percentage-wise than CTS from their 52W-Highs . Now it may be CTS's turn to drop some more, whether justified or not....?
3) Tax loss selling has begun.......?
Just theories I know, but I wouldn't be surprised if CTS fell further from here.
This is why I do not like "roll-up" companies that go on buying sprees of other companies. More cash is spent and/or more money is borrowed and/or more shares are issued while Goodwill grows.
We shall see.....