Portraying itself as Australia’s answer to PayPal, iSignthis’ share price had increased more than tenfold so far this year – from 15¢ to a high of $1.76 – and earned itself a market cap of $1.85 billion compared to just $161 million at the start of the year. Investors had been treated to a steady flow of news and have been optimistic about the company’s potential despite recording a modest amount of revenue to date.
However, the share price has tanked 42 per cent since Tuesday on the back of an Ownership Matters report which raised questions about the company’s revenue and governance. Despite this, it’s still valued at over $1 billion.
Biotech company PolyNovo has also earned itself a $1.5 billion valuation and place in the S&P/ASX200 after a share price jump of almost 300 per cent. Avita Medical (founded by well known burns surgeon Professor Fiona Wood) is also poised to become a billion dollar company as its shares have rallied from 8¢ to 51¢ – a gain of 525 per cent.
While well and truly still a small cap, $265 million company PainChek is up 624 per cent in the last six months, after a slow start to the year.
The business has developed an app that can automatically detect pain via artificial intelligence and facial recognition software, which can be used by doctors to help idenfity the pain levels of a child who hasn’t learned to speak, or an adult who can’t verbalise their pain.
Small cap tech stocks Dubber, which makes cloud-based call recording software, and NetLinkz, which has created an improved version of a VPN known as a Virtual Invisible Network, have enjoyed share price gains this year of 300 per cent and 500 per cent price rises respectively.
But with price rises like these, there’s always the risk of being caught out between hype and reality. There have been plenty of companies in the past that could have made this list but have fizzed. Take Afterpay competitor, Splitit, which earlier this year hit a high of $2 just six weeks after listing, before falling back down to trade at 56¢.
If the fundamentals don’t stack up, the fall will be sure and fast.