Digital Wine Ventures (ASX: DW8) share price fell 35% in one month

Actions in Digital Wine Ventures Ltd (ASX: DW8) fell a further 10% yesterday despite no news or announcements from the company.

It seems that some of the enthusiasm for digital wine has waned recently. Shares are down 35% in the last month and 63% since hitting highs of 21 cents a share in April.

Digital Wine shares finished trading yesterday at 7.7 cents.

DW8 share price

Source: Rask Media DW8 share price chart over 1 year

Digital wine background

Digital Wine Ventures invests in technology-driven businesses that serve the global wine and beverage industry.

Its basic investment, WineDepot is a B2B (business-to-business) wine trading and logistics platform.

Simply put, the WineDepot platform was developed to streamline efficiency and connect suppliers, buyers, and other stakeholders. It doesn’t sell its own wine, but rather facilitates transactions which translate into faster delivery and a more profitable experience for those involved.

Recent financial performance

Digital Wine updated the market last week with a trade update for the month of May.

Over the past month, WineDepot shipped a total of 25,284 cases, up 480% from the previous corresponding period (pcp) and just under 10% from April.

The company fulfilled 11,736 orders, a jump of 23.5% month on month (MoM).

Digital Wine also announced a recent partnership with Inc (NASDAQ: AMZN).

As part of this partnership, suppliers will be able to list their products online that will use Digital Wine’s integrated commerce, logistics and payment solution.

Why did the market react negatively?

The recent results seem to confirm that the company continues to make good progress. However, investors should be aware of how difficult its actions are lately.

At their peak of 21 cents, that commanded a market cap of around $ 350 million, which seems like a bit of a stretch for a company that only raised $ 630,000 in revenue in its last quarter.

Digital Wine ended the last quarter with a cash balance of just over $ 8 million, but is burning around $ 1.5 million per quarter based on operating activities alone.

I wouldn’t be surprised to see another capital raise in the not-so-distant future which would further increase the already huge number of shares which currently stands at over 1.6 billion.

Time to buy Digital Wine shares?

As someone looking to invest for a long time – say 3 to 5 years at least, I have no problem waiting on the sidelines in cases like these to better determine the long-term outlook for the business. ‘business.

At current valuation, the actions of Digital Wine are a hold for me at best.

For more sharing ideas, you might want to check out my recent article: 3 ASX Shares To Add To Your Watchlist This Week.

About Michael Brafford

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