The ASX doesn’t owe you anything

Back in 2019 an Israeli company called Shekel Brainweigh raised $10m at $0.35 and listed on the ASX, valuing the company at $48m market cap.

The ASX has, over time, targeted a number of overseas markets, including Israeli tech companies. “Don’t wait until you are a $1bn company to go to the Nasdaq, where you will still be small - come to Australia, where there is a vibrant community of retail and HNW investors to back you, invest, and grow along with you!”

Or so goes the sales pitch.

Quite a few companies took them up on this, and the ASX has continued to bat above its average and list good overseas companies on the local bourse.

On IPO, Shekel was a tech company doing $18m USD a year of revenue, having made $1.9m profit after tax in the 12 months to Dec 17. This was a real business with growing revenues, with a 40% gross margin and a 10% net profit margin.

Things were looking good - but it didn’t perform, And has since culminated in the stock seeking approval to delist from the ASX. Here is their life as a listed company displayed as a chart:

Over this period of time, the fundamentals of the business have changed. The revenue has continued to increase, from $18m USD pre listing to $27m USD for the 12 months to Dec 2023, which is great, but the losses have also increased. Retained earnings have decreased from $4m to retained losses of $20m total.

In addition, instead of raising equity, the company has raised a lot of debt from the US market in a series of deals. Debt obviously ranks above equity, so this has had a further impact on the share price.

Overall it hasn’t been the best of rides, with the stock down 94% from IPO and the company now delisting due to a lack of liquidity and lack of interest.

Now this isn’t the first time I have looked at SBW. In October 2021, I was a panel member on an ASX event targeting currently-listed Israeli companies. It was myself and two research providers meant to be talking about getting exposure - the sector needed some help and the ASX had put the event together to support the companies.

It was a really interesting event for me. This was before our pivot into InvestorHub, we were still doing the broker thing, and I wasn’t talking to listed execs like I do now. I was less curious.

I was meant to be pushing our product at the time, but I was shocked by the heat and disappointment in the discussion from the companies there. Almost all of them carried a grudge against the ASX. They felt like they had been sold an active market, and when they got here it was quiet, illiquid, and disengaged.

Across the panel, there was this assumption that all these companies had to do was list, put out their announcements, and the investors would line up to buy stock.

When it came to be my time to talk, I took a direct approach. I paused, sat quietly for a minute, and then said: “I just want to take a minute, I just want to make sure we are all on the same page here. The ASX doesn’t owe you anything. You have joined a market, but it is still your responsibility to promote the business and engage shareholders. No matter who you engage, which advisers you have, the buck stops with you - the company.”

In short, the market’s job is to give you access to liquidity - yet these companies seemed to think that liquidity was guaranteed.

There is an important reminder here: You have agency over your own listing.

Every listed CEO made a choice. Either you listed your business, or you joined a listed company as a CEO. In both cases it was an active choice to be listed - with all the costs, and upside that comes along with that.

So - don’t ignore the market. Don’t outsource the responsibility. Embrace it, take ownership, have agency, and drive to outcompete.