Tintra’s Been Up 500%, Down 30% – So, Where Next?

What we’d all like to know about the Tintra (LON: TNT) share price is where is it going to go next? That Tintra price is up 10% this morning but we’ve seen surges fade as well as happen here. The price jumped some 500% or so in January, then faded back by 30% and more to the current level after all.

The reason for the volatility here is that Tintra as a company is entirely reinventing itself. The business used to be in lottery administration. As Tintra has announced that is being sold off. The final terms and conditions are under negotiation. As Tintra has also announced parts of their new and announced investment is conditional upon that sell-off happening. And then there’s that whole idea of shifting the entire business through an acquisition by Tintra.

So, it’s not really possible to evaluate Tintra by the normal methods of revenues, costs, earnings and so on. Because the business is going through an entire rebuild. What emerges at the end of this process will have near nothing in common with what it was when it started – other than perhaps the company name and the share quotation. That’s what explains the volatility in that Tintra share price too, as opinions change about news as it comes out.

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Today’s news is that there is further investment into Tintra as part of this strategic turnaround. It’s not a huge investment, that should be said. Tintra is currently valued at about £25 million as a company and this new subscription brings in $250,000 in capital. However, it’s also seen as the precursor to near 10 times that amount, a further $2 million and change on the same terms.

From the company’s description, it’s not just the money that’s important either. It’s a Family Office investment which means that a sophisticated investor has bought into the basic strategic plan of the company.

For us, as traders, that long-term strategic plan isn’t quite so important as trying to work out what others think of it. We wish to trade that is, not invest for the long term. Tintra is of interest not because of what the company will do but what thoughts about what they will do has on the current share price.

It’s worth noting that the spread on Tintra is daily wide, about 5%. So, we need a 5% share price movement to be able to make a profit. Given the 500% and then 30% in reverse movements that’ is achievable – being on the right side of these price movements does cover that spread nicely.

A reasonable opinion to have would be that further information arriving will drive more large changes in the Tintra share price. That is just what happens in small stocks going through strategic transformations. The difficulty, obviously, is in working out in which direction.