A two-year profit warning by bruised asset manager GAM shocked investors, who sent the shares spiraling downward. Shareholders are asking themselves whether the company is a case of horrible ending, or endless horror.
GAM's fight for survival is well-documented, but a massive profit warning earlier on Thursday nevertheless shocked investors: the asset manager said it expects a full-year loss of 925 million ($931.3 million) for this year, and for underlying profit in 2019 to fall short of this year's, it said.
The company's stock tanked in early trading by as much as 28 percent to just over 3 francs – less than the price of a cup of coffee in Zurich, where GAM is based. The shares have already lost more than 70 percent of their value thus far this year.
GAM on Operating Table
The drop raises the question of whether GAM's management under emergency CEO David Jacob have gauged the market correctly. The goodwill impairment which is to blame for the massive loss this year, which scotches a planned dividend, is being taken in one fell swoop.
Jacob also wasn't able to give investors an idea when GAM's pain would end: a raft of cost-cutting measures including letting go at least 90 people are expected to take hold in 2020. Meanwhile, the company is keeping all its options open in terms of mergers-and-acquisitions, Jacob told journalists on Thursday.
