Why are Crossrider plc, Lookers plc and Blinkx plc shaking wildly today?

Royston Wild explains why shares in Crossrider plc (LON: CROS), Lookers plc (LON: LOOK) and Blinkx plc (LON: BLNX) are volatile in Tuesday trade.

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Today I’m looking at three newsmakers in Tuesday trade.

Profit warning

Shares in Crossrider (LSE: CROS) have fallen off a cliff on Tuesday following a terrifying trading update.

The firm — which designs advertising platforms for digital devices — has slumped 27% after warning that “structural changes… have negatively impacted on the outlook for future trading.”

Crossrider noted that “mobile revenue growth rates have declined significantly,” particularly from mobile subscription campaigns due to regulatory changes in some countries. And revenues from web app advertising “is significant and notably faster than previously expected,” the tech play added.

Crossrider now expects revenues and EBITDA to collapse 25% from 2015 levels, it advised.

City expectations for a 6% earnings rise have now been put to the sword, making a P/E ratio of 10.5 times look suddenly expensive. I reckon investors should give Crossrider short shrift given the massive shifts across its key markets.

Revving higher

Car dealership Lookers (LSE: LOOK) has suffered no such worries in Tuesday trade, the business recently dealing 8% higher following perky first-quarter numbers.

Lookers enjoyed “continued improvements in all areas of the business” during January-March, it advised, with gross profits from sales of new and used cars rising 23% from the corresponding 2015 period. On a like-for-like basis, new and second-hand vehicle demand rose 5% and 7%, respectively.

On top of this, Lookers also benefitted from bubbly aftermarket activity during the quarter. Gross profits here advanced 25% between January and March, or 7% on an underlying basis.

And the impact of a stable UK economy on car demand should keep sales at Lookers ticking skywards, in my opinion. New vehicle sales enjoyed their best April since 2003 last month, according to the Society of Motor Manufacturers and Traders.

The number crunchers expect earnings at Lookers to climb 7% in 2016, resulting in a P/E rating of just 8 times. I reckon this is a steal given the company’s terrific momentum.

Video player

Shares in tech play Blinkx (LSE: BLNX) have also bounced higher in Tuesday business, the company last dealing 19% higher on the day.

Blinkx — which generates revenues by allowing digital users to find videos more easily — saw pre-tax losses surge to $94.3m in the period to March 2016 from $24.8m a year earlier.

The company saw revenues slip to $166.7m from $215m in 2015 as the impact of non-core asset-shedding weighed. And a colossal $81m worth of one-off charges also contributed heavily to Blinkx’s pre-tax loss.

Blinkx is clearly making progress in transforming itself into a programmatic platform builder, the development of its RhythmOne product helping drive revenues here 68% higher in 2016.

But the company’s restructuring programme still has plenty to deliver before bumping the firm back into the black. Indeed, the City expects the firm to clock up further losses in fiscal 2017. Regardless of today’s handsome share price bump, I believe Blinkx remains a very high-risk selection.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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