There are a surprising number of public, micro-cap companies in the supply chain software market. By virtue of their forced transparency, these companies are useful indicators of industry economics and valuations.
Micro-Cap Stocks are Getting Crushed
During the market’s recent downdraft, micro-cap stocks, and micro-cap growth stocks, in particular, have fared poorly. Over the past 3 months, the Russell Microcap Growth Index is down more than 15%, while the Russell 1000 Index is down about 5%.
Micro-Cap Supply Chain Software is Battered Too
Like their microcap brethren, microcap supply chain software stocks have been taking it on the chin. Here’s a chart of some of the microcap companies in the supply chain software market:
Over the past year the Nasdaq index was up 6.57%. The only microcap supply chain software company I follow that was up more than the index was Amber Road (AMBR). And if you look carefully, you will see that AMBR is up because E2open made an unsolicited offer for AMBR at a price of $10.50 per share when the stock was trading at $7 in February.
Over the past year other supply chain software micro-caps have not fared as well:
- Versapay (VPY.V) (a tiny Canadian A/R competitor to Billtrust or High Radius) is down 44%
- Determine (DTRM) (a procure-to-pay vendor) is down 71%
- Cortex (CBX.V) (e-invoicing in oil and gas) is down 8.75%
- Mediagrif (MDF.TO) (public sector procurement) is down 9.23%
- Tungsten PLC (e-invoicing) is down 53%
- Basware (procure-to-pay) is down 37% (it would be down more were it not for a rumored offer from Tradeshift)
- Park City Group (supply chain and safety) is down 27%
- Proactis (procure-to-pay company not in the graph) is down 18%
The Growing Gap Between Large and Small Supply Chain Software Vendors
The implication of this post and the last one on merger mania is that the gap between the large and small players in some segments of supply chain software is becoming enormous. In procure-to-pay software, Ariba, Coupa, Jaggaer, and possibly Tradeshift are acquirers. In what Gartner calls Multienterprise Supply Chain Business Networks, E2open, OpenText, and GTNexus seem to be pulling away from the pack as well.
Look for more opportunistic buying by the big fish if the stock prices of small fish continue to fall.