Shares in Internet of Things (IoT) investor Tern (LSE: TERN) plunged 15% on Wednesday after the company announced it has decided against further investment in portfolio company Konektio. The tech firm’s stock dropped 15% to 4.05p per share following the news
The announcement comes after Tern originally committed in May to invest up to £400,000 in two tranches into IoT start-up Konektio, in which it already holds a 28% stake. However, with Konektio’s recurring revenues falling short of expectations, Tern has now opted out of the second £1.3 million funding round.
Tern stated that Konektio’s inability to deliver forecast monthly recurring revenue growth was behind the move. It said it will not provide any additional capital to Konektio and will instead look to “realise value” from its remaining shareholding “in due course”.
As per the original agreement, the failure to invest will see 75% of Tern’s Konektio holding converted into deferred shares with no value. Its ultimate holding will be determined once the second funding tranche completes.
Tern specialises in investing in early-stage IoT businesses. It originally invested £100,000 into Konektio’s first £1.2 million funding round earlier this year.
But with Konektio’s performance disappointing, Tern is now cutting its losses. Wednesday’s 15% plunge means Tern’s share price has now dropped 48% year-to-date. The company stated it will provide further updates on its remaining Konektio stake “at the appropriate time”. The stock has been on a steady decline since May 2021.
