As is clear from some of the recent posts here, many VMT...

As is clear from some of the recent posts here, many VMT shareholders are overstretched, and I would assume that some will find it difficult to participate in this share purchase plan.

However, I think there is a strong argument that shareholders in the company should at least try to take part in the latest offer, even if they can only manage to contribute the minimum.

The share price of Vmoto has been on a downward trajectory for almost three years. I'm stating the obvious here, but the basic reason the share price of this company has been headed south is because the number of VMT sellers over this period has outnumbered the number of prospective buyers.

The paucity of buyers since 2016 may have been because potential buyers of VMT shares were anticipating difficulty ahead for the company, and therefore opted to steer well clear of the company. A second possibility, however, is that many potential buyers might have been distracted by something else.

I follow certain niche agriculture stocks, and noticed something like this a few years ago. Back in 2015, two new horticultural stocks, Dongfang and Costa Group, listed on the ASX. I got the impression that the debut of these two new stocks dragged down the share price performance of all of the other horticultural stocks for some time.

I have been wondering if something similar has been weighing on the Vmoto share price. In this case, the culprit might be a company called Motorcycle Holdings (MTO), which listed on the ASX on the 29th of April, 2016.

If you look at the chart below, it does appear that the Vmoto share price (in blue) has struggled since MTO listed. At the end of trading on the first day as a listed stock, the MTO share price was $2.40, and it has subsequently risen to $4.83. By comparison, on 29/4/16, the Vmoto share price closed at $0.235, and has since plunged to $0.058 (it is interesting to note that the VMT share price plunged by more than 25% just a few days after MTO listed).  




In short, it does look to me like MTO has stolen some of the limelight, and investors with an interest in the two-wheeler niche who might have once backed Vmoto have instead gone for the shiny, newer model, namely Motorcycle Holdings.

I wouldn't go so far as to suggest that the arrival of MTO is entirely responsible for the disappointing share price performance of Vmoto over the past couple of years, and I suspect the share price probably would have drifted lower anyway. However, I think it is a fair assumption that MTO has managed to hive off a large number of potential VMT share buyers, and this has probably served to exacerbate the decline in the Vmoto share price.

This is one of the reasons that I think that the VMT shares on offer at 0.055c will probably prove to be a good buy: it would appear that the Vmoto share price has been artificially depressed for a while, at least to some extent. Given this, if Philip Campbell is able to attract the attention of fund managers and other such significant investors, I suspect there is a real possibility that this distortion could be corrected in short order.