Cupid confused by recent plunge in shares, broker blames blogger

Cupid, the internet-based dating operator, released a statement on Friday saying that it doesn't know of any reason for recent fall in its share price - the stock has fallen almost 23 per cent in the past week.

Cupid, the internet-based dating operator, released a statement on Friday saying that it doesn't know of any reason for recent fall in its share price - the stock has fallen almost 23 per cent in the past week.

In a statement Cupid said: "The company is aware of a consumer radio programme investigating the online dating world. Cupid is currently co-operating fully with the programme makers to respond to their questions and to clarify that the group only acts in a legal and appropriate manner."

It also confirmed that it is trading in line with expectations and said that at the year-end had around £14m cash on its balance sheet.

The company's house broker, Peel Hunt, blamed short sellers as well as an important online blog.

Analyst Paul Morland made the following comment: "Unfortunately, the Cupid share price is susceptible to scare stories and one blog in particular has done some damage this week. We are confident that nothing has happened in the last month to undermine the buy case and investors should use this unjustified weakness to top up holdings.

"With sites such as BeNaughty.com there is always going to be ammunition for scare stories around Cupid. We have examined the one that appears to have damaged the share price this week. We can find little new, many inaccuracies and nothing that concerns us. In fact, the focus on traffic rather than registrations appears to miss the point and many of the charts in the article show traffic picking up in January, as would be expected, after a steady drift lower during 2012.

"The article concludes that Cupid is overvalued based one analyst's sales forecast for 2013 of £111m. Our own forecast is 10% below this which suggests the chances of us downgrading are remote. Furthermore, based on recent news from industry peers, we see no reason to believe that trading in January has not been in line with our expectations."

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