My own strength, and perhaps also a weakness as an investor, is that I have been involved in businesses that were either started from scratch or grown from small to medium-sized at growth rates compared to which Smart Eye’s growth is light stuff. Perhaps that is why I “got so worked up” about this.
As a result of years of work, Smart Eye has great growth, a huge margin, and a very strong order backlog. Here is my interpretation in a nutshell of why the share price dropped and what the current situation is…
On December 11, 2025, the company announced it had entered the bond market and raised 300 MSEK through a bond. The company stated it would use this to pay off more expensive debt. OK. At that time, one could safely assume that there would be no share issues and investors could watch the company’s journey toward positive cash flow.
Two months later, the acquisition of Sightic Analytics for 60 MSEK, added to negative cash flow.
Now there is 134 MSEK in cash and, despite any sleight of hand, you have to subtract the acquisition from that. And at the same time, operating cash flow is barely positive. The management culture is apparently such that once money is in the account, they start throwing it at startup acquisitions, even though the cash flow doesn’t actually allow for this. Sensible debt has practically been destroyed in two months, and repayment has been built on beautiful startup dreams, on speculations that are a year or two away. I recognize the phenomenon well through my own work experience. The world is full of managers who start drooling when they are presented with a high-margin, scalable business case, and hype is generated about starting to do something that others aren’t capable of doing at all. Something that fits the existing business like a glove AS LONG AS A COUPLE OF SMALL THINGS ARE RESOLVED FIRST. Usually, these managers don’t get their way. At Smart Eye, it was different. Shorters predicted this, as did the pension fund that hit the panic button.
What, then, are those couple of small things I mentioned? There are typically three: 1) the product is unfinished, 2) the market is a question mark, and the third one, which is forgotten while drooling: the company’s liquidity is insufficient. Euphoria won, the cash lost. Now we have time-traveled back to an empty treasury regarding cash flow and the question of where the money will come from.
For my part, the milk is spilled since I didn’t realize to press the panic button when the acquisition of Sightic Analytics was announced. Only the Q4 operating cash flow revealed how badly things went wrong. Selling doesn’t help anymore; now I just have to see if the company can fix its operating cash flow to allow business to continue without a share issue, where investors with their diluting shares are taken for a ride.