It’s the nature of the beast.
Right now, small caps as a whole are getting the short end of the stick. Year-to-date, companies with market-caps of between $100 million and $1 billion are averaging a 3.5% loss, vs. a 15% gain for the S&P 500.
To give you a real sense of the volatility we’ve seen, however, here’s a look at some of the biggest winners and losers of 2013 in the small-cap space, which include two 500%-plus performances and one company that went bust.
First, the winners:
Winner: Revolution Lighting Technologies
Revolution Lighting Technologies (RVLT) develops LED solutions, serving industrial, commercial and government markets. The underlying technology has taken years to develop, but it has gotten lots of traction lately, helped in part by the recent acquisition of Seesmart.
Although the company is still fairly small, growth has been sizzling; during the latest quarter, RVLT’s revenues shot up from $1.1 million to $6.3 million. However, the company’s losses have also accelerated, bleeding $2.9 million in Q1 2013, up from $1.7 million in the year-ago period.
The LED market appears to be reaching a tipping point in terms of bulb life, brightness and color rendering. Even better, the cost savings compared to traditional alternatives can reach as much as 80%. So even amid Revolution’s eye-popping gains, the long-term prospects still look … well, bright.
Winner: China Mobile Games & Entertainment
China Mobile Games & Entertainment (CMGE) is a top mobile game operator in China, and a key part of its strategy is volume. The company has a portfolio of 510 games, including titles such as War Valley, Xiang Mo Shen Hua, and Immortal Wind, which are available on Apple (AAPL) iOS and Google (GOOG) Android devices.
CMGE also has been aggressive with distribution. The company has struck deals with more than 400 handset manufacturers, and plans to pre-install games on 60 million smartphones in 2013. CMGE’s current distribution network reaches more than 150 million mobile users.
In the latest quarter, revenues actually fell by about a third year-over-year to $5.9 million, though that’s primarily because of a recent transition to mobile. The good news: Revenues did increase quarter-over-quarter, by 27%.
As Zynga (ZNGA) has proved, the mobile gaming business is brutal, but investors still appear willing to be that CMGE can capitalize on its opportunity.
Loser: Powerwave Technologies
On its website, Powerwave Technologies (PWAVQ) claims that it is a “global leader in end-to-end wireless coverage and capacity solutions,” and that it has “cutting edge” products for antennas, base stations and coverage systems.
Too bad that hasn’t translated into a decent business.
During the first nine months of 2012, revenues collapsed by about two-thirds to $128 million, and its loss ballooned from $35 million to $153 million.
As a result, Powerwave had no choice but to file for Chapter 11 bankruptcy in January, and it recently had to drop its case down to a Chapter 7 liquidation after an asset sale came up well short of expectations.
MeetMe (MEET) is a social network that allows you to meet new people through social games and apps.
That broadly makes it not altogether much different than Facebook (FB) — perhaps a decent reason investors haven’t been too interested in its stock.
MeetMe’s monetization has been lackluster; in the latest quarter, revenues fell from $10.4 million to $7.8 million, though mobile revenues did spike by 150% to $1.9 million. However, it did succeed in racking up losses, to the tune of $7.3 million, up from $1.9 million in the year-ago period.
That performance has helped fuel a more-than-halving of MEET shares in 2013.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.