Firmus Technologies’ recent failed attempt to list on the Australian sharemarket has highlighted a broader challenge facing the ASX: an influx of profitless companies. The data centre developer, which builds and operates critical infrastructure for data storage and processing, saw its initial public offering (IPO) collapse amidst fund manager concerns over its $44 billion valuation. With no current profits and little visibility beyond a forecast loss in the first half of the 2027 financial year, investors reportedly baulked at the lack of immediate profitability.
This incident, according to MST senior analyst Hasan Tevfik, underscores a worrying trend. “Despite the failure of the Firmus IPO, Aussie shareholders are still being force-fed a steady stream of profitless companies,” Tevfik noted. MST’s tracking of loss-making stocks on the S&P/ASX 300, dubbed “birds without wings,” reveals a grim picture: a model portfolio backing such companies since 2000 would now be worth merely 9¢ after annualised losses of 23 per cent. This cohort, which includes companies like NextDC, Megaport, and Droneshield, saw its portfolio collapse 35 per cent in the last six months.
The prevalence of these companies on the ASX 300 is partly attributed to less stringent index inclusion rules compared to overseas markets. Unlike US indices, which mandate an earnings hurdle, Australia lacks an equivalent “quality screen,” allowing speculative businesses to compete with established giants. Furthermore, Australia’s absence of dedicated junior exchanges means smaller, growing companies directly list on the main bourse. While MST sees the ASX better off without another profitless listing, Morningstar suggests the collapsed Firmus IPO was a missed opportunity. They argue for diversifying the “remarkably old” ASX beyond traditional sectors, advocating for cultivating future-facing industries like data centres, leveraging Australia’s unique capital and energy advantages.
