Fears of an imminent cash call sent shares in ASOS PLC plunging 19% in afternoon trade.
"Given the ongoing restructuring and cost savings initiatives, it is becoming increasingly evident that ASOS will need to seek further capital infusion to support its long-term viability, in our view," said Shore Capital in a note repeating its 'sell' advice.
Those words echoed warnings last week from Barcalys and Liberum, which raised concerns over the threadbare nature of the online clothier's balance sheet.
Earlier Monday, Credit Suisse cut its price target - to 550p a share from 680p - while US investment bank Jefferies was even harsher when wielding the axe, lopping 250p from its valuation to 500p.
Last week, ASOS posted a first-half loss but said it remained on track to deliver full-year targets.
The online fashion retailer made an adjusted loss before tax of £87.4mln in the six months to 28 February 2023, compared to a profit of £14.8mln in the same period last year.
The possibility of a rights issue, or share placing, has become more apparent following the financial print, which failed to inspire confidence in some sections of the Square Mile.
The longer analysts have been given to cogitate, the less they believe the 'it-will-be-all-right-in-the-end' narrative.
The root of the problem stems from a worse-than-expected cash flow, which has left the business scrambling to catch up in the second half, according to Liberum, the City research house.
Its analysts had initially predicted a cash inflow of between £40mln and £50mln for the year, but they have now adjusted their forecasts to a cash outflow of around the tune of £125mln.
Despite this, ASOS remained optimistic about achieving its full-year targets, which include a free cash inflow of £150mln and profitability in the second half.
However, one can understand why some commentators might view this as a challenging goal, considering the £263mln that left the business during the first half of the company's financial year.
It should also be pointed out that the company’s targets hinge on the successful execution of its strategy, which involves selling more items at higher prices while keeping costs low.
However, given the current consumer climate, this strategy is not without its risks.
A pushback from customers on higher prices will likely result in trading down to Primark or other cheaper retailers.
ASOS may also be forced into discounting items, eating away at margins that CEO José Antonio Ramos Calamonte has pinned hopes of a turnaround on.
Hopes seem to receding for a revival in the retailer's fortunes. Indeed, the shares seem to be pricing in a highly discounted cash call.
Mid-afternoon the stock was down 94p at 411p.
Asos was not available for immediate comment.