The AMP Ltd (ASX: AMP) share price continues swimming in a sea of red on Wednesday.
At the time of writing, shares in the financial services giant are trading at an all-time low of $1 per share. That’s a 2.44% drop from the market open.
What’s the deal with AMP’s share price lately?
The AMP share price has been on an extended run south ever since the Australian Securities and Investment Commission (ASIC) commenced criminal proceedings against the company.
Serious allegations and findings of misconduct were already brought against AMP from the Royal Commission into Banking and Financial Services. One of those findings was that AMP was charging fees on its life insurance and advisory services to accounts of deceased customers.
The investigations into such reprehensible conduct have been drawn out over a 3 year period after AMP admitted to the wrongdoings.
Keep in mind the AMP share price has come off a high of $5.43 back in March 2018, the time of the Royal Commission.
Even though ASIC dropped one of its cases against AMP in July, there is no doubt the Royal Commission’s findings still plague the AMP share price to this day.
For instance, the company reported a fairly robust first half result last month, which resulted in a slight recovery in its share price.
In its report, the company recognised a 57% increase in net profit after tax (NPAT) from the year prior and grew its assets under management (AUM) by 8%.
However, zooming out, the downward pattern has continued from this point and its earnings result had little to no impact on the longer-term trend of the AMP share price.
What else is weighing down AMP shares?
It could also be that a failed deal with Ares Management Corp earlier in the year has left a sour taste in the mouth of investors – particularly since it was the second failed deal with Ares.
Adding more pressure is AMP’s demerger plans to split and form two separate entities, AMP Limited and AMP Private markets.
The company expects the split to finalise some time in FY22 but this appears to be weighing in on the AMP share price today.
Finally, it’s important to remember the market prices shares on the basis of a blend of past earnings history and future earnings expectations.
AMP expects its FY21 earnings to be weaker than FY20 due to lower investment return and performance income – especially given the decision to withhold the interim dividend last month. At the same time, its past earnings results over the last 3 years haven’t been much to write home about either.
So taking all of this into consideration, it starts to make sense how the market is pricing AMP shares. It’s reflecting a combination of controversy, failed deal flow, lower earnings expectations and the lack of visibility in AMP’s growth vision.
AMP share price snapshot
The AMP share price has been a major disappointment on the ASX this year, posting a loss of 36% since January 1.
Over the last month alone, AMP shares have slipped a further 13% into the red. This extends the loss over the last 12 months to 33%.
These results have lagged the S&P/ASX 200 Index (ASX: XJO)’s gain of around 25% over the past year.
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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