Month: May 2022

The S&P/ASX 200 Index (ASX: XJO) is having yet another topsy-turvy kind of trading day this Thursday.

The ASX 200 initially opened in the green this morning, but descended into negative territory just before midday. The index is now nursing a 0.54% loss at around 7,115 points at the time of writing.

But rather than trying to figure all of that out, let’s instead take a look at the ASX 200 shares that are topping the market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Thursday

Tabcorp Holdings Ltd (ASX: TAH)

Tabcorp once again makes an appearance on this list today. So far this Thursday, a sizeable 19.44 million Tabcorp shares have found a new home. This ASX 200 gaming company has been in the news all week after its blockbuster spinoff of The Lottery Corporation (ASX: TLC) went into effect on Tuesday.

But the company has been struggling since then and has copped another loss of 3.24% so far today to below $1 a share. It’s this fall, as well as ongoing gyrations following the demerger, which is probably responsible for Tabcorp’s presence here.

Whitehaven Coal Ltd (ASX: WHC)

ASX 200 coal miner Whitehaven is our next cab off the rank today. So far, we’ve seen a hefty 19.53 million Whitehaven shares bought and sold on the ASX share market. There’s been no news out of Whitehaven today.

However, this company has been on the receiving end of a nasty share price sell-off. Whitehaven shares are presently down by 4.9% at $5.03 each. This comes after some big falls on commodity markets over the past day or two.

Pilbara Minerals Ltd (ASX: PLS)

Our third, final and most traded share of the day goes to ASX 200 lithium stock Pilbara Minerals. We’ve so far seen a whopping 21.3 million Pilbara shares change hands as it currently stands. Again, there has been no news out of Pilbara today to speak of.

But we have had a solid share price performance from this lithium producer this Thursday. Pilbara shares are currently up 1.08% at $2.80 each today. But saying that, the company has done a fair bit of bouncing around, and even went into negative territory at one point. It’s likely that this volatility has sparked the elevated trading volumes we are seeing with this ASX 200 share.

The post Here are the 3 most traded ASX 200 shares on Thursday appeared first on The Motley Fool Australia.

More reading

• How do ASX shares typically perform following a demerger?
• Why Catapult, Costa, Endeavour, and Whitehaven Coal shares are dropping
• Why are ASX coal shares sliding today?
• Are newly-listed Lottery Corp shares worth buying? ASX brokers weigh in
• ASX 200 midday update: Appen rockets, Westpac super update

Motley Fool contributor Sebastian Bowen has no position 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 Scott Phillips.

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I am so sick of down days on the ASX.

I’ve had enough.

So, I’m going to…

… just keep investing, anyway, because these things happen sometimes (unfortunately) but the overall direction of the market is still likely to be up — strongly — over the long term

That’s pretty much it.

That’s the formula.

It’s not secret.

It’s not magic.

But I will add something I’ve said before, to add some emphasis:

“The ASX has never yet failed to regain, then surpass, its previous highs.”

That’s not a guarantee, but unless we’ve seen the all-time peak for the ASX, I think it’s something that’s likely to happen again and again.

And if that’s true, here’s what the numbers say:

The All Ordinaries Index (ASX: XAO) closed at 7926.8 points on 4 January, this year.

As I type this, it’s at 7362.9 points.

If I’m right, and it goes back above its previous high – as it’s done every time – it’ll add 8% to get back there.

Then, in all likelihood, more from there.

Sure, it might fall first.

Maybe even by a lot. Or not.

We don’t know and can’t know.

But that’s just noise.

There’s 8% on offer, just to do something it’s always done.

And if it does fall further in the meantime?

Well, the gain, as we return to past highs – assuming that happens – will be even greater.

And if it doesn’t?

Well, we get to lock in that gain.

But what about individual companies?

It’s true that some have fallen by more.

A lot more.

Honestly, it depends.

If you own something that was stupidly overpriced in the past, your odds of making back that loss might be long.

Markets regularly get too excited (as well as too pessimistic) about some companies – particularly the ‘hot stocks’ that everyone is talking about.

Lithium? Maybe.

BNPL? Probably.

But others? Some will bounce out of their share price funk, once investors realise they have strong business models and bright futures.

No, I can’t tell you with certainty which is which.

Nor can I tell you how long it might take.

So you need to be diversified, and know what you’re buying and the risks you’re taking.

More often than not, the moonshots with huge upside potential also have a decent chance of exploding on the launchpad.

Those companies whose growth stories depended on them raising ever more capital from shareholders might be in for a rude shock as interest rates go up and risk appetites wane.

But some will do very, very well.

Now, some of those moonshots won’t explode on launch. And some profitable businesses with good cash flows might flounder.

The trick is to know what you’re buying, what you’re expecting, and your risk appetite.

Frankly, some companies whose shares have plunged 40%, 60% or 80% will be screaming bargains right now, with the benefit of hindsight.

Some will flame out.

If you’re a risk-seeking investor, that’s where I’d be shopping, as long as you have a seriously cast-iron stomach for volatility and you don’t mind a low success rate.

If not, I’d be looking at companies whose business models and cash generation are every bit as good, today, as they were six months ago, even though their share prices may have cratered.

This is not an ad, but for what it’s worth, we’re recommending one such company to members of Motley Fool Share Advisor this afternoon.

For all I know, the shares could fall tomorrow.

Maybe next week.

Maybe next month.

Or for the next few months.

Or not.

But if the cash generation capabilities of this company (and its ilk) are good enough, we’re happy to buy and wait for the market to come to its senses.

You don’t see too many entrepreneurs who sell out of their businesses just because of six or twelve month periods where buyers dry up.

You don’t buy and sell your home, multiple times a year, because the local real estate agent tells you there is fluctuating interest from buyers.

And yet, many of us are only too quick to let the market tell us what to think about the businesses we’re part-owners of.

Woolworths Group Ltd (ASX: WOW) shares were almost $32 a pop in 2014.

They fell to around $17.50 in 2016.

They were back to $41 by late last year.

And that doesn’t include dividends.

At $17.50, investors were probably pretty worried.

Some were, by definition, because they sold shares at that price.

Some held.

Others bought, or bought more.

Woolies paid 94c in dividends in the last 12 months.

That’s a 5.4% yield, plus franking credits, on the 2016 price.

Plus a rough doubling of the share price, between then and now.

It was easy to buy Woolies shares when the price was going up.

It was hard to buy Woolies shares when the price was falling.

It was hard to buy when the company’s Masters chain was bleeding cash and the company was shuttering supermarket stores.

And yet, we know how that ended.

I can almost guarantee – the Good Lord willing and the creeks don’t rise – that I will be writing about some of the 2022 laggards in five or six years’ time.

And in 2028, it’ll be obvious that we should have been buying shares in those companies, rather than fretting over the falls.

So, while others fret, I’m going shopping for shares.

Not because it’s comfortable. Not because this is (necessarily) the bottom.

But, as Warren Buffett has told us, again and again, we should be greedy when others are fearful.

Fool on!

The post Sick of the ASX falls? Me too! appeared first on The Motley Fool Australia.

More reading

• The BrainChip share price just plunged 8%, what happened?
• Why did the Hawsons Iron share price stage such a stunning comeback today?
• Why did the BrainChip share price just crash 17%?
• 3 quality ASX All Ordinaries shares tumbling 10% or more today
• Are you investing with the odds in your favour?

Motley Fool contributor Scott Phillips has no position 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 Scott Phillips.

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It certainly has been an eventful day for the Appen Ltd (ASX: APX) share price.

The artificial intelligence services company’s shares rocketed higher this morning after it received a takeover approach.

Less than a trading session later, the Appen share price has been slammed into a trading halt pending the release of another announcement.

What’s going on with the Appen share price?

This morning Appen received an unsolicited, conditional, and non-binding indicative proposal from Canada’s Telus International to acquire it for $9.50 per share. This represented a 48% premium to the Appen share price at yesterday’s close and valued the company at approximately $1.2 billion.

And while the Appen board revealed that it would engage with Telus and grant it due diligence, it suggested that the offer would not be enough to get a deal over the line. It said:

The Board is in discussions with Telus to seek an improvement in the terms of the Indicative Proposal. To facilitate this, the Board has offered to provide, on a non-exclusive basis, limited business and financial information, subject to Telus agreeing to enter into a mutually acceptable confidentiality and standstill agreement, which it has yet to execute. At this point in time, no material non-public information has been provided to Telus.

What’s the latest?

While details are light at this stage, Appen’s trading halt request states:

The trading halt is requested in light of developments with respect to the non-binding indicative proposal announced in relation to Appen earlier today.

Appen requests that the trading halt remain in place until the earlier of: (1) Appen making an announcement regarding the developments with respect to the proposal; and (2) Monday, 30 May 2022.

Although there has been speculation that a private equity firm is also circling, this request appears to suggest that the announcement will be in relation to the offer that has already been tabled.

If that is the case, there are a couple of potential scenarios. One is that Telus has had a quick look at the books and has seen enough to up its offer.

The other is that it was so horrified with what it saw that it withdrew its offer and caught the first flight back to Canada.

Unfortunately, investors will need to be patient and wait until tomorrow or Monday before getting an answer.

The post Action aplenty: Here’s why the Appen share price has now been halted appeared first on The Motley Fool Australia.

More reading

• Will the $2 billion Telus International up its bid for ASX-listed Appen?
• Why ALS, Appen, Objective Corp, and WiseTech shares are pushing higher
• ASX 200 midday update: Appen rockets, Westpac super update
• Appen share price rockets 35% on Telus takeover approach
• Appen share price on watch amid $1.2 billion takeover bid

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. 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 Scott Phillips.

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The Endeavour Group Ltd (ASX: EDV) share price is trading down on Thursday and currently rests 5.35% in the red at $7.25.

The alcohol and pubs company’s shares have swung between $7.25 and $7.60 today, having already come down from a high of $7.91 on 17 May.

In wider market moves, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) has also slipped around 2.25 today, while the S&P/ASX 200 Index (ASX: XJO) is down 0.5%.

What’s up with Endeavour?

The Endeavour share price is falling on the back of the company’s investor day presentation.

The company reiterated that it sees $120 million to $230 million in growth opportunities in FY23 alongside a targeted capital expenditure (CAPEX) plan of $200 million to $260 million for the year.

It’s also targeting 20 to 30 additional retail stores, while aiming to allocate some of its CAPEX spend to the acquisition of “hotels, production assets and productivity”.

In addition, the company is also looking at a dividend payout ratio of 70–75% from free cash flow “based on current expectations”.

Investors don’t appear to have welcomed the news with open arms, and instead appear to be taking a ‘glass half empty’ approach in today’s session.

The selling pressure has occurred on a volume more than 67% of the stock’s four-week trading average at more than 2.2 million shares.

As such, Endeavour now trades back in line with its February 2022 levels.

Endeavour share price snapshot

Since listing on the ASX in June 2021, the Endeavour share price has climbed around 19% into the green. It has also gained 8% this year to date.

However, it is down around 6% over the past month.

The post Why is the Endeavour share price sliding 5% on Thursday? appeared first on The Motley Fool Australia.

More reading

• How do ASX shares typically perform following a demerger?
• Why Catapult, Costa, Endeavour, and Whitehaven Coal shares are dropping
• 2 ASX All Ordinaries shares top brokers rate as buys
• 2 ASX shares to buy as Aussies tighten their belts
• 2 retail ASX shares Morgans rates as a buy now

Motley Fool contributor Zach Bristow has no position 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 Scott Phillips.

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Mergers and demergers have been all the rage on the ASX over the past few years. It seems we can only go for a month or two these days without finding out about a new plan to split or merge an ASX share or two.

Just this week, we had the splitting of Tabcorp Holdings Ltd (ASX: TAH), which spun out The Lottery Corporation (ASX: TLC) on Tuesday. This follows several high-profile demergers before it.

Endeavour Group Ltd (ASX: EDV) flew the Woolworths Group Ltd (ASX: WOW) nest last year. Iluka Resources Limited (ASX: ILU) split with Deterra Royalties Ltd (ASX: DRR) back in 2020.

There’s also a debate raging within AGL Energy Limited (ASX: AGL) as to whether going down the demerger route is the best way forward for the company. A vote will take place on 15 June.

But demergers, despite the hype, don’t always work out for ASX investors.

Since its demerger in 2020, Deterra Royalties shares have gone backwards. Lottery Corp shares haven’t exactly had a kind first few days of trading either.

Is a demerger ever a bad thing for ASX shares?

According to a report in the Australian Financial Review (AFR) this week, this is no accident. Macquarie analysts have run the ruler over the ASX’s history of demergers and found that “demerged businesses usually underperform by up to 10 per cent in the first six months”.

Not only that, but the analysts also found “the trend has only become stronger in the past five years, with spun-out businesses taking at least 12 months to trade well with spells of underperformance longer and stronger”.

But that’s only for the spun-off company. In the parent company’s case, Macquarie revealed the picture can get even bleaker still:

For the parent, the wait to returns has been even longer. Macquarie found it’s not until 18 months after the demerger goes live that the head stock starts to outperform. The parents have done slightly better in recent years because of stronger run-ups in the share prices between the announcement and the implementation, but it’s still taking them up to 12 months to outperform.

Of course, there are exceptions. Endeavour had a relatively successful split from Woolworths. And until this year, the Coles Group Ltd (ASX: COL) split from Wesfarmers Ltd (ASX: WES) back in 2018 looked like pure genius.

But still, numbers don’t lie. Macquarie’s analysis indicates that investors in a demerged or demerger company face an uphill battle for returns.

No doubt Tabcorp and Lottery Corp shareholders will be hoping their companies turn out to be trend-buckers. But we’ll have to wait and see.

The post How do ASX shares typically perform following a demerger? appeared first on The Motley Fool Australia.

More reading

• Why is the Endeavour share price sliding 5% on Thursday?
• Why is the Zip share price beating the ASX 200 today?
• Why Catapult, Costa, Endeavour, and Whitehaven Coal shares are dropping
• Are newly-listed Lottery Corp shares worth buying? ASX brokers weigh in
• ASX 200 midday update: Appen rockets, Westpac super update

Motley Fool contributor Sebastian Bowen has no position 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 positions in and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Resources Index (ASX: XJR) is underperforming on Thursday, but these ASX mining shares are bucking the trend to record whopping gains.

They’ve all surged more than 20% today – some for no apparent reason.

Let’s take a closer look at what’s going on with these three ASX mining shares.

3 ASX mining shares rocketing higher

Galileo Mining Ltd (ASX: GAL)

The Galileo Mining share price is surging upwards once more on Thursday, gaining 49.2% to trade at $1.41.

Its gains come on the back of assay results released by the company this morning. The results from six drill holes have confirmed palladium, platinum, gold, copper, and nickel at the company’s Norseman Project’s Callisto discovery.

Galilea Mining is now planning to kick off another 20-hole drilling program at the discovery next week.

Its shares are now up 509% this year to date.

Resource Mining Corporation Limited (ASX: RMI)

The Resource Mining share price is also launching higher today. It’s surged 33% to trade at 14 cents right now. That’s a new multi-year high for the ASX mining share.

There’s been no news from the Tanzania-focused nickel explorer since 17 May. However, it did release a non-price sensitive investor presentation on Thursday.

The company is continuing to work towards its acquisition of five nickel projects in Tanzania, as announced earlier this month.

Resource Mining shares have soared 350% since the start of the year.

Ragusa Minerals Ltd (ASX: RAS)  

The final ASX mining share to post a whopper of a gain on Thursday is Ragusa Minerals. The company’s stock is currently 22.7% higher, trading at 14 cents.

There’s been no news from the $14 million gold-turned-lithium explorer today.

However, it announced its spin towards the ‘white gold’ that is lithium earlier this week.

The company has shaken on a tenement farm-in agreement that will see it able to earn an initial 90% interest in five lithium prospective tenements in the Northern Territory. It also has the option to up its stake in the tenements to 100% in the future.

Since the start of 2022, the Ragusa Minerals share price has gained 69%.

The post 3 ASX mining shares going gangbusters on Thursday appeared first on The Motley Fool Australia.

More reading

• Galileo Mining share price surges another 25% on ‘very important’ drill results
• The Galileo Mining share price has been on a tear, but now it’s halted. What’s happening?
• 3 ASX microcap shares going gangbusters on Monday
• Tiny ASX gold share soars 23% on ‘transformational’ lithium prospects
• 3 ASX mining shares that went gangbusters on Friday

Motley Fool contributor Brooke Cooper has no position 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 Scott Phillips.

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We Aussies like to gaze upon the richest people in our country with what I suspect are mixed emotions. There might be pride and respect, but also some curiosity, perhaps even a little jealousy and (in some cases) outright resentment.

After all, we are a country known for its love of egalitarianism and occasional enforcement of the tall poppy syndrome.

But that doesn’t change the fact that there is an enormous amount of wealth concentrated among our richest people.

Every year, the Australian Financial Review (AFR) catalogues our richest residents in its Rich List. Well, its latest edition has just been revealed, and it makes for some interesting reading. So let’s check out our richest citizens, and what ASX shares they own (if any).

Australia’s richest people revealed

Here are the current richest ten Aussies and what the AFR estimates are their net worth:

1. Gina Rinehart with a net worth of $34.02 billion, up from $31.06 billion in 2021
2. Andrew Forrest with a net worth of $30.72 billion, up from $27.25 billion in 2021
3. Mike Cannon-Brookes with a net worth of $27.83 billion, up from $20.18 billion in 2021
4. Scott Farquhar with a net worth of $26.41 billion, up from $20 billion in 2021
5. Anthony Pratt and family with a net worth of $24.3 billion, up from $20.09 billion in 2021
6. Harry Triguboff with a net worth of $21.25 billion, up from $17.27 billion in 2021
7. Clive Palmer with a net worth of $19.55 billion, up from $13.01 billion in 2021
8. Melanie Perkins and Cliff Obrecht with a net worth of $13.8 billion, up from $7.98 billion in 2021
9. Ivan Glasenberg with a net worth of $12.2 billion, up from $7.39 billion in 2021
10. Frank Lowy with a net worth of $9.27 billion, up from $8.51 billion in 2021

So that’s Australia’s richest 10 people as it currently stands.

It’s the third year Gina Rinehart has topped the list in a row, so she must be feeling pleased as punch.

However, according to the report, this is only due to the recent slump in the Atlassian plc (NASDAQ: TEAM) share price. Atlassian shares have fallen more than 50% over 2022 so far. If the company had stayed at its older valuations, co-founders Cannon-Brookes and Scott Farquhar would be sitting at the top of the list today.

Why no ASX shares for the richest Aussies?

Interestingly though, Cannon-Brookes and Farquhar are among only a few rich listers to actually derive their wealth from publically-listed shares. Atlassian trades on the US markets.

Andrew ‘Twiggy’ Forrest is another one. His famous stake in Fortescue Metals Group Limited (ASX: FMG) keeps him in second place. But Gina Rinehart’s company Hancock Prospecting is private, meaning there are no ASX shares for mere mortals like you or me to trade alongside her with.

It’s a similar story with Anthony Pratt’s packaging and recycling giant Visy Industries, which is also private. And ditto with the tech company Canva, which was founded by married couple Melanie Perkins and Cliff Obrecht.

Again, Clive Palmer (of recent political fame) derives most of his wealth from the private company Mineralogy. As does Harry Triguboff from private property giant Meriton.

It seems our richest people don’t necessarily hold too much faith in owning large swathes of public ASX shares.

The post The richest Aussies revealed (and the ASX shares they own) appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 dividend shares in the second half of 2022?
• Why is the Fortescue share price tumbling 4% today?
• Are ASX 200 mining shares good options for dividends?
• Australia’s renewable energy output could triple by 2030 under Labor. Will that impact these ASX 200 shares?
• Why has the Fortescue share price gained 10% in a week?

Motley Fool contributor Sebastian Bowen has positions in Atlassian. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Atlassian. 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 Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is trading lower on Thursday afternoon.

At the time of writing, the mining giant’s shares are down almost 1.5% to $42.43.

Why is the BHP share price falling today?

The softness in the BHP share price appears to have been driven by broad weakness in the resources sector today, with almost all of BHP’s peers in the red this afternoon.

In addition, investors may be wondering how to value BHP now that its petroleum assets have been demerged into Woodside Energy Group Ltd (ASX WDS).

Well, the good news is that analysts at Morgans have been running the rule over BHP sans petroleum and they believe the BHP share price offers plenty of value at the current level.

According to the note, the broker has an add rating and $48.30 price target on the Big Australian’s shares. This implies potential upside of almost 14% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends per share of $3.95 in FY 2022. This equates to a very attractive dividend yield of 9.3%.

What did the broker say?

Morgans notes that while the demerger has concentrated BHP’s earnings, it has boosted its ESG profile.

The broker explained:

In terms of BHP’s altered earnings mix by commodity post the Petroleum divestment (where Petroleum had been 11% of EBITDA in FY22F), BHP’s new EBITDA breakdown by commodity according to our estimates is as follows: iron ore now 54% (was 49%), Copper now 25% (was 23%), Coal now 18% (was 16%) and Nickel now 2% (was 1.3%).

Other than rebasing our expectations for life without the contribution from its Petroleum business our investment view on BHP is unchanged. We continue to see the move as likely to increase the amount of global and domestic investors willing to invest in the company, something that will be further aided by the eventual divestment of its remaining thermal coal assets.

All in all, Morgans appears to believe the BHP share price is trading at an attractive level for investors and I would have to agree. Particularly given its world class operations and favourable commodity prices, which are underpinning bumper free cash flows.

The post Top broker gives its verdict on the BHP share price post-demerger appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 dividend shares in the second half of 2022?
• Are ASX 200 mining shares good options for dividends?
• Why BHP, BrainChip, Chalice Mining, and Fisher & Paykel shares are dropping
• ASX 200 midday update: BHP and Pilbara Minerals shares tumble
• What exactly is the difference between Woodside Energy (WDS) and Woodside Petroleum (WPL)?

Motley Fool contributor James Mickleboro has no position 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 Scott Phillips.

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After hitting a multi-year low of 83 cents this week, the Zip Co Ltd (ASX: ZIP) share price is recovering some lost ground.

In the first three days of this week, the buy now, pay later (BNPL) company’s shares recorded consecutive losses totalling 9%.

However, investors are bidding up Zip shares today with a 4.14% rise to 88 cents apiece.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.31% to 7,132.7 points.

Let’s take a look at what’s driving these gains.

Zip stages a mini rebound

The Zip share price is on the move following an uptick across the S&P/ASX All Technology Index (ASX: XTX).

At the time of writing, the tech sector is up 1.37% to 2,061 points.

While the strong ascent could be attributed to the big rise in the Appen Ltd (ASX: APX) share price following a takeover bid, many other ASX tech shares are also gaining today.

Sezzle Inc (ASX: SZL), which Zip is still in the process of acquiring, is currently up 8.16%, while Block Inc (ASX: SQ2), the owner of Zip’s old rival Afterpay, Xero Limited (ASX: XRO), and Altium Limited (ASX: ALU) have all edged into the green

No doubt, the rise in the Zip share price today will bring relief for shareholders who have seen the company’s shares continue to drop in value this year.

Selling pressure has mounted on the BNPL market due to a shift in the external environment. This includes rising interest rates, dried-up government stimulus packages, and a global economic slowdown.

In its half-year results in February, Zip reported growth across its global operations, however, investors have focussed on the bottom line.

As such, the company registered a loss of $153.6 million compared to the $139.8 million in H1 FY21.

Furthermore, net bad debts stood at $115.4 million, up from the $22.4 million written off in the prior comparable period.

Zip share price summary

Over the past 12 months, the Zip share price has plummeted 87%, and it is currently down 79% this year to date.

This is a massive contrast to when its shares reached an all-time high of $14.53 a little more than a year ago.

Based on today’s price, Zip presides a market capitalisation of around $580.74 million.

The post Why is the Zip share price beating the ASX 200 today? appeared first on The Motley Fool Australia.

More reading

• Are newly-listed Lottery Corp shares worth buying? ASX brokers weigh in
• ASX 200 midday update: Appen rockets, Westpac super update
• Guess which ASX 200 shares UBS just added to its ‘best ideas’ list
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Motley Fool contributor Aaron Teboneras has positions in Altium and Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Appen Ltd, Block, Inc., Xero, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Appen Ltd (ASX: APX) share price is flying higher on Thursday after receiving a takeover proposal from a company known as Telus International. While most Australians have likely never heard of this inconspicuous Canadian tech company, it has come knocking with a $1.2 billion offer.

However, the Appen board is viewing the $9.50 per share bid as rather opportunistic in the current market. A market where tech company valuations have been severely compressed, irrespective of whether the business is profitable or not.

As such, management has returned to Telus International asking to cough up a better price… and by the sounds of it, they might need to.

At the time of writing, the Appen share price is still high up in the green, trading 28% higher at

Let’s take a closer look.

Is there more financial fodder behind Telus?

For starters, is it possible for Telus International to up its offer for ASX-listed Appen? Well, we can’t speak in absolutes — but let’s dig deeper into this company shrouded in mystery.

To keep it brief, Telus International is a broader version of Appen. Rather than being focused solely on AI training data and annotation alone, the Canadian suitor encompasses digital strategy, consulting, and managed solutions.

Like Appen, Telus is profitable — albeit on thin margins — and free cash flow positive. In the last 12 months, the extensive IT company collected US$109 million in net profits after tax. Meanwhile, the balance sheet at the end of March contained US$161 million in cash and cash equivalents and US$894 million in debt.

In terms of market capitalisation, Telus International is approximately twice the size of Appen. This might all lead investors to think that the suitor has maybe bitten off more than it can chew. But, there is an important piece of information here.

Telus International is owned by A$47 billion parent company Telus Corporation, the Canadian equivalent of Telstra Corporation Ltd (ASX: TLS). Therefore, if the need is there, papa Telus might tip in the extra funds if required.

More parties coming to the table

The chances of Telus International needing to up their bid are highly likely if rumours prove to be true.

According to The Australian, there is at least one private equity firm showing an interest in ASX-listed Appen. At the same time, experts are suggesting private equity might wait on the sidelines — hoping the Telus deal falls through.

The thinking is the Appen share price could fall further given Appen advised more disappointing news today. Unfortunately, the profit downgrade adds to an ongoing trend from Appen recently.

The post Will the $2 billion Telus International up its bid for ASX-listed Appen? appeared first on The Motley Fool Australia.

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• Appen share price rockets 35% on Telus takeover approach
• Appen share price on watch amid $1.2 billion takeover bid
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Motley Fool contributor Mitchell Lawler has positions in Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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