Why did the Nearmap share price tumble 17% in June?

The Nearmap Ltd (ASX: NEA) share price struggled in June, closing the month down 16.9%.

Nearmap shares finished May trading at $1.24 per share and had slid to $1.03 by 30 June.

The decline was significantly more than the 9.5% losses posted by the All Ordinaries Index (ASX: XAO) in June and the 10.4% loss on the S&P/ASX All Technology Index (ASX: XTX).

Why was the aerial mapping company sold off in June?

Though the Nearmap share price fell harder than many tech shares, it’s worth noting that the NASDAQ also slipped 8.7% in June.

Nearmap certainly will have felt the same pressures that saw the broader technology sector sell off last month, namely soaring inflation figures and fast-rising interest rates. With the markets pricing in a series of sharp rate hikes ahead yet.

That’s put particular pressure on companies like Nearmap, which are priced with future growth in mind. As the present cost of money goes up, awaiting those future earnings gets pricier.

The Nearmap share price also looks to have gotten some continuing headwinds from a lawsuit in the United States. Eagle View Technologies and Pictometry International Corp allege the Aussie company has infringed on their patents. While Nearmap is defending its position, analysts have taken note.

Speaking to The Motley Fool’s Tony Yoo in June, U Ethical chief investment officer Jon Fernie cited the lawsuit along with increased competition as likely to drag on Nearmap:

We think the company’s small, but also I think it’s facing increased competition in that aerial mapping space. It continues to be a loss-making business. It’s going to require a lot of ongoing investment, and they’re also facing some legal action from a competitor.

Nearmap share price snapshot

The Nearmap share price is down 21% year to date, compared to a loss of 14% posted by the All Ordinaries.

Longer-term, Nearmap shares remain up 82% over five years and up 1,639% since the beginning of 2013.

The post Why did the Nearmap share price tumble 17% in June? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Nearmap Ltd. The Motley Fool Australia has positions in and has recommended Nearmap Ltd. 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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