Key points
- Softening growth during the second quarter weighing on its shares
- Megaport shares also caught up in tech selloff
- Management positive on the future
The Megaport Ltd (ASX: MP1) share price is under pressure on Wednesday morning.
At the time of writing, the leading elastic interconnection services provider’s shares are down 12% to $16.10.
Why is the Megaport share price falling?
Investors have been selling down the Megaport share price today amid broad weakness in the tech sector and the release of an underwhelming second quarter update.
According to the release, Megaport reported a quarter on quarter increase of just $0.6 million or 7% in its monthly recurring revenue (MRR) to $9.2 million. This led to an 8% increase in second quarter revenue to $26.6 million.
Driving this was a 5% increase in customer numbers to 2,455, a 5% lift in total ports to 8,523, and a modest 2% rise in average revenue per port to $1.074. This was supported by the launch of the PartnerVantage portal, which allows indirect partners to resell Megaport services.
While no details were provided on Megaport’s earnings during the period, it did reveal that its cash balance stood at $105 million at 31 December. This is down from $114 million since the end of September.
Judging by the Megaport share price performance today, its growth during the quarter doesn’t appear to have been enough for the market. Particularly given the sky high multiples its shares trade on.
Management commentary
Megaport’s Chief Executive Officer, Vincent English, commented, “In the second quarter, we continued to stay very focused on executing to achieve our targets and aligning the business for greater channel growth. In addition to delivering the strongest second quarter for new customers and Ports, the team also delivered key new partnerships in the indirect channel and technology alliance space. Additionally, we launched VantageHub, a one-stop platform for indirect channel partners to manage their Megaport business.”
Mr English remains positive on the future. He said: “We are well positioned to capture indirect channel opportunities coming into the second half of the financial year and beyond. Integration of InnovoEdge following the acquisition last August is well underway and we expect to showcase the capability for additional orchestration and automation for greater end-to-end control of network and IT resources in the next quarter.”
The post Why the Megaport (ASX:MP1) share price is crashing 12% today appeared first on The Motley Fool Australia.
Should you invest $1,000 in Megaport right now?
Before you consider Megaport, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Megaport wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- 2 beaten down ASX tech shares tipped as buys
- ASX 200 (ASX:XJO): Woolworths withdraws API proposal, tech shares rebound
- Why has the Megaport (ASX:MP1) share price tumbled 14% in a month?
- 2 exciting ASX 200 tech shares to buy
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. owns and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3qOdPW9
Leave a Reply