This ASX share is down 76% in 2022, and a director just scooped up 500,000 of them

When ASX shares take a big fall, it’s worth keeping an eye on what management is doing.

Any big selling action among the company directors tends to indicate they have a negative view on where the share price is heading.

Conversely, when directors go on a buying spree, they likely believe the company is undervalued.

Which brings us to the ASX share that’s dropped 75.8% in 2022 and just saw a director snap up 500,000 shares.

Namely, Electro Optic Systems Holdings Ltd (ASX: EOS).

Bargain hunting executive

On 4 January, the defence and space systems company was trading for $2.34. Today the ASX share is swapping hands for 57 cents, up 1.8% in intraday trading.

Last Thursday, the Electro Optic share price was right around 60 cents.

Indeed, Garry Hounsell, the newly appointed independent chair of EOS, paid 60.4 cents per share for his 500,000 allotment on Thursday. Or about $302,000.

If Hounsell had bought the same number of shares at the beginning of 2022, it would have cost $1.17 million.

If the company can turn its fortunes around, this executive may have scooped up a bargain.

Why has this ASX share nosedived in 2022?

The Electro Optic share price has struggled in the face of operational challenges and stiff competition from global powerhouses.

The ASX share’s satellite communications segment is up against challengers including Apple’s satellite-connected handsets and Elon Musk’s Starlink. Talk about some major rivals.

In its delayed half-year results for the six months ending 30 June (not released until 8 September), the company reported a 45% decline in revenue to $53.8 million. And its net loss after tax leapt to $99 million, up from $11.7 million in the prior corresponding period.

The ASX share has lost 22% since recommencing trade on 8 September following the release of those results.

The post This ASX share is down 76% in 2022, and a director just scooped up 500,000 of them 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 Electro Optic Systems Holdings Limited. 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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