Category: Stock Market

The BHP Group Ltd (ASX: BHP) share price is down 2.99% even though the ASX mining share just announced a significant agreement to purchase renewable energy.

BHP is aiming to lower its emissions in the coming years. An important step with this plan is changing its electricity usage to renewable energy.

Olympic dam in South Australia represents “one of the world’s most significant deposits of copper, gold and uranium” according to BHP.

Renewable power purchase plan

The resources giant has signed a power purchase agreement with Neoen. This is expected to meet half of Olympic Dam’s electricity needs from FY26, based on current forecast demand.

BHP said that it would enable Olympic Dam to achieve a net zero emission position for the contracted volume of supply.

How much power are we talking? It’s expected to supply 70MW of electricity to Olympic Dam and will support Neoen to construct the 203MW Goyder South stage 1b wind farm, assuming all consents are obtained.

BHP revealed that this wind farm is to form part of the larger ‘Goyder renewables zone’ in South Australia, and will introduce new renewable generation into the South Australian electricity grid.

Neoen will also construct a large-scale battery energy storage system in Blyth, South Australia to support the purchase agreement, which will also “assist in improving the stability of the South Australian electricity grid”.

This is part of BHP’s actions to contribute to its medium-term target to reduce operational greenhouse gas emissions (scope 1 and 2 from operated assets) by at least 30% by 2030, compared to FY20. This could be important for BHP’s share price in the future, to attract green-focused investors.

Renewable electricity is also helping power other BHP facilities in Western Australia, South Australia, Queensland and Chile.

Leadership commentary

BHP Olympic Dam asset president, Jennifer Purdie said:

The world needs South Australia’s high-quality copper to build renewable technologies and infrastructure, and BHP is focused on producing that copper more sustainably.

This agreement will support BHP on its decarbonisation journey, and provide new firmed renewable energy and increased stability to the South Australian grid.

Adding to that, the BHP chief commercial officer Vandita Pant, said:

BHP is consciously working towards our target of at least a 30% reduction in our operational emissions by FY2030. Renewable energy partnerships, such as this agreement with Neoen, are important steps towards that outcome, and our longer-term 2050 net zero goal.

Why is the BHP share price down?

At the moment, most of the ASX share market is down, with the S&P/ASX 200 Index (ASX: XJO) down by 1.73%.

The Rio Tinto Limited (ASX: RIO) share price is also down by 2.47%, so it’s not as though BHP is alone in its decline.

This is happening despite the iron ore price climbing overnight, according to Commsec.

The decline in the ASX share market appears to be because the US Federal Reserve is going to get to a higher peak interest rate than previously expected, and perhaps stay there for longer.

The post BHP share price tumbles with ASX 200 despite renewables deal appeared first on The Motley Fool Australia.

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More reading

• What’s the forecast for the iron ore price right now?
• Why is the BHP share price racing ahead of the ASX 200 today?
• Which ASX 200 mining shares managed to dig up gains in October?
• 5 things to watch on the ASX 200 on Wednesday
• ‘It’s a buy’: Why are BHP shares in the good books of this expert?

Motley Fool contributor Tristan Harrison 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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The Lake Resources NL (ASX: LKE) share price gained a whopping 17.8% in October.

Shares in the ASX lithium stock closed September trading for 90 cents and finished October swapping hands for $1.06 apiece.

That was a considerable outperformance over the S&P/ASX 200 Index (ASX: XJO), which gained a healthy 6% over the month just past. And it was a remarkable turnaround from September, when Lake Resources shares dropped 23%.

Here’s what happened over the month.

What were ASX 200 investors considering in October?

The Lake Resources share price got a big boost on 4 October following the company’s annual general meeting and another lift two days later on 6 October.

That’s when the miner announced a strategic investment and offtake agreement with WMC Energy at its Kachi Project, in Argentina.

The agreement stipulated that WMC Energy take a 10% strategic investment in Lake Resources for $1.20 per share. It provides WMC Energy with 50% of the Kachi Project’s lithium product, up to 25,000 metric tons per annum (mtpa) of battery-grade lithium (LCE).

On 12 October, the Lake Resources share price got another leg up after the miner reported on a separate offtake from Kachi.

The miner announced it had signed a conditional framework agreement (CFA) with lithium SK On for the offtake of up to 25,000 tonnes per annum (tpa) of lithium from Kachi. As with WMC Energy, that’s 50% of the planned production from the project.

It was also reported that SK On would acquire a 10% stake in Lake Resources via the issue of new ordinary shares.

And the Lake Resources share price ended the month on a strong note, gaining 8.1% on 31 October following the release of the company’s quarterly report.

Among the numbers that look to have pleased investors, the explorer reported holding cash and cash equivalents of $159 million as at 30 September. It estimated that was sufficient for more than 14 quarters of funding.

How has the Lake Resources share price performed longer term?

The Lake Resources share price is up a whopping 489% over the past five years. That compares to a gain of 15% posted by the ASX 200 over the same period.

The post The Lake Resources share price leapt 18% in October. Here’s what drove the ASX 200 lithium share higher appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Atlantic Lithium, Coronado Global, Lake Resources, and Rio Tinto are charging higher
• Here are the 3 most traded ASX 200 shares on Wednesday
• Lake Resources share price leaps 10% on ‘excellent early results’
• Here are the top 10 ASX 200 shares today

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 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of US markets and dropped deep into the red. At the time of writing, the benchmark index is down 1.8% to 6,863.2 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Bravura Solutions Ltd (ASX: BVS)

The Bravura share price has crashed 54% to 60.2 cents. Investors have been selling this financial technology company’s shares after it announced the results of a strategic review. Management commented: “The review has indicated that whilst Bravura has solid foundations, the business will be required to be reconfigured to scale our products across customers. This will require enhancing the existing technology stack to unlock the existing microservices strategy, drive higher resale multiples on technology development and reduce single customer efforts.”

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is down 10.5% to $53.70. This pizza chain operator’s shares have come under pressure after the release of a disappointing trading update at yesterday’s annual general meeting. Management warned that its earnings would be down “materially” during the first half.

Lendlease Group (ASX: LLC)

The Lendlease share price is down 7.5% to $7.94. This has been driven by the release of the property developer’s strategy briefing this morning. That briefing also provided an update on the company’s outlook for FY 2023. Lendlease now expects to only hit the lower end of its ROIC and EBITDA margin guidance for its businesses.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price is down almost 4% to $31.99. Investors have been selling this retail giant’s shares following the release of a mixed first quarter update. Although Woolworths’ sales were largely in line with expectations, its key Food businesses underperformed due partly to weak online sales.

The post Why Bravura, Domino’s, Lendlease, and Woolworths shares are sinking appeared first on The Motley Fool Australia.

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More reading

• Why is the Domino’s share price down 13% in two days?
• Why is the Woolworths share price sinking 4% today?
• Why is the Bravura share price crashing 59% today?
• Woolworths share price on watch following soft Q1 update
• 2 ASX shares to cash in on ‘a very good Christmas’: expert

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 Bravura Solutions Ltd. The Motley Fool Australia has positions in and has recommended Bravura Solutions Ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises 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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Well, it was a top week for the S&P/ASX 200 Index (ASX: XJO) until today. The ASX 200 has taken its lead from the US markets overnight and is having a dreadful day of trading this Thursday so far.

At the time of writing, the ASX 200 has plunged by a nasty 1.77%, putting the index back to around 6,860 points.

But rather than dwelling on all of that, let’s instead check out the shares currently topping the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Thursday

South32 Ltd (ASX: S32)

Our first ASX 200 share worth checking out today is mining giant South32. We’ve seen a notable 10.97 million South32 shares exchanged on the markets so far this Thursday. There’s been no news from the company itself today.

However, the South32 share price looks to have been caught up in the market’s foul mood regardless. The miner has lost a painful 3.16% today and is down to $3.68 a share at present. This has probably elicited the high volumes we are seeing.

Core Lithium Ltd (ASX: CXO)

Next up this Thursday is ASX 200 lithium share Core Lithium. So far this session, a hot 17.18 million Core Lithium shares have been traded on the share market. Core Lithium is another share that has had a very bouncy day. The company plunged as low as $1.32 a share this morning, but has recovered somewhat in the later half of the trading day.

Even so, the company remains down by 2.87% at $1.36 a share. It’s almost certainly this steep fall that has caused the trading volumes we are seeing.

Pilbara Minerals Ltd (ASX: PLS)

Finally this Thursday we have another ASX 200 lithium company in Pilbara minerals. Pilbara has seen a sizeable 17.7 million shares bought and sold on the ASX today so far. Again, it seems some volatile share price action is what is to thank for this elevated volume.

Pilbara shares also plunged in value this morning, going as low as $4.89 a share. But, just like Core, investors seem to have gotten cold feet with these losses, and Pilbara shares have bounced back to $5.05 a share at present, down 1% for the session.

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

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More reading

• Why is the BetaShares Nasdaq 100 ETF taking a thrashing today?
• 3 ASX 200 directors buying up their company shares this week
• Why is the Core Lithium share price tanking 3% today?
• Perpetual share price surges 9% on new takeover bid
• Coles shares underperformed the market last month. What’s next?

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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The S&P/ASX 200 Index (ASX: XJO) is on course to record a sizeable decline. In afternoon trade, the benchmark index is down 1.8% to 6,861.1 points.

Four ASX shares that have not let that hold them back are listed below. Here’s why they are rising:

A2 Milk Company Ltd (ASX: A2M)

The A2 Milk share price is up 4.5% to $5.50. Investors have been buying this infant formula company’s shares after it was given approval to import, sell, and distribute products in the US market. Management estimates that it will ship 1 million cans of infant formula to the country during the second half.

New Hope Corporation Limited (ASX: NHC)

The New Hope share price is up 5% to $6.06. This morning, this coal miner announced plans to undertake a $300 million on-market share buyback. The buyback is expected to commence on 17 November and run for 12 months. Management made the move on the belief that the company’s “current share price does not accurately reflect the underlying value of the Company’s assets.”

Perpetual Limited (ASX: PPT)

The Perpetual share price has jumped 7% to $28.85. This follows news that the fund manager has received but rejected a $30.00 per share takeover offer. Management believes the offer from a consortium comprising BPEA Private Equity Fund VIII and Regal Partners “materially” undervalues the company.

Talga Group Ltd (ASX: TLG)

The Talga share price is up over 5% to $1.29. This morning the battery materials company advised that the hearing for its Vittangi Graphite Project mine environmental permit has been scheduled by the Swedish Land and Environment Court. The hearing is expected to conclude the week of 20 February 2023. If approved, it would be a major step forward for the project.

The post Why A2 Milk, New Hope, Perpetual, and Talga shares are charging higher appeared first on The Motley Fool Australia.

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More reading

• It’s not all bad news for ASX All Ords shares today. Here are some big winners
• Perpetual share price surges 9% on new takeover bid
• Why is the A2 Milk share price defying the selloff and jumping 9%?
• A2 Milk share price on watch following US FDA approval
• Here are the top 10 ASX 200 shares today

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 recommended A2 Milk. 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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Writing in its latest monthly update, leading fund manager QVG Capital reports a positive return for its Long Short Fund in October, up 3.6% for the month versus a gain of 5.8% for the S&P/ASX 300 Index (ASX: XKO).

The QVG Long Short Fund is a ‘best ideas’ fund with the flexibility to take advantage of the best ASX opportunities regardless of share price direction or market capitalisation.

The fund’s solid performance in October was driven by its long positions, the top contributors being Aristocrat Leisure Limited (ASX: ALL), Hub24 Ltd (ASX: HUB) and IDP Education Ltd (ASX: IEL).

Aristocrat Leisure offers a diverse range of products and services, including electronic gaming machines, casino management systems, and free-to-play mobile games.

Although the Aristocrat Leisure share price jumped 15% higher in October, in tune with other ASX growth stocks trading on premium valuations, Aristocrat shares are still down 23% over the past 12 months. 

Writing about the company, the fund says Aristocrat is a beneficiary of the stronger US dollar. In addition, the QVG Capital Long Short Fund says, “feedback from the Global Gaming Expo of continued strong trading over recent months both for the US land-based market and Aristocrat’s market share bodes well for near-term earnings”.

The Hub24 share price climbed more than 20% in October on the back of a September quarter trading update which showed resilient inflows onto the platform amid elevated levels of stock market volatility. 

“Given the nature of financial markets, we were impressed with the strength of HUB’s flows. Commentary around revenue margins and operating cost growth were also encouraging,” the portfolio manager said in its monthly update. 

The IDP Education share price jumped almost 12% higher in October as the provider of international student placement services and high-stakes English language testing services continued to bounce back from a difficult period impacted by the pandemic.

Writing in its update, the QVG Capital Long Short Fund said it expects the headwind of falling valuations to no longer be the driving force behind the ASX stock’s performance. Going forward, the fund expects earnings growth will be the key driver of future returns, saying its English language testing and student placement divisions are recovering strongly. 

“IDP has a runway of multiple years of ~20% revenue growth as they exploit the benefits of their scale to entrench their market leadership.”

IDP Education shares trade at 75 times trailing earnings, with that multiple forecast to come down to around 50 times FY23 earnings based on S&P Capital IQ forecasts.

On the short book, QVG names EML Payments Ltd (ASX: EML), Megaport Ltd (ASX: MP1) and Appen Ltd (ASX: APX) as top contributors to returns in the month of October. 

Respectively, regulatory issues, increased cash burn and another downgrade weighed on these share prices.

The EML Payments share price was hit for six on the last day of October when the global payments company was hit with yet more regulatory concerns.

The Megaport share price took a dive after the network-as-a-service provider released a lacklustre first-quarter trading update.

The post Leading fund manager names the 3 ASX stocks that drove its returns higher in October appeared first on The Motley Fool Australia.

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More reading

• Why has the EML share price rebounded 30% in 2 days?
• Here are the top 10 ASX 200 shares today
• Here are 3 ASX All Ords shares that are off to the races today
• These were the worst-performing ASX 200 shares in October
• These were the best-performing ASX 200 shares in October

Motley Fool contributor Bruce Jackson has positions in Hub24 Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd, EML Payments, Hub24 Ltd, Idp Education Pty Ltd, and MEGAPORT FPO. The Motley Fool Australia has positions in and has recommended EML Payments and Hub24 Ltd. 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 Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Over the last 24 hours, the price of Litecoin (CRYPTO: LTC) jumped nearly 8% as of 3:40 p.m. ET after the payments company MoneyGram (NASDAQ: MGI) announced that it would enable users to trade and store several cryptocurrencies, including Litecoin, on its app.

So what

In addition to Litecoin, Moneygram will also allow users to trade and store Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). However, with Litecoin having much less of a following and a much smaller market cap, the news did not move Bitcoin and Ethereum in the same way it boosted Litecoin.

MoneyGram’s CEO Alex Holmes said in a statement: “Cryptocurrencies are additive to everything we’re doing at MoneyGram. From dollars to euros to yen and so on, MoneyGram enables instant access to over 120 currencies around the globe, and we see crypto and digital currencies as another input and output option.”

Moneygram has served more than 150 million people over the last five years, so it certainly has enough scale to spread more awareness of Litecoin and potentially grow adoption of the token.

Now what

Litecoin is actually one of the earlier cryptocurrencies, having been launched in 2011. At the time, I believe the value was that it could process more transactions than Bitcoin. There is also a finite amount of 84 million Litecoin tokens.

Unfortunately, since then a ton of new blockchain networks have popped up, all seeking to increase the number of transactions per second they can process. For this reason, and given the ensuing crypto winter, I’m really only interested in the more established tokens like Bitcoin and Ethereum right now.       

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why the price of Litecoin is rising today appeared first on The Motley Fool Australia.

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More reading

• Why A2 Milk, New Hope, Perpetual, and Talga shares are charging higher
• Leading fund manager names the 3 ASX stocks that drove its returns higher in October
• Why is the BetaShares Nasdaq 100 ETF taking a thrashing today?
• It’s not all bad news for ASX All Ords shares today. Here are some big winners
• 3 ASX 200 directors buying up their company shares this week

Bram Berkowitz has positions in Bitcoin, Ethereum, and Litecoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.   

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The BetaShares Nasdaq 100 ETF (ASX: NDQ) is down 2.71% today amid a broader sell-off across United States markets overnight.

Units in the exchange-traded fund (ETF) currently trade for $26.60 each. Earlier they fetched a high of $26.65 and a low of $26.53.

The S&P 500 Index (SP: .INX) is currently down 2.5%. Meanwhile, the Nasdaq Composite Index (NASDAQ: .IXIC) is down more at a 3.36% loss.

The shockwave of US markets falling overnight has also reached us here in Australia. All the sector indices are in the red today and the S&P/ASX 200 Index (ASX: XJO) is down too at a 1.84% loss.

There have been some major developments that could have caused the market to panic. Let’s cover the highlights.

US interest rates rise

The US Federal Reserve approved a 0.75% interest rate hike yesterday, thus bringing the benchmark lending rate to a range of 3.75% to 4%.

This rate hike increase is the most aggressive attempt by the Fed to get inflation under control since the 1980s.

While my Fool colleague Bernd notes that the massive rate hike was expected, some of the comments made by the Federal Reserve’s chair Jerome Powell in a post-announcement news conference have apparently caught investors off guard.

Some of these comments included the admission that inflation remains sticky and that interest rates may not yet have reached a level to sufficiently cool down the overheated economy.

Powell said:

We think we have a ways to go. Before we get to that level of interest rates that we think is sufficiently restrictive.

He continued:

The level of rates that we estimated in September, the incoming data suggests that’s actually going to be higher. There is no sense that inflation is coming down… We’re exactly where we were a year ago.

Another insight gleaned from Powell included that it may be “premature” for the Fed to discuss pausing interest rate hikes.

BetaShares Nasdaq 100 ETF price snapshot

The BetaShares Nasdaq 100 ETF is down 26.3% year to date. That’s underperforming the ASX 200 which has lost 7.88% over the same period.

The post Why is the BetaShares Nasdaq 100 ETF taking a thrashing today? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 directors buying up their company shares this week
• Why is the Core Lithium share price tanking 3% today?
• Perpetual share price surges 9% on new takeover bid
• Coles shares underperformed the market last month. What’s next?
• ASX 200 dives on hawkish Federal Reserve interest rate policies

Motley Fool contributor Matthew Farley 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 BETANASDAQ ETF UNITS. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. 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 All Ordinaries Index (ASX: XAO) is 1.85% in the red today, but these four All Ords shares are soaring higher.

The A2 Milk Company Ltd (ASX: A2M), Perpetual Ltd (ASX: PPT), RHYTHM Biosciences Ltd (ASX: RHY) and Weebit Nano Ltd (ASX: WBT) share prices are all charging ahead.

The market overall is struggling today amid the US Federal Reserve raising interest rates by 0.75%. So why are these companies surging ahead of the ASX All Ords Index?

A2 Milk

A2 Milk shares are surging nearly 6% today. The company will be selling its infant formula to the United States. A2 Milk has received US Food and Drug Administration (FDA) approval to supply the product to the USA. A2 Milk sees this as a “significant opportunity” to develop its infant milk formula brand in the long term. However, A2 Milk added:

However, at this early stage, it is difficult to predict the IMF sales potential in the US which is a highly competitive market to enter.

Perpetual

Perpetual shares are rising 8% today. The company has rejected an offer from Regal Partners Limited and BPEA Private Equity Fund VIII to acquire 100% of Perpetual’s shares. Perpetual said the $30 cash per share offer “materially undervalues Perpetual”. Perpetual said:

This offer is uncertain and conditional and the Perpetual Board believes that it is not in the best interests of its shareholders to engage on this offer and has therefore rejected the offer.

Rhythm Biosciences

The Rhythm Biosciences share price is soaring nearly 10% today. Rhythm has expanded its international regulatory footprint. This includes registering cancer detection technology ColoSTAT product with the New Zealand national database of medical devices. This will mean the technology can now be marketed and sold in New Zealand.

Commenting on the news, CEO and managing director Glenn Gilbert said:

Rhythm is pleased to expand its international regulatory approval footprint into New Zealand which enables the Company to commence marketing and sales activities for ColoSTAT.

Weebit Nano

This ASX All Ords share is jumping nearly 6% today despite no news from the company. Weebit is a memory and semiconductor technology company. In a presentation this week, the company advised it has made significant technical and commercial progress in the last 12 months. The company is developing ReRam NVM memory technology. The NVM market is forecast to be worth $2.9 billion by 2027, Weebit Nano highlighted.

The post It’s not all bad news for ASX All Ords shares today. Here are some big winners appeared first on The Motley Fool Australia.

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• Why is the A2 Milk share price defying the selloff and jumping 9%?
• A2 Milk share price on watch following US FDA approval
• A2 Milk share price climbs amid legal stoush
• Why is the A2 Milk share price underperforming on Tuesday?

Motley Fool contributor Monica O’Shea 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 recommended A2 Milk. 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 Zip Co Ltd (ASX: ZIP) share price is down in line with the rest of the market amid the company holding its annual general meeting (AGM) today.

The Zip share price is down 2.3% to 62.5 cents at the time of writing. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is down 1.8%.

At the AGM, Zip provided an investor presentation and CEO and managing director Larry Diamond made a speech.

Let’s see what he had to say.

EBTDA cash flow positive by first half of FY24

The key takeout from today’s AGM is that the buy now, pay later (BNPL) share expects to turn cash EBTDA (earnings before taxes, depreciation and amortisation) positive as a group in the first half of FY24.

Zip mapped out its strategy to become cash flow positive in its annual report in late September.

Following various changes in 2022, including the shutdown of its Singapore and United Kingdom businesses, Zip is now focused on two core markets — Australia and New Zealand, and the US.

The Australia and New Zealand business has been cash flow positive for four years already.

Zip now anticipates that its United States business will be cash flow positive by the end of FY23.

We’ve got the funds to reach profitability

Diamond said Zip has approximately $141 million in available cash and liquidity:

We are confident that we have the balance sheet to fund the Company through to cash EBTDA profitability.

We expect to see the US exiting FY23 cash EBTDA positive and to neutralise the cash burn from our rest of world footprint during the second half of FY23.

We are on track to deliver positive cash EBTDA as a group in the first half of financial year 2024.

$10 trillion addressable market in US

Zip sees the US business as crucial for the company’s growth. This prompted Diamond and his family to relocate to the US this year.

Diamond said the US market was on a similar trajectory to Australia’s market:

In the US, the addressable market is estimated to be over US$10 trillion and BNPL penetration is still under 2%, including just 4% of e-commerce and 1% of in-store spend. This demonstrates the sheer size, and early stage of the BNPL opportunity that we are positioned to capture.

With Worldpay predicting BNPL volumes to more than double in 2025 from 2021 levels, we believe that the US penetration is on a similar trajectory to a more mature market like where we started in Australia.

In Australia, around one-third of adults have a BNPL account and this number is growing. Zip’s brand awareness amongst 18-45 is now close to 60%.

In the last financial year, Zip’s Australian business made a record $28 million cash EBTDA, 2.5 times cash EBTDA from financial year 2021. This clearly demonstrates the operating leverage of the business model and the potential to deliver strong EBTDA growth at scale.

Zip share price snapshot

The Zip share price is down 86% in the year to date.

The shares have been rangebound in the low 60 cents since early October.

They are currently trading 43% above their 52-week low of 44 cents.

The post Zip share price slides despite CEO pinpointing profit timeline appeared first on The Motley Fool Australia.

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More reading

• What could this proposed regulation mean for Zip shares?
• Why is the Zip share price up 5% on Tuesday?
• Why has the Zip share price dumped 12% in October?
• Could this represent another nail in the Zip share price coffin?
• Zip shares have fallen 85% this year but Diamond still says ‘We can be the next CBA’

Motley Fool contributor Bronwyn Allen has positions in ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. 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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