Category: Stock Market

The Bubs Australia Ltd (ASX: BUB) share price is rocketing, up 17% in early trade to 42 cents per share.

This as the All Ordinaries Index (ASX: XAO) is down 0.2%.

Below we take a look at the company’s quarterly report for the first quarter of the 2022 financial year (Q1 FY22), which looks to be driving ASX investor interest.

Bubs share price surges on quarterly revenue leap

The Bubs share price is charging higher after the company reported a 96% year-on-year leap in gross revenue of $18.5 million for the quarter. Revenue was also up 45% from the previous quarter.

Breaking the revenue down, Bubs Infant Formula gross revenue was up 124% over Q1 FY21 and up 64% over the prior quarter. Revenue from its Adult Goat Milk Powder was up 100% year-on-year and up 61% quarter-on-quarter.

Bubs also reported a resurgence in its Chinse business, with a 156% year-on-year increase in revenue.

Overall international revenue was up 489% from Q1 FY21.

The company ended the quarter with a strong balance sheet, holding $28.3 million in cash as at 30 September.

What management said

Commenting on the results Bubs CEO Kristy Carr said:

Bubs has largely put the disruption and challenges of COVID-19 behind us, delivering a turnaround to high growth during the quarter as we revamped our business strategy in response to the rapidly changing market dynamics.

Importantly, there continues to be strong consumer demand for Bubs’ quality nutritional products in all key markets with solid performance across our core business segments…

Our global expansion strategy continues to advance with business entities and representation now established in New Zealand, China and North America… The first shipment of Aussie Bubs’ products arrived in the USA during the quarter and Bubs is now an official Walmart vendor, with the first online sales expected to be realised in October 2021.

Bubs share price could also be getting a boost from the fairly positive outlook the company provided.

Looking ahead, Bubs executive chair Dennis Lin added:

We are investing in our manufacturing capabilities at our facility in Victoria and have extended the Bubs family to have local representation in New Zealand, China and North America, as we continue to diversify our business model.

Having recovered the ground lost due to COVID-19 disruption, we expect to be able to sustain continued growth momentum, to the extent our go forward approach does not depend on a material improvement in the pandemic setting.

Bubs share price snapshot

The Bubs share price has struggled this year, down 30% in 2021. That compares to a gain of 9% posted by the All Ords.

Over the past month Bubs shares are up 8%.

The post Bubs (ASX:BUB) share price rockets 17% on revenue growth appeared first on The Motley Fool Australia.

More reading

• Why is the Bubs (ASX:BUB) share price leaping 7% on Tuesday?
• Bubs (ASX:BUB) share price down 9% in September despite upcoming US launch

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 BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lovisa Holdings Ltd (ASX: LOV) share price is under pressure on Wednesday morning.

At the time of writing, the fast fashion jewellery retailer’s shares are down 2% to $17.95.

Why is the Lovisa share price tumbling?

Investors have been selling down the Lovisa share price today after it announced the exit of its long serving Managing Director and Chief Executive Officer.

According to the release, Shane Fallscheer intends to step down from the role after 12 years leading the company.

The good news is that Lovisa has already secured a replacement. It has announced the appointment of Victor Herrero as its new Global Chief Executive Officer.

Mr Herrero is a highly experienced retail executive. For example, he previously spent 13 years at the Inditex Group. This is the retail giant behind popular brands including Zara, Pull & Bear, and Massimo Dutti.

During his time at Inditex, Herrero held numerous roles including Head of Asia Pacific and Managing Director Greater China and led the company’s expansion through the Asia region. This includes rolling out 800 stores across multiple countries including China and India.

In addition, Mr Herrero was the CEO of global retail brand Guess for four years until 2019 and most recently the Chairman and CEO of international shoe manufacturer and retailer Clarks.

Management commentary

Mr Herrero appears up for the challenge of running Lovisa.

He commented: “This is an amazing time to be joining the Lovisa business, and I look forward to continuing to drive it forward with the same passion and momentum that has gotten the business to where it is today. I would like to thank Shane for agreeing to help ensure a smooth transition and for his exceptional efforts to lead the company to its current strong position, and I look forward to the great opportunity we now have to further drive the company’s strategic goals.”

Lovisa’s Chair, Brett Blundy, was pleased with the appointment.

He said: “Shane’s decision has provided us with the opportunity to appoint an exceptional global retailer and we are excited to announce the appointment of Victor Herrero as Global CEO. Victor has an exceptional track record of driving global expansion and leading complex global retail businesses and will help us to move to the next stage of the global growth strategy of the Lovisa business.”

“Shane hands over the business in a very strong position and the Board is excited by the opportunity to continue the global expansion under Victor’s leadership, backed by his extensive global retail experience. Victor will commence in the role of Global Chief Executive Officer as soon as practical subject to current COVID restrictions, and we are pleased Shane and Victor are committed to ensuring a smooth transition,” Blundy added.

The post Lovisa (ASX:LOV) share price falls on surprise CEO exit appeared first on The Motley Fool Australia.

More reading

• 2 compelling ASX shares that could be buys in October 2021

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 Bruce Jackson.

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The Paladin Energy Ltd (ASX: PDN) share price is booming on Wednesday, up 8.8% to 80 cents.

What’s driving the Paladin Energy share price?

Uranium ETFs boom overnight

The Global X Uranium Exchange Traded Fund (ETF) surged 11.65% to US$26.92, just 6% away from its mid-September all-time highs of $28.72.

This move comes off the back of its highest volume day in history, with over 6.1 million shares traded.

The uranium ETF is comprised of companies involved in uranium mining and the production of nuclear components, including those used for extraction, refining and exploration.

The ETF holds positions in ASX-listed uranium players including Paladin Energy and a handful of explorers including Bannerman Energy Ltd (ASX: BMN) and Boss Energy Ltd (ASX: BOE).

Tailwinds for uranium demand

According to Bloomberg, uranium “may extend this year’s uptrend as worsening power shortages bolster its allure as a potential alternative to fossil fuels”.

Uranium prices have cooled off to around US$40/lb after surging to a 9-year high of ~US$50/lb on 17 September.

Similarly, the Paladin Energy share price boomed from the mid-40 cent range in mid-August to a 9-year high of $1.12 on 16 September.

Bloomberg said that “more uranium producers and developers are seeking to build inventories and reactors with Bloomberg New Energy Finance (NEF) forecasting Asia will take the lead”.

“Inflows into uranium exchange-traded funds remain elevated and Asian miners look primed to benefit,” it added.

Hedge funds join the party

The Australian Financial Review (AFR) also reported that funds such as Ben Melkman’s New York-based Light Sky Macro, Anchorage Capital and Tribeca Investment Partners are bullish on the outlook for the energy metal.

How has the Paladin Energy share price performed?

The Paladin Energy share price is up 237% year-to-date thanks to the resurgence of uranium spot prices.

Its shares have pulled back sharply from mid-September highs of $1.12 but managed to consolidate around the low 70 cent range.

The post Why the Paladin Energy (ASX:PDN) share price is up 8% today appeared first on The Motley Fool Australia.

More reading

• Why ASX uranium shares are bouncing back on Friday
• Which ASX 300 shares are on the move for the start of the week?
• Which ASX shares are set to finish the week as the top movers on the ASX 300?
• How did ASX uranium shares perform in September?
• Why the Paladin Energy (ASX:PDN) share price is down 10% today

Motley Fool contributor Kerry Sun 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 Bruce Jackson.

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The Transurban Group (ASX: TCL) share price is falling this morning following news the company has completed the final stage of its $3.97 billion entitlement offer.

The resulting funds will go towards the purchase of the remaining 49% of Sydney’s WestConnex. Transurban already has a 50% hold in the road network.

Transurban is part of a consortium – named Sydney Transport Partners (STP) – that’s buying the stake in the major road infrastructure from the NSW Government. The acquisition will cost the consortium $11.1 billion.

At the time of writing, the Transurban share price is $13.45, 0.81% lower than its previous close.

Let’s take a closer look at Transurban’s latest equity raise and its bolstered stake in WestConnex.

Transurban share price slips on finished capital raise

The Transurban share price is sliding lower this morning after the company announced it has completed its $3.97 billion entitlement offer.

The now-completed offer finished alongside its retail bookbuild, part of a retail entitlement offer that raised around $1.07 billion.

The company previously completed a $2.9 billion institutional entitlement offer.  

Under the retail entitlement offer, eligible shareholders could get their hands on Transurban shares for $13 apiece. Shareholders were able to purchase 1 new Transurban share for every 9 shares they owned as of 23 September.

The retail bookbuild saw around 28.6 million new Transurban shares sold for $13.30 each. The extra 30 cents will go to retail shareholders who didn’t act on the pro-rata offer or who were ineligible.

Transurban is also raising $250 million through selling shares for $13.07 apiece to AustralianSuper, a fellow member of the STP Consortium.

That brings the total amount raised by Transurban to $4.22 billion, as Transurban announced on 20 September. The Transurban share price was frozen as the company prepared to announce the capital raise. It fell 0.4% when trading resumed.

WestConnex will be a roughly 70-kilometre network connecting Sydney’s west with the city’s CBD, airport, and Port Botany. The network has more than 40 years of concession life left in it.

Transurban expects its increased stake in WestConnex will see it receive more than $600 million of potential capital releases until financial year 2025.

The post Why the Transurban (ASX: TCL) share price is sliding on Wednesday appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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The Challenger Ltd (ASX: CGF) share price is on the move on Wednesday morning.

At the time of writing, the annuities company’s shares are edging 0.5% higher to $6.37.

Why is the Challenger share price rising?

Investors have been bidding the Challenger share price higher today following the release of its first quarter update.

According to the release, Challenger’s Life sales were up 32% to $2.1 billion during the first quarter.

Challenger’s Managing Director and Chief Executive Officer, Richard Howes, advised that this was driven by its diversification strategy. He commented: “Strong quarterly sales growth highlights the success of our diversification strategy and reflects our focus on building relationships with institutional clients.”

This ultimately led to the Life business reporting net flows of $594 million, which underpinned book growth of 3.4% for the quarter.

Challenger’s annuity sales of $1.2 billion were stable and included strong growth in domestic annuity sales, which increased 17% or $143 million to $986 million.

Pleasingly, Mr Howes appears optimistic that this solid form can continue thanks to new product launches.

“Continuing to innovate has been a priority and we recently launched our new market-linked annuity for customers who seek the benefits of lifetime income, while maintaining exposure to investment markets. Benefiting from rigorous market testing, this option will form an attractive complement to our existing lifetime annuity offering,” he added.

Funds under management continue to grow

Also potentially giving the Challenger share price a boost was news that its funds under management (FUM) have continued to grow.

Management notes that Challenger’s Funds Management business is one of the fastest growing asset managers in Australia. The business delivered a strong performance for the quarter, with FUM increasing to $108.4 billion This was a $2.6 billion or 2% increase for the quarter.

This FUM growth reflects net inflows of $1.4 billion for the quarter, a $1.7 billion contribution from investment markets, and net distributions of $0.5 billion.

Bank acquisition

The company has now completed its acquisition of digital bank MyLifeMyFinance.

Management sees the acquisition as a key pillar of Challenger’s growth strategy. It believes it is now well positioned to increase the role it plays in improving retirement outcomes, extending its customer reach, and further diversifying its product offering to accelerate medium-term growth.

Outlook

In FY 2022, Challenger continues to expect to achieve strong profit growth.

It has reaffirmed its FY 2022 normalised net profit before tax guidance of between $430 million and $480 million. The mid-point of $455 million represents 15% growth on FY 2021.

The post Challenger (ASX:CGF) share price pushes higher on Q1 update appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday

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 owns shares of and has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The gap between the Zip Co Ltd (ASX:Z1P) share price and Afterpay Ltd (ASX: APT) share price could be set to widen.

This is because Citigroup downgraded Zip to “neutral” from “buy” as it cut its customer growth forecast.

The news is likely to weigh on the Zip share price, which is already lagging its bigger rival Afterpay.

Zip share price in the shadow of Afterpay

While the prospects of rising global interest rates have cast a cloud over the fast-growing sector, the Afterpay share price is still up by around 24% over the past year. In contrast, the Zip share price has slumped 14% in the red over the period.

Higher interest rates lower the valuation of ASX shares, particularly those trading at a big premium to the S&P/ASX 200 Index (Index:^AXJO).

That issue aside, Zip will find it harder to come out of the shadow cast by Afterpay after Citi’s recommendation cut.

Lower new customer growth

Citi analysed various Buy-Now Pay-Later (BNPL) players’ websites and mobile apps across key markets. The findings aren’t so good for Zip even though Citi expects increasing app usage to drive strong transaction volume growth in the US for the company.

“Zip’s app downloads were down for the sixth consecutive month in September,” said the broker.

“We have lowered US customer growth assumptions and forecast 4.957 million customers in the US in 1Q21, which assumes customer net adds of 520k in 1Q22e.”

This equates to a drop in customer net adds of 14% when compared to 4QFY21 when Zip recorded a figure of 608,000.

Other drags on the Zip share price

But this isn’t the only reason why Citi downgraded the Zip share price. It also increased its operating expenses forecasts for the company. This is to reflect increasing promotional activity, such as cashbacks, and geographical expansion.

Then there is the risk of a capital raise to the Zip share price. This should come as less of a surprise given the acquisitive fervour shown by management.

“With $462 million of cash available as of Jun’21, Z1P has ample balance sheet capacity to funds its growth, including the recent US$50 million investment in Indian BNPL operator ZestMoney,” added Citi.

“However, we do see potential need for an equity raise, especially if Z1P accelerates its international expansion strategy.”

The broker’s 12-month price target on the Zip share price drops to $7.40 from $7.95 a share.

The post Zip (ASX:Z1P) share price on watch after broker downgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Propel Funeral Partners Ltd (ASX: PFP) share price could be a mover on Wednesday. This morning the company released its trading performance for the first quarter of FY22.

Propel Funeral Partners share price on watch as acquisitions kick in

Propel Funeral Partners announced that its performance for the 3 months ended 30 September was materially above the prior corresponding period (pcp). The strong performance demonstrates its resilience despite COVID-19 impacts.

Revenue increased 13% against Q1 FY20, underpinned by a record number of funerals in the quarter.

Total funeral volume growth was 10% above the pcp, including comparable funeral volume growth of 5%.

While the company couldn’t provide exact financial figures, it noted that average revenue per funeral remained resilient and in line with the pcp.

This is despite the impacts of extended lockdowns and strict funeral attendee limits across New South Wales, Victoria, and New Zealand during the quarter.

Propel achieved an operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) of ~28%.

By comparison, its FY21 full-year results delivered operating EBITDA margins of 30.1%.

The Propel Funeral Partners share price has performed strongly this year following a steady stream of M&A.

Today’s quarterly performance includes contributions from its 3 acquisitions completed during Q2 FY21. It also includes a 2-week contribution from its recently announced acquisition of State of Grace Funerals.

Management commentary

Propel managing director Albin Kurti said:

Propel’s diversified network of funeral and related social infrastructure assets across Australia and in New Zealand has continued to deliver considerable financial resilience in the first quarter of FY22, despite COVID-19 impacts, and I thank our staff for their dedication to providing essential funeral and related services to local communities.

Hopefully extended lock downs, strict funeral attendee limits and travel restrictions will soon be behind us, enabling bereaved client families to grieve in a manner that they ordinarily would, surrounded by family and friends.

Propel Funerals Partners share price snapshot

The Propel Funeral Partners share has performed strongly in 2021, up 50% year to date, closing at $4.28 on Tuesday.

The post Propel Funeral (ASX:PFP) share price on watch after first quarter update appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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 Propel Funeral Partners Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYTPO: BTC) price, unlike ASX shares, doesn’t move on quarterly financial reports. But it sure does move.

But as we’ve been running our slide rules over the performance of ASX companies in the quarter just gone by (Q1 FY22), we thought we’d see how the world’s number one crypto by market cap stacks up.

How did the Bitcoin price perform in Q1 FY22?

The digital token commenced the last quarter trading for US$33,572 on 1 July, according to data from CoinMarketCap.

Three months later, on 30 September, that same virtual coin was worth US$43,790, a gain of 30%.

While that’s a handsome gain, investors weren’t spared the Bitcoin price volatility that’s part and parcel when investing in most cryptos.

Bitcoin hit a quarterly low of US$29,807 on 20 July and reached a quarterly high of US$52,633 on 6 September. That’s a price range of more than 76%.

What moved investor sentiment during the quarter?

The Bitcoin price was pushed and pulled on various fronts over the quarter.

Increasing inflation concerns was one of the factors helping drive prices higher. According to a recent survey by global crypto platform Gemini, “59% of respondents believe cryptocurrencies will offer better long-term growth potential than the Aussie dollar”.

Then there was China.

The Chinese government’s move to stamp out crypto mining and discourage trading certainly put a short-term damper on the Bitcoin price.

As did global investor jitters about the potential financial ripple effects of China’s debt laden property giant China Evergrande Group (HKG: 3333). Jitters which brought 98 of the top 100 cryptos into the red on 21 September.

But it doesn’t take the world’s most populous nation and number 2 economy to move the Bitcoin price.

Bitcoin initially climbed on news that central America’s El Salvador was adopting it as legal tender. That measure was pushed through by the government, which enabled citizens to buy and sell items using the government’s cryptocurrency wallet, Chivo.

However, on 7 September, the day of the rollout, glitches in Chivo were partly responsible for seeing Bitcoin tank by 11% in 24 hours. Those glitches were fixed later that day.

In the wild world of cryptos, these were just some of the forces impacting on the Bitcoin price over the quarter just past.

The post What happened to the Bitcoin price in the FY22 first quarter? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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 Bruce Jackson.

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The Bank of Queensland Limited (ASX: BOQ) share price will be one to watch today.

This follows the release of the regional bank’s full year results this morning.

Bank of Queensland share price on watch after strong profit growth

• Statutory net profit after tax up 221% year on year to $369 million or 206% to $352 million excluding ME Bank
• Cash net profit after tax up 83% to $412 million or 73% to $389 million excluding ME Bank
• Net interest margin (NIM) of 1.92%
• CET1 ratio of 9.8%, up 2 basis points and ahead of 9% to 9.5% target
• Final fully franked dividend of 22 cents per share declared, bringing full year dividend to 39 cents per share

What happened in FY 2021?

Bank of Queensland returned to form in FY 2021 following a difficult and COVID-impacted 12 months in FY 2020.

The bank reported a 13% increase in total income to $1.26 billion for the year including the ME Bank acquisition or 5% to $1.18 billion excluding it. Management advised that this reflects growth in its net interest income thanks to quality asset growth and NIM improvement.

Things were even better for its cash earnings, which grew 83% year on year. This was driven by the ME Bank acquisition, increased net interest income, and a credit to its loan impairment expense. The latter reflects sound credit, a $71 million reduction in its collective provision from the improved economic outlook, and improvements in data quality relating to collateral.

Another positive from the result was its lending growth. Housing growth (excluding ME Bank) was 1.7x system with growth delivered across all channels. Its Business segment also delivered growth of $0.6 billion for the year as market conditions improved.

This ultimately led to the company finishing the period with a CET1 ratio of 9.80%. This was up 2 basis points compared to FY 2020 and is comfortably ahead of the target range of 9.0 – 9.5%. Management notes that this strong capital position leaves the bank well placed to support future growth and its transformation investment.

It also allowed the bank to declare a final fully franked dividend of 22 cents per share. This brings its full year dividend to 39 cents per share. Based on the current Bank of Queensland share price, this represents a fully franked 4% yield.

What did management say?

Bank of Queensland’s Managing Director and CEO, George Frazis, commented: “BOQ’s financial results for FY21 underscores the Group’s progress on strategic execution with strong cash earnings, an increase in NIM and cash EPS growth.”

“Our refreshed strategy announced in February 2020 set out a clear path to return the Group to sustainable profitability and today’s results show our momentum with four consecutive halves of improving performance. We have achieved this during a period marked by uncertainty, and also in a year where we executed the transformative acquisition of ME Bank. This transaction delivers further scale in retail, enhances our portfolio diversification, and we have accelerated capturing synergies from the integration,” he added.

Outlook

No earnings or dividend guidance has been given for FY 2022 due to the uncertain environment.

However, management advised that it is cautiously optimistic that Australia remains well placed for economic recovery, characterised by further house price rises and solid growth in consumer spending and business investment.

“BOQ remains focused on achieving sustainable profitable growth. In FY22, we are expecting at least 2% jaws, driven by above system growth in our BOQ and VMA brands, and by returning ME Bank to around system growth by year end. We expect NIM to decline by c.5-7bps in FY22, as competition continues and the low interest rate environment remains. We expect expenses to grow by 3% on an underlying basis to support business growth, which will be offset by accelerated integration synergies,” management stated.

The Bank of Queensland share price is up 29% in 2021.

The post Bank of Queensland (ASX:BOQ) share price on watch after 83% cash profit jump appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
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• Own Bank of Queensland (ASX:BOQ) shares? Here’s what to expect from its FY21 results
• Bank of Queensland (ASX:BOQ) share price hits 52-week high on Friday
• Top broker tips Bank of Queensland (ASX:BOQ) share price as a 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. 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 Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price had a disappointing run in the first quarter of FY22. 

Since the beginning of July to the end of September, the iron ore producer’s shares tumbled about 36% in value. This makes the company by far one of the worst performers on the S&P/ASX 200 Index (ASX: XJO).

Fortescue’s closing price on 30 June was $23.34. By the close on September 30, this had fallen to $14.96. That’s a drop of 35.9% over the quarter.

At Tuesday’s market close, Fortescue shares finished down 1.4% on the day to $14.79.

What’s happened to Fortescue?

There are a number of factors that have caused Fortescue shares to fall in recent times.

First and foremost, the price of iron ore collapsed after reaching a record high of US$219 a tonne in mid-July. However, the price has rebounded this week, which could help the Fortescue share price going forward.

Chinese efforts to reduce reliance on Australian iron ore, along with the potential default of Chinese property behemoth Evergrande Property Services Group Ltd (HKG: 6666), have impacted the market. This has led to supply concerns as policymakers from China have imposed harsh penalties for steel mills that exceed production limits.

Furthermore, Fortescue could suffer more than its peers as it produces a lower grade of iron ore. Steel producers prefer higher quality iron ore, which miners Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) supply. Consequently, this puts a squeeze on Fortescue’s margins.

Fortescue share price snapshot

Over the past 12 months, Fortescue shares have declined around 11% in value. However, when looking year to date, its losses are magnified to a sizeable 40% for the period.

Fortescue commands a market capitalisation of $45.5 billion and has more than 3 billion shares on its registry.

The post Why did the Fortescue (ASX:FMG) share price have such a lousy FY22 first quarter? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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