Category: Stock Market

The Hexagon Energy Materials Ltd (ASX: HXG) share price is rocketing today after the company released its quarterly activities and cash flow report.

The Hexagon Energy share price is up 40.9% at the time of writing, trading at 15.5 cents per share.

Hexagon Energy is a mineral exploration company focused on downstream graphite and rare earth processing. Its rare earths project includes RAPID SX, and graphite includes the McIntosh Graphite Project in the Kimberley region of Western Australia. Operations are also underway at the Halls Creek Gold & Base Metals Project in WA.

The Hexagon share price has been a fast mover in recent days after the company acquired Ebony Energy on 23 April. This has enabled Hexagon Energy to start the development timeline for Ebony’s Pedirka Blue Hydrogen Project, which will spearhead the company’s shift towards renewable energy production.

Quarterly activities and cash flow report

In the report, Hexagon Energy outlined its plans following the acquisition of Ebony Energy. The acquisition means Hexagon now has full control of the Pedirka Blue Hydrogen Project in the Northern Territory. 

It plans to immediately start a pre-feasibility study for Pedirka, which is slated for completion this year. Hexagon is also gearing up for a drill program at Halls Creek and has secured an electromagnetic survey. It’s also in ongoing discussions to “create shareholder value” at its McIntosh and Alabama projects.

The Pedirka project covers an area of just under 800km. Hexagon said the acquisition was timely, given the Australian government’s commitment to provide $275.5 million in funding to develop four regional clean hydrogen hubs and $263.7 million for carbon capture and storage technology in its upcoming budget.

Hexagon proposes that the project host a surface gasification plant producing “blue” hydrogen to supply domestic and export markets from coal feedstocks with zero carbon emissions.

In addition to being clean, hydrogen is a versatile energy source with applications across the transport, electricity, industrial and heating sectors. Hexagon is working with government and private sector entities to secure agreements that will accelerate the project’s pathway to production of hydrogen to meet the growth in demand in the Asia Pacific region.

What Hexagon Energy management said

Hexagon chair Charles Whitfield said the company had big ambitions in hydrogen production.

We are very excited to have finalised our acquisition of the Pedirka project. We strongly believe that Pedirka has the potential to become a regionally important producer of hydrogen that will help meet the increasing demand for carbon-neutral energy solutions in the Asia-Pacific region.

The acquisition of Pedirka is consistent with our focus on clean energy solutions and will hopefully support the conversion to hydrogen economies in the years ahead. We look forward to rapidly advancing the Pedirka Pre-Feasibility Study while also progressing our mineral assets.

Hexagon Energy share price snapshot

The Hexagon Energy share price has been one of today’s biggest movers on the ASX, but has also been rising strongly for some time.

Since the beginning of 2021, it’s nearly tripled from just over five cents per share. Overall, it’s up 52% this past week and 163% in 2021 to date.

More reading

• Is the Telstra (ASX:TLS) share price going to keep rising?
• Is this new ASX eSports ETF a winner?
• DigitalX (ASX:DCC) share price rockets 13% on quarterly update
• Here’s why the Silver Mines (ASX:SVL) share price is on the rise today
• The Tempus Resources (ASX:TMR) share price is soaring 24% today

Motley Fool contributor Lucas Radbourne-Pugh 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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Can the Telstra Corporation Ltd (ASX: TLS) share price keep going higher? It has gone up more than 10% since 11 March 2021.

The telco has been rising as it continues to progress with its strategies.

5G

One of the main parts of the strategy is to be the market leader of 5G. This is the next phase of mobile technology that should allow for much faster speeds than we already have.

To that end, Telstra recently invested $277 million to secure 1000 MHz in the 26 GHz spectrum auction. It secured spectrum in all major capital cities and regional areas where it was sold.

The Telstra CEO Andrew Penn said that the new mmWave spectrum would “dramatically” increase capacity and speeds for Telstra customers.

Why is the mmWave spectrum so important? Mr Penn said:

mmWave spectrum is especially good at providing high-speed mobile broadband in high-density areas, such as built up cities and towns, train stations, sports stadiums and other locations with a high concentration of people using their mobile devices.

The Telstra CEO also said that the additional capacity would enable the mobile network to be used more effectively for 5G broadband in the home, providing another way to deliver fast and reliable internet where the current fixed connection may not meet a customer’s needs.

If Telstra can convince a good number of NBN customers to switch over to 5G broadband at home, then it could lead to higher margins for each home connection.

How is the profit going?

Telstra’s profit continues to decline. In the FY21 half-year result, total income decreased 10.4% to $12 billion and net profit after tax (NPAT) decreased 2.2% to $1.1 billion. Reported earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 14.7% to $4.1 billion.

Competition in the mobile sector is still impacting the business, though it was able to add 80,000 retail postpaid handheld services during the period.

Cost cutting continues to be an important part to ensure the business remains as profitable and efficient as possible The T22 cost reduction target has been increased to $2.7 billion by FY22.

It’s also targeting mid to high single digit growth in underlying EBITDA in FY22 and $7.5 billion to $8.5 billion of underlying EBITDA in FY23.

One of the main ways that Telstra is helping shareholder returns is with its consistent 8 cents per share dividend every six months. That equates to a grossed-up dividend yield of 6.75%.

It’s also planning to commence the process for external investment in its InfraCo Towers division early in the first quarter of FY22. Telstra has restructured its business to create more transparency, increase focus across its operating businesses and enable long-term valuation realisation from its infrastructure businesses.

Time to jump on Telstra the share price?

Brokers are generally a fan of Telstra shares. Morgan Stanley rates Telstra as a buy with a share price target of $4 for the next 12 months.

The broker likes the restructuring of the business because each division can focus on what’s best for the segment. However, competition remains a detractor for Telstra being able to generate organic (revenue) growth.

More reading

• Is the Telstra (ASX:TLS) share price better value than the TPG (ASX:TPG) share price?
• What’s next for the Telstra (ASX:TLS) share price?
• 2 ASX dividend shares with generous yields
• ASX 200 finishes flat, Kogan drops, Accent jumps
• What’s with the Telstra (ASX:TLS) share price and other telcos today?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO) is a relatively new addition to the ASX share market. It only launched in early September last year, after all. But this exchange-traded fund (ETF) has already made a decent start, adding more than 10% to its value since its launch.

Perhaps more tantalising for investors is the performance of the index that ESPO tracks. According to VanEck, this ETF mimics the MVIS Global Video Gaming and eSports Index. The index “comprises companies involved in video game development, eSports, and related hardware and software globally”, and evidently does so with great success, seeing as it has reportedly returned an average of 37.17% per annum over the past 5 years.

We don’t have to look too far to understand why this ETF has amassed close to $100 million in assets under management in almost 8 months. So what does this ETF really look like under the hood? Let’s take a look.

A closer look at ESPO

The Video Gaming and eSports ETF holds a relatively concentrated basket of gaming and eSports shares — 25 at the current time. The fund’s current top holding is NVIDIA Corp (NASDAQ: NVDA). NVIDIA is a popular US company that mostly designs and manufactures graphics hardware.

Other holdings that investors might be familiar with include Nintendo Co Ltd, Tencent Holdings Ltd, Activision Blizzard Inc (NASDAQ: ATVI) and Take-Two Interactive Software Inc (NASDAQ: TTWO).

Nintendo is the famous Japanese gaming company behind the gaming characters Mario, Donkey Kong, Pokemon and Zelda. It is also famous for its gaming consoles like the Wii, the old GameBoy, the Nintendo DS and the Nintendo Switch.

Tencent is the Chinese gaming behemoth that is perhaps most famous in Australia for its Fortnite game, although it owns a portfolio of popular Chinese social media and eSports apps like WeChat as well.

Activision Blizzard is the company behind some of the most popular gaming franchises in the world, like World of Warcraft and Call of Duty. Similarly, Take-Two is known for well-known franchises like Grand Theft Auto and Red Dead.

As you might have gathered, the ESPO ETF is relatively well balanced from a geographical perspective — 38.5% of its holdings are US companies, with Japan (21.1%), China (18.4%) and Singapore (6.6%) also well represented.

Finally to note, the VanEck Vectors Video Gaming and eSports ETF charges a management fee of 0.55%. That would equate to $5.50 per year for every $1,000 invested.

More reading

• 2 exciting ETFs ASX investors need to know about
• A red-hot reason why NVIDIA’s blockbuster growth is here to stay
• Got money to invest? Here are 2 ASX shares to buy
• 2 outstanding tech ETFs for ASX investors to buy this month

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Activision Blizzard and NVIDIA. The Motley Fool Australia has recommended Activision Blizzard and NVIDIA. 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 DigitalX Ltd (ASX: DCC) share price is storming higher towards the end of market trade. This comes after the blockchain and asset management services company released its March quarterly report for the FY21 year.

The DigitalX share price is swapping hands for 7.8 cents apiece at the time of writing, up 13%.

How did DigitalX perform?

For the quarter ending 31 March 2021, DigitalX delivered strong growth across all key metrics.

Liquid assets for the period increased to $46.4 million, representing a 122% jump from the prior quarter (December 2020). The result came from a strong performance of Bitcoin (CRYPTO: BTC), the DigitalX digital assets funds, and proceeds of a capital raise.

Cash receipts lifted to $265,000 for the 3 months, a 77% improvement when looking at quarter-on-quarter (QoQ) growth. Revenue for the March quarter stood at $713,000, a 232% QoQ jump.

The performance was underpinned by increased fees from the funds under the management division, totalling $31.9 million, rising 237% QoQ.

The company said it was continuing to focus on commercialising its Drawbridge RegTech product, which “supports listed companies in better managing their compliance and corporate governance policies”.

Several engagements with customer leads for the Drawbridge application are beginning to follow through. DigitalX revealed that 4 ASX-listed companies, including itself, have signed on as paid customers for the now-closed early adopter program.

In addition, the company has undertaken sales and marketing strategies to accelerate awareness of Drawbridge.

What did management say?

DigitalX CEO Leigh Travers commented on the company’s outlook:

DigitalX is well capitalised and well-positioned to deliver growth in both of our businesses in 2021. There is a growing focus for improving corporate governance, particularly in light of the ESG priorities from investors, and DigitalX enables this with Drawbridge.

Meanwhile, the digital asset funds management business is starting to gain traction on the back of a growing appreciation of the sector as a legitimate asset class and DigitalX is at the forefront of developments within this market.

About the DigitalX share price

The DigitalX share price has gained close to 200% in the past 12 months but is down just over 15% year-to-date. The company’s shares reached a 52-week high of 13.5 cents in late November before treading lower.

DigitalX commands a market capitalisation of about $57 million, with 736 million shares on issue.

More reading

• The DigitalX (ASX:DCC) share price is up 30% this week

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends 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 Silver Mines Limited (ASX: SVL) share price is up today following the release of the company’s quarterly results.

At the time of writing, the Silver Mines share price is 23 cents, up 2.2% from Friday’s closing price.

Let’s take a closer look at the company’s activities and balance sheet from the quarter ending 31 March 2021.

Silver Mines’ balance sheet

In the most recent quarter, Silver Mines reported an earnings before interest, tax, depreciation, and amortisation (EBITDA) loss of $1.01 million.

That number doesn’t include the government grants and tax incentives the company received this quarter, which were valued at a total of $41,000.

Silver Mines received $919,000 from the sale of entities over the quarter, including the sale of its the sale of its Webbs and Conrad Projects to Thomson Resources Ltd (ASX: TMZ). It also received $30 million from a capital raise it conducted in February.

Silver Mines also repaid just over $1 million worth of debt over the quarter.

After the costs of the company’s capital raise, and an income from the exercise of options, the company’s cash flow from financing activities was around $27.8 million.

Silver Mines ended the quarter with around $32.6 million in cash in the bank.

Quarterly activity highlights

During the March 2021 quarter, Silver Mines lodged a mining lease application for the development of the Bowdens Silver Project. The company advised there were no objections to the project from government agencies and it received large public support.

Currently, two diamond drilling rigs are operating at the project and testing for high-grade silver targets and extensions are ongoing. Bolstered by the outcomes of its current program, Silver Mines is now planning the expansion of drilling and other exploration activities.

During the quarter, the final drill assay results from the company’s Tuena Gold Project were returned. Drilling found many potential mineralised structures of quartz and carbonate veining, both with and without pyrite.

As part of Silver Mines’ capital raise, it issued around 136.3 million shares. A further 100,000 were issued following the exercise of options at 10 cents apiece, pursuant to Silver Mines’ employee incentive plan.

Silver Mines share price snapshot

The positive reception to the company’s quarterly results was much needed for the Silver Mines share price, which has had a tough time on the ASX lately.

Currently, the Silver Mines share price is down 11.5% year to date, although it is up by 155% over the last 12 months.

The company has a market capitalisation of around $267 million, with approximately 1.1 billion shares outstanding.

More reading

• Here’s why the Thomson (ASX:TMZ) share price is climbing today

Motley Fool contributor Brooke Cooper 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 Tempus Resources Ltd (ASX: TMR) share price is soaring today, leaving many investors wondering what’s provided the micro-cap with such a dramatic boost.

Tempus Resources shares boomed in early trade, at one point rocketing by 38% to trade at 24 cents.

At the time of writing, the mineral explorer’s shares are trading at 20.5 cents, still 24.24% higher than Friday’s closing price.

While there hasn’t been any news out of the company today to prompt these share price moves, Tempus has provided the market with several updates lately. Let’s take a look.

Tempus Resources placement 

On Friday, Tempus announced that its successful private placement raked in $1.9 million for the company, which it will put towards continuing the drilling program at its Canadian Elizabeth Gold Project. The placement included more than 12.4 million shares at 15.3 cents apiece. Publicly traded shares were going for 16.5 cents each before news of the placement broke.

The company’s drilling program was suspended in December last year after only completing 11 holes. Though, according to Tempus, the assay results from those holes returned bonanza-grade gold intercepts.

Assay results from the 11 holes included:

• 5.0m at 61.3 grams of gold per tonne from 116.5 metres, including 1.5 metres at 186.0 grams of gold per tonne from 118.0 metres; and,
• 3.2 metres at 28.1 grams of gold per tonne from 184.0 metres, including 0.5 metres at 178.0 grams of gold per tonne from 184.5 metres.

The drill program is fully permitted and expected to be completed in the second quarter of 2021.

What else has Tempus been up to lately?

Tempus released the assay results from the Elizabeth Gold Project‘s 11 holes on 8 February, sending its share price rocketing. Tempus shares closed the day trading at 30 cents – 25% higher than the previous session.  

Since then, prior to today’s surge, the Tempus share price has been mostly falling. As of Friday’s close, the company’s shares had dropped 45% since 8 February.

This was despite a number of seemingly positive announcements. 

On 22 February, Tempus announced it had finished the first phase of exploration at its Valle de Tigre II Project, located in Southeast Ecuador. It stated it had found coarse gold in streams using panning methods. The exploration also found visible copper.

While the announcement seemed positive, it included bad news of the company’s Rio Zarza project – also located in Ecuador. Due to COVID-19, Ecuadorian Presidential elections and recent exploration results, the company suspended strategic discussions regarding the Rio Zarza project.  

Then, in late March, Tempus shared two pieces of news.

Firstly, it announced it had completed a joint venture agreement with Robinhood Gold Corp. The agreement gave Robinhood the ability to earn a 75% interest in Tempus’ Mineral Creek Project. To do so it must spend $2 million in work commitments before the end of 2023. Robinhood was also given the option to purchase another 5% of the project for C$1 million. The Mineral Creek Project is located in Canada, in an area with a long history of gold mining.

Finally, Tempus shared the results from the sampling program at the Valle del Tigre II Project. The results confirmed the presence of both gold and copper and spurred further exploration.

Tempus Resources share price snapshot

Though there is no apparent reason for the surge, today’s boost to the Tempus Resources share price will be welcome news for shareholders, with the company’s shares performing poorly of late.

Even after today’s gains, Tempus Resources shares are still down by around 15% year to date. Although, they are still up by around 22% over the last 12 months.

The company has a market capitalisation of around $14 million, with approximately 86 million shares outstanding.

More reading

• Here’s why the Silver Mines (ASX:SVL) share price is on the rise today
• 4DMedical (ASX:4DX) share price wobbles on quarterly report
• Could the Resmed (ASX:RMD) share price face a similar selloff to Kogan?
• Why Bubs, Carbon Revolution, Paradigm, & Tyro shares are sinking
• If Afterpay leaves the ASX, what happens to the shares?

Motley Fool contributor Brooke Cooper 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 4DMedical Ltd (ASX: 4DX) share price is wobbling today after the company released its latest quarterly report. Shares in the company are currently trading 0.31% lower at a price of $1.62.

4DMedical is a medical imaging company that is focusing on commercialising its respiratory imaging program.

Route to commercialisation

During the quarter ended 31 March 2021, 4DMedical pressed ahead with a number of initiatives, primarily in the effort to get its XVD scanner — the world’s first dedicated lung scanner — closer to commercial use.

The company was granted $28.9 million in funding by the Medical Research Future Fund to be used towards development of the XVD Scanner.

4DMedical confirmed it will receive 100% of the revenue generated from the scanner sales and associated service revenue. The scanners are expected to be deployed in early 2022, with commercialisation coming one year later.

The company continues to press ahead securing clinical pilots and completing clinical trials with healthcare institutions. In January, 4DMedical announced the first clinical pilot for its lung ventilation analysis software would be conducted at St. Joseph Hospital. Located in Orange County, California.

In the quarter, 4DMedical also secured pre-contracts with the US Department of Defense and Veterans Affairs. This access will allow the department’s healthcare facilities first access to use the company’s technology. 4DMedical has negotiated a fixed price for the offering without requiring separate reimbursement, which it states will help streamlining commercial agreements in the future.

Clinical trials commence

In further good news for the company during the quarter, it was able to recommence clinical trials in the US, with the pandemic being brought under control by vaccines. As such, 4DMedical has 3 trials active.

The trials are all being conducted in separate institutions to ensure the validity of results.

What next for 4DMedical?

Following the company’s successful capital raising it now has $76.5 million in the bank as of March 2021. Net outflows for the quarter were $4.5 million, relating mainly to staff costs, R&D and operating costs.

Moreover, according to the release, a strong pipeline of clinical trials awaiting hospital readiness are expected to resume in the coming months.

On current prices, the 4DMedical share price is down more than 30% so far this year, but up 2.52% on this time last year. 

More reading

• Here’s why the 4DMedical (ASX:4DX) share price will be on watch today

Motley Fool contributor Daniel Ewing has shares in 4DMedical Ltd. 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 ResMed Inc (ASX: RMD) share price is as choppy as they come. Its shares have experienced multiple V-shaped recoveries starting with the initial COVID-19 selloff in March last year. 

Why it could be sink or swim for ResMed

ResMed will announce its third-quarter FY21 (3Q21) financial and operational results on Thursday, 29 April after the New York Stock market closes. 

ResMed has played a critical role through the global pandemic, providing ventilators, masks and circuits to countries in need around the world. This has likely accelerated its earnings, like many other ASX healthcare and tech shares.

However, as the COVID-19 environment unwinds, many ASX growth companies have been unable to repeat the supercharged earnings experienced in FY20. 

This has particularly been the case for ASX e-commerce shares including Kogan.com Ltd (ASX: KGN), Redbubble Ltd (ASX: RBL) and Temple & Webster Group Ltd (ASX: TPW). All of which have copped a heavy discount since last week. 

However, the key difference is that Kogan, Redbubble and Temple & Webster have all run well above pre-COVID highs. This compares to ResMed which has gone full circle, delivering near-zero capital gain since February 2020.

Brokers weigh in on the ResMed share price 

Credit Suisse and Morgan Stanley have put forth their opinions on what to expect for the company’s 3Q21 results on Thursday. 

Credit Suisse is bullish on ResMed shares with an outperform rating and a $29.50 target price. The broker is forecasting revenue growth of 3% and earnings growth of 7% for the current quarter. Its commentary highlights the company cycling through US$35 million in benefits from the pandemic in terms of ventilator sales, which it has not included in revenue estimates. 

The broker believes the company’s cash position could be building up, which could trigger a potential share buyback in FY22. 

Morgan Stanley has been more reserved with its opinions, expecting the business to continue to work towards pre-pandemic levels in its core sleep business. The broker is forecasting device sales in the United States and the rest of the world to be down 3% and 11% on the prior corresponding period. 

Morgan Stanley rates the ResMed share price as equal weight with a $27.40 target price. 

ResMed shares are down 1.20% at the time of writing, trading at $26.79. 

More reading

• Is the Temple & Webster (ASX:TPW) share price a bargain buy?
• These are the 10 most shorted shares on the ASX
• This broker thinks you should buy the Kogan (ASX:KGN) share price dip
• Leading brokers name 3 ASX shares to buy today
• 2 ASX shares that could be dividend stars of the future

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd, ResMed Inc., and Temple & Webster Group 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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In afternoon trade on Monday, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small decline. At the time of writing, the benchmark index is down slightly to 7,057.7 points.

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

Bubs Australia Ltd (ASX: BUB)

The Bubs share price is down almost 2.5% to a two-year low of 43 cents. This is despite there being no news out of the infant formula company today. However, with its third quarter update due this week and analysts warning that trading conditions are very tough, investors may be jumping ship in anticipation of a very poor update.

Carbon Revolution Ltd (ASX: CBR)

The Carbon Revolution share price has crashed 22% to $1.83. Investors have been selling the carbon fibre wheels manufacturer’s shares following the completion of the institutional component of its underwritten entitlement offer and placement. According to the release, the company has raised $73.5 million at a discount of $1.60 per new share. It will now seek to raise a further $21.5 million from retail investors. These funds will be used to execute its mega-line strategy.

Paradigm Biopharmaceuticals Ltd (ASX: PAR)

The Paradigm share price is down almost 7% to $2.38. The biopharmaceutical company’s shares have come under pressure today after an update on its dealings with the US FDA. According to the release, on Friday Paradigm received a verbal indication from the FDA that the regulator would be putting further questions to Paradigm outside the 30-day investigational new drug (IND) application review period. This has the potential to delay proceedings and adds an element of uncertainty.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price is down 3% to $3.81 following the release of a trading update. Investors have been selling the payments company’s shares despite it reporting transaction value of $1.741 billion month-to-date in April. This is up 155% on the prior corresponding period. Though, it is worth noting that this time last year the pandemic was hitting the economy hard.

More reading

• Tyro (ASX:TYR) share price drops despite April transaction values surging 155%
• Why the Paradigm (ASX:PAR) share price is sinking 5% today
• Why the Carbon Revolution (ASX:CBR) share price is frozen
• Why the A2 Milk (ASX:A2M) share price hit a multi-year low today
• Smartpay (ASX:SMP) share price lifts on fourth quarter trading update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Carbon Revolution Limited and Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia has recommended BUBS AUST FPO and Carbon Revolution 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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There has been some big news coming out of buy now, pay later (BNPL) pioneer Afterpay Ltd (ASX: APT) over the past week or so. The Afterpay share price is now up more than 22% since 31 March, but that kind of move is old hat for Afterpay investors.

No, I’m talking about the quarterly update that Afterpay provided to the markets last week, last Tuesday to be exact.

In this announcement, Afterpay gave investors what they would be used to by now. An update showing triple-digit payment volume growth, as well as a 75% growth rate in active customers. The company’s presence in the United States and United Kingdom markets are growing well, and Afterepay continues to explore new markets.

Impressive as always, but also nothing we haven’t seen before. However, something we indeed have never seen before from Afterpay was also floated last week. A potential US listing for the company.

Afterpay to list in America?

As we discussed last week, Afterpay made an announcement in its quarterly update that it was “exploring options for a potential US listing”.

Here’s what the statement said:

Afterpay is currently working with external advisors to explore options for a US listing given the US market is now the largest contributor to our business and is expected to continue to grow strongly…

While Afterpay intends to remain an Australian headquartered company, our shareholder base is increasingly becoming more globally focused. A US listing would further accommodate this growing interest…

There is no timeline set for a Board decision on a listing and any listing would be subject to market conditions, approval by a US exchange and satisfying a number of other customary listing prerequisites.

That’s all.

However, this question of a US listing opens the doors to another question: What is going to happen to Afterpay’s ASX investors if the company does indeed pack up and move overseas. Well, Afterpay isn’t giving much away right now, as you can garner from the words above. But there are a few possibilities.

How will Afterpay shares look if they move to the US?

ASX dumped?

Afterpay could just delist from the ASX altogether, and become like that other Aussie tech company Atlassian Corporation (NASDAQ: TEAM). Aussies who want to invest in Atlassian simply have to buy shares on the US Nasdaq exchange, like they would for any other US company. There are no ASX-listed Atlassian shares.

If Afterpay did go down this path, it’s even possible (if perhaps unlikely) that ASX investors might be forced to sell their ASX Afterpay shares. Following that, they would then buy the US-listed shares when they become available if they still want to own Afterpay. A likelier outcome is that ASX investors would have their ASX shares ‘swapped’ with the US version of the shares.

Dual listing

Alternatively, Afterpay could follow a full dual-listing structure, which companies like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) already employ. For example, BHP lists on the ASX, as we all know. But it also has a US listing in BHP Group Ltd (NYSE: BHP), as well as a listing in the UK in BHP Group plc (LON: BHP).

All of these shares have a similar structure, albeit with different pricing.

CDIs?

Finally, Afterpay could employ a CDI model. A CDI (or Chess Depositary Interest) is not quite the same as a dual listing. Instead of the shares being officially available on an exchange, a CDI is a certificate of sorts that says you have a beneficial ownership right to shares on another exchange. An ASX example of this type of listing is Resmed CDI (ASX: RMD).

Resmed Inc (NYSE: RMD) is officially the company’s ‘true’ listing. The ASX CDIs just allow ASX investors to buy those US shares on the ASX. But it will still be a US investment priced in US dollars. Thus, if Resmed’s US shares don’t change in value, but the Aussie dollar rises, the Resmed CDIs will fall in value.

This is another avenue Afterpay could go down.

Foolish takeaway

Whatever the outcome, it doesn’t appear as though ASX Afterpay investors have anything to fear from the company’s US listing aspirations. But we will have to wait for further updates on Afterpay’s plans to really get a gauge on this situation. Watch this space!

More reading

• 5 things to watch on the ASX 200 on Monday
• Afterpay (ASX:APT) share price given $40 price target
• Could a dual listing drive the Afterpay (ASX:APT) share price higher? 
• Why your ASX 200 shares aren’t going up with the market 
• Is the Afterpay (ASX:APT) share price fully valued?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Atlassian. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ResMed. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended ResMed Inc. 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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