In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small decline. At the time of writing, the benchmark index is down slightly to 7,143.4 points.

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

Allkem Ltd (ASX: AKE)

The Allkem share price is up 4% to $13.53. Investors have been buying lithium shares today amid optimism that demand will continue to outstrip supply for some time to come. This could lead to lithium prices remaining higher from longer.

National Australia Bank Ltd (ASX: NAB)

The NAB share price is up 2% to $31.36. This appears to have been driven by a broker note out of Goldman Sachs this morning. According to the note, the broker has retained its conviction buy rating and $34.17 price target on the bank’s shares. Goldman believes that NAB’s balance sheet mix provides investors with the best exposure to the domestic system growth the broker is forecasting over the next 12-18 months.

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price has jumped 14% to $1.28. This follows news that the donations technology company has received a takeover proposal from BGH Capital and Sixth Street. While no details have been provided, the suitors appear to mean business. They have already accrued a combined 20% interest in Pushpay recently.

Virgin Money UK (ASX: VUK)

The Virgin Money UK share price is up 3% to $2.65. This follows an even stronger gain by the UK-based bank’s London-listed shares during overnight trade. This was despite there being no news out of Virgin Money. Though, it is worth noting that banks performed positively on Wall Street and elsewhere last night following a strong update from JP Morgan.

The post Why Allkem, NAB, Pushpay, and Virgin Money UK shares are rising appeared first on The Motley Fool Australia.

More reading

• Pushpay share price jumps 17% amid BGH Capital and Sixth Street takeover approach
• Why are ASX 200 lithium shares kicking goals today?
• ASX 200 midday update: Nufarm, Tabcorp and TechnologyOne tumble
• Pushpay share price halted following takeover approach
• Has the NAB dividend been growing?

Motley Fool contributor James Mickleboro has positions in Orocobre Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has positions in and has recommended PUSHPAY FPO NZX. 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 shakiness of the S&P/ASX 200 Index (ASX: XJO) seems to be continuing for investors thus far on Tuesday. The ASX 200 has been bouncing around all day but is presently down by a paltry 0.06% at around 7,150 points.

But rather than trying to get our heads around all that, let’s instead check out the ASX 200 shares that are currently sitting at the top end of the market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Tuesday

Nufarm Ltd (ASX: NUF)

ASX 200 chemicals manufacturer Nufarm is our first share to check out today. So far this Tuesday, a hefty 14.12 million Nufarm shares have been bought and sold on the markets today.

This is almost certainly a consequence of the company’s painful share price loss today. Nufarm shares are currently down by a nasty 14.4% at a flat $5. This slump follows news that Nufarm’s largest investor, the Japanese Sumitomo Chemical Co Ltd, has dumped its 15.9% stake in Nufarm for a heavy loss. NUF said.

Pilbara Minerals Ltd (ASX: PLS)

Pilbara Minerals is our next company to have a look at this Tuesday. So far, a sizeable 15.77 million of this ASX 200 lithium producer’s shares have been thrown around the ASX.

There’s been no news out of Pilbara today that might explain this high volume. However, the company is still up a pleasing 4.1% so far today at $2.92 a share. It’s this strong rise that is the likely cause of these volumes we are seeing.

Tabcorp Holdings Limited (ASX: TAH)

ASX 200 gaming giant Tabcorp is our final and most traded share of the day as it currently stands. A whopping 100.56 million Tabcorp shares have so far swapped hands. This is almost certainly the result of the demerger that has occurred with Tabcorp shares today.

No, the company is not down 80%, as is suggested in some corners. Instead, Tabcorp has completed the ASX spinoff of The Lottery Corporation Limited (ASX: TLC), which has debuted on the ASX today. Shareholders received one Lottery Corp share for every Tabcorp share owned. So while Tabcorp has dropped in value, investors have also got some shiny new shares to admire.

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

More reading

• The Pilbara Minerals share price has surged 15% in 2 weeks. What’s happening?
• Here’s what you need to know about the Tabcorp demerger
• Looking for the world’s biggest dividend? You’ll find it right here on the ASX 200
• The Lottery Corporation share price debuts on the ASX boards
• Why are ASX 200 lithium shares kicking goals today?

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 Materials Index (ASX: XMJ) has fallen 3.6% in a month, but this ASX lithium share is surging ahead.

The Lithium Energy Ltd (ASX: LEL) share price has soared 44% from market close on 22 April to its intraday high of $1.43 on Tuesday. At the time of writing, it had settled at $1.36, up more than 7% on the day.

Let’s take a look at what has been helping this ASX lithium share.

Lithium demand

ASX lithium shares, including Lithium Energy, are rising amid ongoing lithium supply concerns.

Other ASX lithium shares to rise today include Mineral Resources Limited (ASX: MIN), up 2.62%, and Pilbara Minerals Ltd (ASX: PLS), up 4.09%. Meanwhile, the Allkem Ltd (ASX: AKE) share price is 3.85% higher while Liontown Resources Limited (ASX: LTR) is ahead 3.47%.

The surge coincides with a release of a new International Energy Agency Global EV report. It warns while electric car sales are breaking records, mineral supply constraints are looming. The report highlights lithium prices in May 2022 are seven times higher than at the start of 2021.

The report said:

Unprecedented battery demand and a lack of structural investment in new supply capacity are key factors.

The rapid increase in EV sales during the pandemic has tested the resilience of battery supply chains, and Russia’s war in Ukraine has further exacerbated the challenge.

Lithium Energy is exploring the Solaroz Lithium Project in Argentina and the Burke Graphite Project in Queensland.

On 9 May, the company advised it is finalising high priority drill targets at the Solaroz project. The company said it aims to define a maiden JORC Mineral Resource of lithium from a 12,000 hectare concession area. The company is conducting passive seismic surveys to find out the depth of the underlying basement rock.

Commenting on the exploration activities, executive chairman William Johnson said:

The commencement of exploration activities on Lithium Energy Solaroz concessions is a very exciting phase in the growth of the company.

In a presentation to a conference in Sydney on 3 May, Lithium Energy highlighted the Solaroz project can be found in the ‘prolific’ lithium triangle. This is said to be home to the “world’s largest reserves of lithium”.

Share price snapshot

The Lithium Energy share price has skyrocketed 180% in the last 12 months while it has soared 47% year to date.

In the past week alone, it has surged more than 18%.

For perspective, the benchmark  S&P/ASX 200 Index (ASX: XJO) has climbed 1.44% in the past year.

Lithium Energy has a market capitalisation of about $62 million based on today’s share price.

The post Why has this ASX lithium share surged 40% in a month? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX mining shares leapt more than 10% on Friday
• Here’s why the Lithium Energy share price is shooting 16% higher

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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Australian dividends have officially recovered from the COVID-19 pandemic after ASX shares offered a record $98 billion of dividends over the 12 months ended March.

But could the rest of 2022 see Australian investors receiving yet another record-breaking payout?

Experts at the Janus Henderson Group (ASX: JHG) think that $100 billion of dividends could be on the money for ASX investors this year. If that’s reached, it will likely be thanks to some of the S&P/ASX 200 Index (ASX: XJO)’s biggest names.

However, the global asset manager has warned of a darker side to such a story.

Let’s take a look at what might be in store for ASX dividend investors over the rest of 2022.

Could ASX shares pay out $100b in dividends in 2022?

ASX 200 mining companies might help push Australian dividends to a new record in 2022. That’s according to data compiled by Janus Henderson.

“Australian dividends, already at record levels, are set to rise further over the rest of the year and may top $100 billion for the first time,” it noted.

However, the asset manager warned that Australia’s dividends are concentrated to a few stocks in a few sectors. That could spell bad news for investors.

Of the $97.9 billion of dividends ASX investors received over the year to March, $53 billion came from materials shares. The financials sector handed another $30.3 billion of dividends to shareholders.

“Australia’s high level of dividend concentration leaves domestic investors far more heavily dependent on just a handful of companies for a very large portion of their dividend income than in any comparable country,” Janus Henderson noted in its latest Global Dividend Index report.

“There are many examples from around the world in recent years of how very large dividend payers encountered difficulties that have forced them to cut payouts …

“[T]aking a global approach to dividend income clearly captures the significant benefits of diversification that a domestic, Australia-focused strategy would struggle to replicate.”

BHP Group Ltd (ASX: BHP) handed out one of the world’s biggest dividend increases last quarter. The Commonwealth Bank of Australia (ASX: CBA) dividend also scored a mention. It increased 17% last half.

No doubt, dividend fans will be keeping their eyes peeled for ASX shares bolstering their payouts over the remainder of 2022.

The post Could ASX shares pay out $100b in dividends this year? Expert weighs in appeared first on The Motley Fool Australia.

More reading

• Looking for the world’s biggest dividend? You’ll find it right here on the ASX 200
• Better buy, BHP or Fortescue shares?
• Keen to bag the special BHP dividend? Here’s what you need to do
• Why is the Woodside share price having such a strong start to the week?
• How are ASX 200 mining shares responding to the election outcome?

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 Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price has been on the move in the last two weeks, helped by the company’s latest announcements.

Since the closing bell on May 10, the lithium miner’s shares are up 15% on the back of renewed investor optimism.

At the time of writing, Pilbara Minerals shares are powering ahead today by 3.91% to $2.92.

Why are Pilbara Minerals shares on the rise?

As the largest ASX-listed lithium player, investors have been taking advantage of the recent Pilbara Minerals share price weakness.

Last week, the company, along with its partner Calix Ltd (ASX: CXL), was awarded a $20 million grant from the Australian Government under the Modern Manufacturing Initiative (MMI).

The funds are set to be used to support the further development and demonstration of the proposed mid-stream project.

Pilbara Minerals and Calix are aiming to execute a formal joint venture agreement by early Q3 2022.

Furthermore, a final investment decision on the project is to be decided by late 2022 to early 2023.

This led to Pilbara shares rising 5% on the day of the release, and 2.56% the day after.

In addition, the company released a corporate presentation highlighting the lithium boom along with its strategy to expand production capacity.

This is namely for its Pilgangoora Operation in which management hopes to achieve 560,000 to 580,000 tonnes per annum of spodumene concentrate from the upcoming September quarter.

A lot of attention has been on the incredible rise in the spot price for lithium. Over the past year alone, lithium carbonate has rocketed almost 400% in value.

The battery-making ingredient is expected to be adopted across a number of industries, notably the transitioning to electric vehicles.

About the Pilbara Minerals share price

Over the past 12 months, the Pilbara Minerals share price has accelerated by 170%. However, year to date it is down 9%.

The company’s share price reached an all-time high of $3.89 in mid-January before treading lower.

Pilbara Minerals presides a market capitalisation of roughly $8.36 billion, and has approximately 2.98 billion shares on its books.

The post The Pilbara Minerals share price has surged 15% in 2 weeks. What’s happening? appeared first on The Motley Fool Australia.

More reading

• Why are ASX 200 lithium shares kicking goals today?
• Here are the 3 most traded ASX 200 shares on Monday
• These were the best performing ASX 200 shares last week
• Here are the 3 most traded ASX 200 shares on Friday
• New or old energy: Have oil producers bested ASX lithium shares?

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 Scott Phillips.

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Shares in Origin Energy Ltd (ASX: ORG) are edging lower on Tuesday, trading at $6.755 apiece at the time of writing, a drop of 0.22%.

Origin shares are slightly underperforming the wider S&P/ASX 200 Energy Index (ASX: XEJ) which is up 0.23% this afternoon, after trading sideways for the past three months.

However, Origin investors have seen 29% gains for the year to date, as the energy supplier continues to see upside amid a sector-wide commodities boom.

Origin Energy’s dividend outlook

Analysts at JP Morgan are baking in a 40 cents per share dividend payment for Origin shareholders in their FY22 estimates.

That’s a 100% jump from FY21’s payout of 20 cents per share. From there, analysts forecast a slight dip to 32 cents per share in FY23 before spiking to 36 cents per share in FY24.

The broker makes its projections on net profit after tax (NPAT) estimates of $200 million, $982 million, and $1.132 billion for the corresponding years.

This should carry dividend yields of 5.8%, 4.7%, and 5.3% respectively at the current Origin Energy share price, JP Morgan says.

Meanwhile, the consensus of analyst estimates forecasts Origin to return 26.3 cents per share in 2022 and 30.6 cents per share the following year, according to Bloomberg data.

If that were to occur, shareholders would realise a 4.13% and 4.84% yield respectively, based on this data. Origin shares would also yield 4.38% in FY24 at the current share price.

Drawing inferences from JP Morgan estimates and the consensus of analyst forecasts on the Origin dividend, it appears shareholders are in for a period of income growth over the next few years, should all go according to plan.

Origin Energy share price snapshot

In the last 12 months, the Origin Energy share price has recorded a 66% gain after rising sharply in 2022. In the last month, however, Origin shares have crept less than 1% higher.

The post What’s the outlook for the Origin dividend in 2022? appeared first on The Motley Fool Australia.

More reading

• If the ‘election outcome is deeply consequential for clean energy investment’, which ASX shares might benefit?
• The Origin share price is absolutely smashing the ASX 200 in 2022. Why?
• 3 ASX All Ordinaries shares that smashed new 52-week highs today
• How is the Origin Energy share price managing to hit multi-year highs today?
• Origin share price gains as surging commodity prices boost revenue to $2.5b

Motley Fool contributor Zach Bristow 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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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.

Amazon (NASDAQ: AMZN) has had a volatile few years since the pandemic‘s onset. It did an excellent job fulfilling the surge in demand for customer orders when folks were avoiding shopping in person. As economies reopen, sales growth is slowing down but remaining at high levels. Between all of that, founder Jeff Bezos stepped down from his role as chief executive officer of his founded company. 

And now, Amazon’s stock has fallen along with the broader market, creating a favorable opportunity to buy. Let’s look at three reasons investors should buy Amazon stock and one reason to be cautious. 

1. Its cloud computing business is thriving

Amazon’s web services segment (AWS), which provides cloud computing services to enterprises worldwide, grows faster than the business overall. In its most recent quarter, which ended March 31, AWS reported revenue of $18.4 billion. That was up by 37% from the same quarter in the prior year. Increasingly, businesses are choosing Amazon for their computing infrastructure needs. With Amazon’s cloud services, companies can turn what used to be a considerable up-front capital expense into a monthly expenditure.

Fortunately for Amazon, AWS also delivers healthy profit margins. Indeed, in the same quarter mentioned above, AWS earned $6.5 billion in operating income on revenue of $18.4 billion. To put that into perspective, Amazon has not reported an operating profit margin of over 6% overall in the last decade. Without the AWS segment, Amazon would be losing money.

AMZN Operating Margin (Annual) data by YCharts.

Amazon has the leading market share in the cloud industry, which is expected to grow nicely from the estimated $400 billion in annual sales it achieved in 2021.  

2. It’s developing a robust advertising business 

Another powerful reason to own Amazon stock is that it’s built a robust advertising business. Amazon has increased ad sales by more than 25% in its past six quarters. In Q1, ad sales totaled $7.9 billion. Like the AWS segment, advertising is a lucrative business. Besides the initial costs to set up the capability, there is little expense associated with incremental ad sales.

Amazon boasts over 200 million Prime members. These folks have a payment method on file and access to fast and free delivery provided by Amazon. They are also one click away from purchasing a product. There is arguably no other advertising real estate that is so close in proximity to consumer purchase. It’s not surprising that marketers would want the opportunity to influence individuals browsing Amazon’s app and website. 

3. The stock is cheaper than it has been in years 

AMZN PE Ratio data by YCharts.

Making the case to buy Amazon more compelling, the stock is cheaper than in years. Amazon’s price-to-sales ratio of 2.3 and price-to-earnings multiple of 52 is near their lows of the past five years. The company has been caught up in the broad market sell-off, and its stock is down considerably off its highs. 

Reason to hesitate: e-commerce sales growth is slowing 

The one reason to hesitate about Amazon is the near-term headwinds facing its online sales. Consumers boosted spending online at the pandemic’s onset to avoid shopping in person. Now that billions of folks have gotten vaccinated against COVID-19 and brick and mortar stores are reopening, people feel better about leaving their homes. That’s creating a headwind for Amazon, which saw online sales fall by 3% year over year in its quarter ended in March. 

To be sure, it’s a significant slowdown from the 40% growth the business experienced in Q4 2020 and Q1 2021. The trend of falling sales could continue if the threat of COVID-19 continues to fade in consumers’ minds. Yet ultimately, investors should not allow these risks to stop them from buying an otherwise excellent company at a bargain price. 

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

The post 3 reasons to buy Amazon and 1 reason to hesitate appeared first on The Motley Fool Australia.

More reading

• 2 reasons Amazon stock is slumping today
• Why Meta Platforms stock just rose while Amazon sank
• The single greatest investing lesson I ever learned
• Will Microsoft and Apple shares finally give way in the stock market’s downturn?
• Why Amazon shares are tumbling today

Parkev Tatevosian has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. 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 ASX share market has seen a lot of declines in the first five months of 2022. But with prices now so much lower, are some of the potential ASX growth share investments now too cheap to ignore?

A decline doesn’t necessarily make an investment the right choice. However, for quality businesses that are growing internationally, this could prove to be an opportune time to evaluate some of the previous high-flying ASX growth shares.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The NDQ ETF has seen a decline of 27% since the beginning of the year, which is a hefty drop for an exchange-traded fund (ETF) that represents many of the world’s biggest technology businesses.

Betashares Nasdaq 100 ETF gives Aussies access to names like Apple, Microsoft, Amazon.com, Alphabet, Tesla, Meta Platforms, PepsiCo, Broadcom, Adobe, Costco, Advanced Micro Devices, Qualcomm, Honeywell International, and Applied Materials.

While I wouldn’t want to buy every single one of those names for my portfolio, I like how the NDQ ETF wraps it all up for investors for an annual fee of just 0.48%.

Higher interest rates do, in theory, explain lower share prices. However, I think the collective lower price of most of these technology names makes them more attractive for a potential long-term investment.

Plenty of the businesses in the portfolio are some of the strongest in the world at what they do in my opinion, which makes this ASX growth share an attractive option to me.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Investors have gone cold on the Domino’s share price this year, with it dropping 43% since the start of 2022. The ASX growth share is down around 60% since September 2021.

The company seems to be suffering from both the market sell-off as well as a slow-down of demand as COVID-19 lockdowns lift around the world. Domino’s fed hungry households during 2020 and 2021 as restrictions limited what food options were available.

The first six months of FY22 showed a slowing of sales growth and a decline in profitability. Domino’s reported that network sales rose by 11.1%, but earnings before interest and tax (EBIT) declined by 5.7% to $144.7 million and underlying net profit after tax (NPAT) dropped by 5.3% to $91.3 million.

There were two elements of decline – in ANZ, EBIT fell 6.1% reflecting investment in franchisees, and the Japan EBIT declined by 17.3%.

However, the company has a long-term plan to keep growing same-store sales, its total network number, and to keep investing in the business. It recently opened its 900th store in Japan – it plans to have 1,000 in FY23 and 2,000 stores by 2033.

After a sizeable reduction of the Domino’s share price and price-to-earnings (p/e) ratio, I think it’s better value for how much profit it could be generating five or 10 years from now.

According to Commsec, Domino’s is now valued at 23x FY24’s estimated earnings.

The post Are these 2 sold-off ASX growth shares now cheap bargains? appeared first on The Motley Fool Australia.

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• Why I would invest $10,000 into these ASX shares today
• 2 high quality ETFs for ASX investors to buy after the market meltdown
• VAS: Were you better off buying the Nasdaq ETF?
• 3 ASX All Ordinaries shares that managed to post decent gains on Monday
• ASX 200 midday update: Westpac result impresses, AVZ halted

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Adobe Inc., Advanced Micro Devices, Alphabet (A shares), Amazon, Apple, BETANASDAQ ETF UNITS, Costco Wholesale, Meta Platforms, Inc., Microsoft, Qualcomm, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Dominos Pizza Enterprises Limited, and Meta Platforms, Inc. 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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Zip Co Ltd (ASX: ZIP) shares have continued to take a beating with losses of 80% in 2022.

Investors are most likely wondering how low the Zip share price can go following the recent market pullback.

Just last week, the buy now, pay later (BNPL) company’s shares hit a fresh multi-year low of $86.5 cents before holding ground for the time being.

Currently, Zip shares are down 4.89% to 87.5 cents.

So, if you are one of the unlucky investors that stayed on for the Zip rollercoaster ride, is now the time to cut your losses?

Why has the Zip share price been sinking?

The spotlight has been on the Zip share price as selling pressure intensifies throughout the BNPL market.

During the pandemic, a throng of customers adopted the alternate way to pay for purchases in-store and online.

The company recorded strong top line growth and still does to this day. However, it’s the rising bad debts and widening losses that are weighing down Zip shares. 

In its half-year results, the company noted that net bad debts stood at $115.4 million. This compares to $22.4 million written off in the prior comparable period.

On the bottom line, Zip registered a loss of $153.6 million compared to the loss of $139.8 million in H1 FY21.

Management acknowledged a shift in the external environment, arguably faster and more severe than first forecast.

Expansion into less mature markets and the easing of government stimulus packages in the United States caused credit headwinds.

In response, the company has refined its strategy but it is still too early to tell if this will pay off.

Not helping matters is the sharp decline of the S&P/ASX All Technology Index (ASX: XTX), down 30% year to date.

So, is now the time to cut your losses?

With the Zip share price going further down the rabbit hole, you might be wondering if you should hit the sell button.

This evidently comes down to your level of investment, risk tolerance, and how far deep in the red you are.

If you bought Zip shares more than a year ago, you’re likely sitting on losses of more than 80%. That means the share price would need to accelerate 400% to make your initial investment back.

And if you’re down 90%, that’s a 900% increase needed.

It’s important to take emotion out of any trade and acknowledge when you’ve made a bad trade. Always set up a trading plan before you make the decision to invest and stick to your guns.

Of course, selling Zip shares at a loss will offset the tax gains accrued in the current financial year. This is a popular strategy, particularly with tax time around the corner.

If so, you can always look to reinvest the leftover funds into founder-led, high-growth ASX shares.

The post The Zip share price is down 80% in 2022. Should you cut your losses? appeared first on The Motley Fool Australia.

More reading

• ‘Just horrific’: Why this fundie says Zip should abandon its Sezzle takeover
• The Zip share price is rocketing 6% today. Here’s why
• Zip just joined forces with another ASX 200 company
• Zip share price dives to yet another multi-year low
• Is the Zip share price set to hit another unhappy milestone this week?

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 Scott Phillips.

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The Tabcorp Holdings Limited (ASX: TAH) share price is catching the eye of investors on Tuesday.

In afternoon trade, the gaming giant’s shares are down 81% to $1.03.

What’s going on with the Tabcorp share price?

The collapse in the Tabcorp share price has been driven by the demerger of the company’s Lotteries and Keno businesses this morning.

These businesses have been spun off and listed separately as The Lottery Corporation Limited (ASX: TLC).

The good news is that while the Tabcorp share price has crashed today, value has actually been created for shareholders.

Prior to the demerger, Tabcorp had a market capitalisation of approximately $11.9 billion. This is based on 2,225,771,703 shares on issue and a share price of $5.34.

Today, eligible shareholders have been given one share in The Lottery Corporation for every Tabcorp share they owned. This means there are now 2,225,771,703 shares on issue for both Tabcorp and The Lottery Corporation.

So, with the Tabcorp share price currently trading at $1.03, it has a market capitalisation of ~$2.3 billion. Whereas The Lottery Corporation share price is fetching $4.63, giving it a market capitalisation of ~$10.3 billion.

This gives us a combined market capitalisation of $12.6 billion, which is $700 million or 5.9% greater than what Tabcorp was valued at pre-demerger.

Why did the Tabcorp demerger happen?

Management decided to push ahead with the Tabcorp demerger on the belief that it would maximise value for shareholders (so far so good!).

It notes that it will create two significant businesses with focused leadership teams and allow each business to adopt a more focused operating profile and capital structure that is more aligned to its core operations.

In addition, management highlighted that the demerger allows shareholders to retain full upside potential from various growth opportunities which may arise for both businesses. It also creates access to new and different investor categories with different investment preferences and ESG criteria.

How have the businesses been carved up?

The Lottery Corporation is the new home of Tabcorp’s Lotteries and Keno businesses. It is an omni-channel business with a portfolio of high profile, recognised brands and games, strong digital growth and a retail footprint across ~7,000 retail outlets/venues.

In FY 2021, these businesses generated 55% or $611 million of Tabcorp’s EBITDA.

New Tabcorp has been left with its wager and media and gaming services businesses, which generated revenue of $2,493 million and EBITDA of $464 million in FY 2021.

Management notes that it will be a leader in omni-channel wagering, racing and sports broadcasting, and gaming services solutions. It believes the business is well positioned for organic growth and potential upside from possible changes in the wagering and gaming industry.

The post Here’s what you need to know about the Tabcorp demerger appeared first on The Motley Fool Australia.

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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 Scott Phillips.

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