S&P/ASX 200 Index (ASX: XJO) mining shares are some of the standout performers today.

While the ASX 200 is down around 0.6% in early afternoon trade, the BHP Group Ltd (ASX: BHP) share price is up 1.62%.

Meanwhile, Fortescue Metals Group Ltd (ASX: FMG) is up 2.23% while Mineral Resources Ltd (ASX: MIN) has gained 1.54%.

So, why are the big miners doing the heavy lifting today?

Bargain hunting and resurgent iron ore

It looks like the three ASX 200 mining shares named above are predominantly benefiting from two aligned factors.

First, after falling 9.7% yesterday, iron ore prices gained 2.4% overnight to US$138.95 per tonne.

Both BHP and Fortescue earn a large portion of their revenue from iron ore, while mining services company Mineral Resources has a strong focus on miners digging up the industrial metal.

Second, and tied into yesterday’s sharp fall in iron ore prices, it looks like investors may be doing some bargain hunting following some big drops in the top miners during yesterday’s trading.

Yesterday the BHP share price closed down 5.8%, Fortescue shares lost 6.9%, and the Mineral Resources share price fell a painful 9.5%.

Atop the bargain hunting and bounce in iron ore prices, Mineral Resources could also be benefiting from some positive broker coverage out this morning.

Bell Potter reported that it is maintaining its buy rating on the ASX 200 mining share, with a $70.00 price target. That’s 27% above the current Mineral Resources share price.

The broker was also positive about Mineral Resource’s US$1 billion offering of senior unsecured notes, calling it “further confirmation of MIN’s commitment to the transformational portfolio of growth projects”.

How have these ASX 200 mining shares been tracking?

Two of the three big miners listed above have handily outperformed the benchmark this year.

While the ASX 200 has lost 4.3% since the opening bell on 4 January, Fortescue shares have gained 4.6% and the BHP share price has rocketed 11% higher.

Mineral Resources shares, however, have struggled, with the ASX 200 mining share losing around 2% year-to-date.

The post 3 ASX 200 mining shares defying today’s sell-off to surge higher appeared first on The Motley Fool Australia.

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• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• 5 things to watch on the ASX 200 on Wednesday
• Why Chalice Mining, EML Payments, Mineral Resources, and South32 shares are tumbling
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Sinking iron ore price sends ASX 200 mining shares tumbling

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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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.

Shares of Nvidia (NASDAQ: NVDA) continue to get clobbered. As of this writing, the stock is now down more than 40% from all-time highs reached in late 2021. Several worries are conspiring to bring down Nvidia, the semiconductor industry, and tech in general right now.

These include the Federal Reserve’s aggressive rate hike posturing, calls for a slowdown in consumer spending, and a possible reduction in demand for graphics processing units (GPUs) needed in cryptocurrency mining. 

Nvidia faced challenges like this just a few years ago. It overcame those issues then, but what about now?

Nvidia is a cyclical stock

All businesses are cyclical for one reason or another — meaning business ebbs and flows based on supply and demand and other economic factors. For Nvidia and chip stocks in general, the cyclicality tends to come from the pacing of hardware purchases. Every few years, consumer and business demand for computing hardware slows, and chip stocks fall. Later, as signs emerge that hardware purchasing might pick up pace again, chip stocks rally.

This is what happened to Nvidia in 2018. GPU sales fell (the crypto market crashed, the US-China trade war pressured demand for chips, the Fed was raising interest rates, too), and Nvidia’s stock tanked. But then it went on an epic tear starting in 2019 as a new generation of chips for video gaming, data centers, and artificial intelligence (AI) came out.

Data by YCharts.

Is the current environment a simple repeat of history? Probably not. Nvidia is a different company than it was four years ago. It’s more diversified now with other chips outside of its GPU bread-and-butter product. And though some of the themes dragging down the chip industry rhyme with the 2018 situation, the economy is also facing very different issues today.

If chip sale growth stumbles at some point later this year or next (Nvidia forecast 43% year-over-year revenue growth for the fiscal first quarter, which will be reported on May 25, there’s no guarantee it will return to the torrid pace of expansion it has enjoyed during the pandemic.

Plus, even after falling 40% in recent months, shares still trade for 60 times trailing 12-month free cash flow and 28 times one-year forward expected earnings. This is no cheap stock.

The case for Nvidia as a $1 trillion company

In spite of mounting worry of an economic slowdown and the fact Nvidia is already a giant among tech stocks, Nvidia’s diversification today could actually be a benefit in the next few years. More than a designer of semiconductors like many of its peers, this is a full-blown tech platform. Nvidia is designing hardware and software, that puts the power of AI into the hands of all industries — from healthcare to the automotive industry, and even other tech companies. 

These are powerful secular growth trends that could help propel Nvidia higher for many years to come. For what it’s worth, some analysts think Nvidia’s revenue will more than double to over $65 billion in five years (compared to $26.9 billion in revenue during the recently-completed fiscal year ended in January 2022). If Nvidia delivers on those lofty expectations, a $1 trillion valuation doesn’t seem out of the question (the company’s enterprise value sits at $489 billion as of this writing).  

Of course, if you’re the type of investor who wants to see a company “prove it” and only buys when a stock is a reasonable value, take a pass on Nvidia right now. But if you believe this tech giant will continue to sink its roots into the global economy with its AI platform in the years ahead, you don’t mind extreme bouts of volatility, and can make periodic purchases to add to your position (dollar-cost averaging), now looks like a great time to go shopping for some Nvidia shares.

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

The post Is Nvidia stock a buy after falling 40% from all-time highs? appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 mining shares defying today’s sell-off to surge higher
• Why aren’t ASX gold shares performing better in these uncertain times?
• Why is the Block share price slipping 6% today?
• Why is the Green Technology Metals share price on ice today?
• Here’s why the Woodside share price is beating the ASX 200 today

Nicholas Rossolillo and his clients own Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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Gold as an investment can be many things to many people. But the yellow metal’s most ardent enthusiasts will tell you that gold’s most valuable trait is its resilient nature.

Gold, and ASX gold shares by extension, are often described as inflation hedges, protection against uncertainty and even ‘real’ money.

These characteristics aren’t just confined to owning physical bullion, either. Investors often gravitate towards the companies that mine it, seeing as they benefit from gold’s underlying strengths, too.

So if gold, and ASX gold shares, are the ultimate safe-haven assets, why aren’t they performing better?

On paper, 2022 thus far looks to be a perfect year for rocketing gold prices. We have buckets of geopolitical instability, exemplified by the tragic war in Ukraine and ongoing tensions with China. We have economic uncertainty as central banks worldwide move to tighten up interest rates. And we have inflation at levels unseen for decades across many of the world’s advanced economies.

And yet many ASX gold shares have been muted in their performance over the year so far.

Take a large ASX 200 miner like Northern Star Resources Ltd (ASX: NST), for example. Since the start of the year, Northern Star shares have risen by 4.35%. Nothing to turn your nose up against. But arguably nothing to write home about either.

Other ASX gold shares have fared worse. Take Gold Road Resources Ltd (ASX: GOR). This miner has gone backwards by around 2.2% over 2022.

ASX expert: Patience with gold

So what’s going on with gold? Well, let’s see what one investing expert reckons. Chris Watling of Longview Economics recently penned an opinion on this matter at Livewire. Here’s some of what he said on gold right now:

There is currently plenty of confusion about the outlook for the gold price…

Theoretically, in [this] environment, gold should hold its purchasing power and perform well. Instead, the price has gone nowhere for the past two years (broadly speaking). It’s therefore not serving as an inflation hedge, nor an ‘alternative’ to fiat money.

Watling said safe-haven buying on the Russian invasion was “short-lived and, instead of a breakout above the 2020 high, the price so far looks like it’s made a ‘double top…” He added:

We would argue, though, that gold has been remarkably resilient… while there’s strong evidence that gold is an inflation hedge over long periods of time, short-term price direction is determined by other factors…

Our central view is that it’s the latter, i.e. real yields, Fed rate expectations, and the dollar are likely to ‘top out’ and move lower in the near term (over the next few months). If that’s correct, then recent headwinds for the gold price should become tailwinds, with gold likely to break above its key resistance level (i.e. the ‘double top’ high of $2,077/oz).

So that’s how one investing expert is viewing gold right now. The precious metal has many advocates as well as detractors. But gold’s allure will no doubt continue to attract the attention of some investors.

The post Why aren’t ASX gold shares performing better in these uncertain times? appeared first on The Motley Fool Australia.

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• ASX 200 midday update: Coronado has record quarter, Life360 and Northern Star sink
• Northern Star share price tumbles on guidance update
• 5 things to watch on the ASX 200 on Wednesday
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• What’s boosting the Northern Star share price on Tuesday?

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 Bruce Jackson.

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The Block Inc CDI (ASX: SQ2) share price is plunging today after a broker downgrade on the company’s United States listing.

Block shares are currently trading at $139.14, a 6.53% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.72% in the red at the time of writing.

Let’s take a look at what could be weighing on the Block share price today.

Broker downgrade

Block’s ASX shares are following the pattern of the company’s New York Stock Exchange (NYSE)-listed shares in US markets.

Susquehanna analyst James Friedman downgraded the target price of Block Inc (NYSE: SQ) from $240 to $140 – a 42% decrease. Though, Friedman maintained a positive rating on Block’s US listing. Block fell 6.43% to $100.47 in the US on Tuesday.

Further to this, Credit Suisse analyst Timothy Chiodo dropped the price target on the US listing from $190 to $180 ahead of the company’s quarterly results. Credit Suisse has maintained an outperform rating on the company’s shares.

Block is not the only buy now, pay later (BNPL) share slipping on the ASX today. Zip Co Ltd (ASX: ZIP) shares are down 5.61%, while Beforepay Group Ltd (ASX: B4P) is 13.13% in the red. However, Openpay Group Ltd (ASX: OPY) is climbing 1.61%.

In recent news, Block CEO and chair Jack Dorsey changed his title from CEO, president and chairperson to “Block Head and Chairperson”.

Dorsey is also the co-founder of Twitter, which Elon Musk has just taken over in a $60 billion deal.

The market is expecting Block to report its earnings in early May.

Block share price snapshot

The Block share price has fallen 21% on the ASX year to date, and it has dropped 21.8% in the past month alone. Block listed on the ASX as SQ2 on 1 February after taking over Afterpay.

For comparison, the ASX 200 has slid nearly 3% year to date.

Block has a market capitalisation of about $6.2 billion.

The post Why is the Block share price slipping 6% today? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended Block, 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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The Green Technology Metals Ltd (ASX: GT1) share price won’t be going anywhere on Wednesday.

This comes as the company requested that its shares be placed in a trading halt.

At the time of writing, the Canada-based lithium explorer’s shares are frozen at $1.155 apiece.

Why is the Green Technology Metals share price halted?

Prior to the market opening, management requested the Green Technology Metals share price be halted while it prepares an announcement.

According to the release, the company is planning to make an announcement regarding a cornerstone investment and associated capital raise.

Green Technology Metals requested that the trading halt remains in place until Friday 29 April or following the release of the announcement, whichever comes first.

More on Green Technology Metals

Green Technology Metals is a North American-focussed lithium exploration and development business.

Located on highly-prospective Archean Greenstone tenure in northwest Ontario, Canada, the company has several lithium projects. They include high-grade, hard rock spodumene assets (Seymour, Root, and Wisa) and lithium exploration claims (Allison and Solstice).

Most notably, the company’s flagship Seymour Lithium project has an existing mineral resource estimate of 4.8 Mt @ 1.25% Li2O.

Earlier this month, management announced it recently intercepted high-grade lithium oxide from the North Aubry deposit at Seymour.

While the maiden drilling program has since been completed, the company is currently conducting both phase two (Central Aubry zone) and phase three (Pye prospect) drilling.

About the Green Technology Metals share price

Since listing in November 2021, the Green Technology Metals share price has surged by more than 360%.

In 2022, its shares are up 122% which has been supported by positive investor sentiment in the lithium sector.

Based on valuation grounds, the company has a market capitalisation of roughly $122.43 million, with 106 million shares outstanding.

The post Why is the Green Technology Metals share price on ice today? appeared first on The Motley Fool Australia.

More reading

• Guess which ASX lithium share has leapt 30% in a month to trade at all-time highs?

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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The Woodside Petroleum Ltd (ASX: WPL) share price is higher today, now trading around 1.2% in the green.

At the time of writing, Woodside shares are $30.92 apiece. That’s down from their intraday high of $31.31 a share but up from the previous close of $30.60 a share on Tuesday.

By contrast, the S&P/ASX 200 Index (ASX: XJO) is down around 0.7%.

What’s propelling the Woodside share price?

Energy markets have been buoyant this year amid an almost two-year-long commodity boom that’s sent inflationary vibes around the globe.

Brent Crude oil has spiked around 37% since the beginning of the year and is up almost 59% in the last 12 months. It now trades at US$106 per barrel, off its high of US$121 per barrel in February.

Meanwhile, natural gas futures contracts have surged across the board these last 12 months. Each of UK Gas, TTF (Netherlands) Gas, and US Natural Gas futures have soared to triple-digit percentage gains at the time of writing.

TTF Gas futures are up 382% on a yearly basis and now trade at 103 Euros/MWh, for instance. They have spiked a further 43% this year after trading as much as 200% higher in that time.

As such, global energy markets continue to rally in 2022, putting players like Woodside front and centre on the ASX. And while momentum has softened in April, it doesn’t appear to have slowed too much for Woodside.

The company is outpacing the S&P/ASX 200 Utilities Index (ASX: XUJ) and the S&P/ASX 300 Metals & Mining Index (ASX: XMM), both of which are leading sectors today.

In further news, Woodside also released its quarterly update yesterday. Judging from its results, it was a mixed quarter for the oil and gas giant.

Woodside’s revenue for the period was 17% lower than that of the December quarter. Though, it was more than double that of the prior comparable period.

The company specified that it saw a slowdown in revenue, as trading activity also slowed last quarter.

Woodside also reported it continues to push ahead with its merger with BHP Group Ltd (ASX: BHP) and that it settled the divestment of its 49% interest in the Pluto 2 venture.

Woodside share price snapshot

In the last 12 months, the Woodside share price has spiked 35% and is now up around 41% this year to date.

The company has a market capitalisation of $30.4 billion at its current share price.

The post Here’s why the Woodside share price is beating the ASX 200 today appeared first on The Motley Fool Australia.

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• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Own ASX 200 energy shares? Here’s why Morgan Stanley says the oil price is set to surge
• Woodside share price plunges 6% following up-and-down quarter
• 5 things to watch on the ASX 200 on Friday
• What’s the outlook for the Woodside share price this quarter?

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 Bruce Jackson.

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The DroneShield Ltd (ASX: DRO) share price has been turbulent in trade on Wednesday, bouncing from gains to losses and back again.

At time of writing the DroneShield share price is up 2.1% to 24 cents per share.

The company offers AI-based platforms to protect against threats posed by drones and other autonomous systems.

Below we look at the quarterly highlights reported this morning for the 3 months ending 31 March.

What results were announced?

The DroneShield share price is on a bit of a rollercoaster today despite the company reporting some strong quarterly results.

That included an 89% year-on-year boost in revenue, which reached $10.6 million.

The ASX tech share also saw a 32% increase in customer and grant cash receipts for the first quarter compared to Q1 2021.

DroneShield also said its inventory balance of $14 million (by sale value) diminishes supply chain risks and enables rapid sales.

As at 31 March the company’s bank balance stood at roughly $8 million, which is where it remains as of this morning. It said monthly gross outflows, before revenues, are around $1.1 million per month.

Looking ahead, DroneShield estimates its sales pipeline for the rest of 2022 to be some $155 million. In 2023 this pipeline is estimated to stand at $175 million.

The company intends to increase its focus on “the more business-transparent US and Australian government customer base”.

It sees significant opportunities globally, noting the situations in the Middle East and the conflict in Ukraine, alongside an ongoing increase in local defence capability by the Australian government.

Outside of the military, airports also offer a potential growth segment, with DroneShield reporting that US and Australian airports, among others, are “actively evaluating counter-drone deployments”.

Droneshield share price snapshot

The DroneShield share price had been a strong performer in 2022, up 31% since the opening bell on 4 January. By comparison, the All Ordinaries Index (ASX: XAO) is down 5% year-to-date.

The post DroneShield share price turbulent as revenue soars 89% appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended DroneShield Ltd. The Motley Fool Australia has recommended DroneShield 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 Reject Shop Ltd (ASX: TRS) share price is freefalling on Wednesday following the shock exit of the company’s CEO.

At the time of writing, the discount retailer’s shares are changing hands at $4.32, down 15.29%.

Reject Shop CEO departs

Investors are selling off the Reject Shop shares after the unexpected announcement regarding its most senior leader.

In today’s statement, the Reject Shop advised that CEO Andre Reich has tendered his resignation with immediate effect.

After serving two years at the helm, Mr Reich has decided to pursue other opportunities away from the company. This comes after the group completed the ‘fix’ phase of its turnaround strategy while navigating the uncertainty around COVID-19.

While the company searches for a permanent replacement, its chief financial officer (CFO), Clinton Cahn, has been appointed acting CEO.

Mr Cahn will continue to fulfil his CFO responsibilities while covering the new duties required within the CEO capacity.

Commenting on the news, Reject Shop chair Steven Fisher said:

Everyone at the Reject Shop wishes Andre well in his future endeavours and we thank Andre for the work he has done to position the company for future growth.

We have commenced an external search to identify an experienced executive to lead the company through the next phases of the turnaround strategy.

The Reject Shop also advised today it has strengthened its leadership team with the appointment of experienced retail professional Amy Eshuys as chief operating officer.

The company said Ms Eshuys brought a wealth of knowledge to the role, with extensive international merchandise experience and a strong understanding of discount variety retail.

Previously, she served as vice president as well as general merchandise manager for buying, merchandising & sourcing at CTS (formerly known as Christmas Tree Shops) in the United States.

About the Reject Shop share price

After hitting a 52-week high of $7.60 in November 2021, the Reject Shop share price has been falling steadily. Its shares are now down more than 30% over the past 12 months.

Year-to-date, Reject Shop shares have fallen further, registering a loss of around 40%.

Based on today’s price, the company has a market capitalisation of roughly $165 million.

The post The Reject Shop share price tumbles 15% following shock resignation 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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The EML Payments Ltd (ASX: EML) share price is down more than 2% today.

This follows the payment company’s shares dropping 38% yesterday after the release of a trading update that included a reduction of guidance.

However, EML isn’t the only business that’s seeing a decline today. The S&P/ASX 200 Index (ASX: XJO) as a whole is down around 1% at the time of writing. Some of the biggest tech names are also down heavily. For example, the Block Inc (ASX: SQ2) share price is around 6% lower.

EML’s trading update

Yesterday, EML reported growth in the three months to 31 March 2022.

Gross debit volume (GDV) increased 408% to $23.9 billion. In the 2022 financial year to date, GDV was up 272% to $55.5 billion compared to the prior corresponding period. The Sentenial acquisition was responsible for $38 billion of the GDV. Excluding Sentenial, GDV increased 17%.

In the third quarter, revenue was up 21% year on year to $59.8 million. The gross profit was up 17% to $42.2 million. However, due to a 50% increase in underlying overheads, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) only rose by 14% to $13.6 million.

FY22 third-quarter underlying net profit after tax (NPATA) increased 22% to $8.1 million.

Reduction of FY22 guidance

While the company reported growth in the third quarter, it reduced its guidance for some metrics.

EML said that its EBITDA guidance for FY22 was reduced by approximately 8% to a range of between $52 million to $55 million. The previous guidance was a range of between $103 million to $112 million. FY21 underlying EBITDA was $53.5 million.

The ASX share said that its Australian and North American businesses were performing in line with expectations.

However, it reported “operational execution issues in Europe and a more risk averse approach to new programs impacted the launch of new programs”. EML is expecting “continued challenges” in the fourth quarter, which is the current quarter, leading to the reported downgrade of guidance.

The FY22 GDV guidance range was reduced from $81 billion to $88 billion, down to $79 billion to $84 billion.

FY22 revenue is now expected to be between $225 million to $235 million, down from $230 million to $250 million.

Underlying overheads are expected to be between $106 million and $109 million. That’s a tightening from the previous guidance of between $103 million to $112 million.

Underlying NPATA guidance is now $27 million to $30 million. The previous guidance was a range of between $27 million to $34 million. That compares to FY21’s underlying NPATA of $32.4 million.

The gross profit margin is expected to be around 69%. This guidance wasn’t changed but it would represent an increase from 67% in FY21.

EML is planning on a number of operational initiatives to drive a recovery in Europe in FY23.

Spotlight on insider sale

There has also been media attention on EML Chair Peter Martin selling 200,000 shares a few weeks before the update, which has seen the EML Payments share price subsequently plunge.

The Australian was not able to establish reasons for the sale of shares after seeking comment. The newspaper was told Martin was “offline with a case of COVID-19”.

EML share price snapshot

Since the start of the year, the EML share price has fallen more than 50%.

The post Why is the EML share price tumbling again today? appeared first on The Motley Fool Australia.

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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. owns and has recommended Block, Inc. and EML Payments. The Motley Fool Australia owns and has recommended Block, Inc. and EML Payments. 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 AMP Ltd (ASX: AMP) share price is dropping on Wednesday after the company confirmed the sale of the Collimate Capital real estate and domestic infrastructure business.

The business – along with its potential $1 billion price tag – will be picked up by Dexus Property Group (ASX: DXS).

Confirmation of the sale comes one week after the companies confirmed they were discussing the business, which was previously earmarked to be demerged.

At the time of writing, the AMP share price is $1.03, 0.48% lower than its previous close.

That’s a better performance than that of the broader market on Wednesday. Right now, the S&P/ASX 200 Index (ASX: XJO) has slumped 0.78%.

The S&P/ASX 200 Financials Index (ASX: XFJ) is also trading lower today, slipping 1.26%.

AMP share price falls as Collimate sells

The AMP share price is trading lower on news Dexus will purchase part of Collimate’s real estate and domestic infrastructure business.

Dexus will buy the business – which houses $31 billion of assets under management (AUM) ­– for an upfront $250 million cash payment.

AMP may also see a $300 million payday in the form of an earn-out agreement.

The earn-out is subject to the retention of the business’ AUM over the nine months following the sale.

Though, AMP doesn’t believe it will bank the full $300 million fee. It expects the business’ AUM to dip by around $3 billion.

Finally, Dexus will purchase AMP’s existing and committed sponsor stakes in the platform, worth $180 million and $270 million, respectively.

That portion of the agreement is expected to cost the real estate investment company $450 million, subject to third-party discussions.

The funds will be used to pay down AMP’s debt and conduct a capital return – for which it will need regulatory and shareholder approval.

AMP will hold onto its 24.99% stake in PCCP and sponsor stake in PCCP Fund VIII following the sale.

The embattled financial services company will now be focusing on the sale of Collimate’s international infrastructure equity business.

Several entities have shown interest in acquiring the business, which holds $9 billion of AUM.

But, according to reporting in The Australian, the main contender to take over the international infrastructure leg is United States firm DigitalBridge Group.

What did management say?

AMP CEO Alexis George commented on the sale:

In Dexus we have found a strong owner for the real estate and domestic infrastructure equity businesses, which will add significant value through their strong track record and experience in real estate and asset management. Their depth of talent will strongly complement our specialist teams.

AMP share price snapshot

Today’s dip hasn’t been enough to push the AMP share price into the long-term red.

Right now, the financial services provider’s stock is trading 3% higher than it was at the start of 2022.

Though, it has slipped 8% since this time last year.

The post AMP share price sinks amid latest Collimate deal news appeared first on The Motley Fool Australia.

More reading

• AMP share price sinks amid asset sale complications 
• Why is the AMP share price having such a top run on Thursday?
• How the federal election will impact ASX shares: top economist
• ASX 200 midday update: AMP asset sale talks, Syrah rockets
• AMP share price on watch amid Collimate Capital sale talks with Dexus and ‘multiple’ parties

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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