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Looking for a growth share or two to buy? Three that could be worth considering are listed below.

All three have been growing strongly in recent years and look well-placed for more of the same during the 2020s. Here’s what you need to know about these ASX growth shares:

Bigtincan Holdings Ltd (ASX: BTH)

The first ASX growth share to look at is this sales enablement platform provider. Bigtincan was on form in FY 2021, delivering a 48% increase in annualised recurring revenue (ARR) to $53.1 million. The good news is that management expects more of the same in FY 2022. In fact, it expects to more than double its ARR to $119 million. This is expected to be driven by organic growth and the benefits of the acquisition of Brainshark. It is an industry-recognised and multi-awarded leader in its field of sales coaching, learning and readiness.

Morgan Stanley is very positive on the company. It has an overweight rating and $2.10 price target on its shares.

Life360 Inc (ASX: 360)

Another ASX growth share to consider is Life360. It is the growing technology company behind the Life360 family safety app. This increasingly popular app was being used by a whopping 33.8 million people globally at the end of the third quarter. This was up by 1.5 million users over the three months and underpinned a 48% year on year increase in Annualised Monthly Revenue (AMR) to US$120.1 million.

Bell Potter was pleased with its update. The broker responded by retaining its buy rating and lifting its price target on Life360’s shares to $12.50.

ResMed Inc. (ASX: RMD)

A final growth share to consider is ResMed. It is a medical device company with a focus on the sleep treatment market. ResMed has been tipped to continue its strong growth over the long term thanks to its industry-leading products and massive market opportunity. In respect to the latter, management estimates that there are ~1 billion people impacted by sleep apnoea worldwide, with just ~20% already diagnosed.

Credit Suisse is a fan of ResMed and has an outperform rating and $43.00 price target on the company’s shares.

The post 3 buy-rated ASX shares with strong growth potential appeared first on The Motley Fool Australia.

More reading

• Why Chalice Mining, Life360, Kogan, and NAB shares are storming higher
• ResMed (ASX:RMD) share price edges higher despite going ex-dividend
• Why Brainchip, Chalice, Life360, and PointsBet shares are surging higher
• These 6 ASX shares are going ex-dividend this week
• 10 top ASX shares to buy in November

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. owns shares of and has recommended BIGTINCAN FPO and Life360, Inc. The Motley Fool Australia owns shares of and has recommended BIGTINCAN 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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The Betashares Asia Technology Tigers ETF (ASX: ASIA) is pushing upwards today. This exchange-traded fund (ETF) gives investors exposure to the 50 largest technology companies in Asia, outside of Japan. However, nearly 70% of the fund is comprised of its top 10 holdings.

Given this, today’s move could be the reflection of a recent announcement from one of its largest holdings. One company that might fit the criteria is Tencent Holdings Ltd (HKG: 0700). The China-based tech conglomerate published its third-quarter results yesterday.

While the tech company’s share price is moving to the downside, its performance during the latest quarter might be attracting some investors to take a closer look at the ASIA ETF.

How did the ASIA ETF’s third largest holding fare in Q3?

It was a shaky quarter for Tencent, having to appease China’s intensified gaming policy for children. In August, the government instated a maximum of 3 hours of gaming for people under the age of 18. This compared to the previously allowed one and a half hours per day.

Based on the metrics for the third quarter, the new restrictions had their desired effect, with gaming among children through Tencent’s platforms dropping significantly. Under the category ‘domestic games’, minors accounted for only 0.7% of the company’s recorded time spent on its platform in September. For reference, this is in contrast to 6.4% in September 2020.

Despite this setback, domestic games revenue still managed to increase by 5% year on year to RMB33.6 billion (~A$7.18 billion) in the quarter. Meanwhile, unhampered by government restrictions, international games revenue experienced a major uptick of 20% year on year to RMB11.3 billion (~A$2.41 billion). This result was due to robust performances of games such as Valorant and Clash of Clans.

Out of the company’s various segments, revenue from fintech and business services delivered the highest growth in the quarter. On a year-over-year basis, fintech revenue increased 30% to RMB43.3 billion (~A$9.25 billion).

Overall, Tencent still increased its total revenue by 13% year on year to RMB142.4 billion (~A$30.43 billion) in Q3. However, diluted earnings per share (EPS) fell 1% to RMB3.269 (~A$0.70).

Why isn’t the ETF down today?

Even though the Tencent share price is falling after these results, the ASIA ETF is humming along with a nice bit of green on Thursday.

Fortunately, ETF’s tend to be diversified across numerous companies. Such is the case for the ASIA ETF, with Tencent only making up roughly 9% of the fund’s total holdings. Other tech giant’s featured in the ETF include Alibaba Group (NYSE: BABA), which experienced a 2.4% increase in its share price overnight.

The post Here’s why the ASIA (ASX:ASIA ETF share price is in focus on Thursday appeared first on The Motley Fool Australia.

More reading

• 2 excellent ETFs for ASX investors to buy today
• Here’s a highly rated tech ETF for ASX investors in November
• Why Betashares Asia Technology Tigers ETF (ASX:ASIA) could be a good investment

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price is currently up around 9% as the mining giant shrugs off further declines of the iron ore price.

What’s going on with the Fortescue share price?

Fortescue is currently one of the top performers within the S&P/ASX 200 Index (ASX: XJO), outperforming its large resource peers of Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP), which are up 2.7% and 3.2% respectively.

This is despite the iron ore price continuing its longer-term descent. The iron ore price is currently down to around US$90, with the discount paid for Fortescue’s lower grade iron ore widening.

According to some reporting, such as Bloomberg, there is speculation that the Chinese government will help property developers with their cash and debt problems. Banking lending to property developers increased in October.

It has also been reported that Evergrande may have made an interest payment that was due at the last moment according to Clearstream.

However, DMSA claims that it wasn’t paid its owed interest and is going to start bankruptcy proceedings against Evergrande.

Hydrogen hopes with Fortescue Future Industries

One part of Fortescue is gaining increasing influence and could cause an impact on the Fortescue share price – Fortescue Future Industries (FFI). It has a vision to make green hydrogen the most globally traded seaborne commodity in the world.

The company has been making various announcements in recent months. It has already allocated US$1 billion of net profit from FY21 for FFI, with it expected to spend US$400 million to US$600 million in FY22.

Fortescue Future Industries has announced the construction of a global green energy manufacturing centre in Gladstone, Queensland. The first stage of development is an electrolyser factory with an initial capacity of two gigawatts.

Another announcement by Fortescue Future Industries has been the signing of an agreement with JCB and Ryze Hydrogen to become the United Kingdom’s largest supplier of green, renewable energy. Under a memorandum of understanding, JCB and Ryze will purchase 10% of FFI’s global green hydrogen production, which is expected to grow to 15 million tonnes by 2030, accelerating to 50 million tonnes per year in the next decade.

FFI has also partnered with PNG, which it said was one of the most renewable-rich countries in the world, to develop multiple large-scale green energy and green hydrogen projects. A master development agreement (MDA) has been agreed to undertake studies to develop up to seven hydropower projects and 11 geothermal energy projects in PNG. These projects would generate renewable energy for the purpose of producing green hydrogen and green ammonia, creating a “significant” new domestic energy and export industry for PNG.

The most recent announcement that could be factoring into investor thoughts about the Fortescue share price was the link up with LA-based Universal Hydrogen to enable the aviation industry to decarbonise with zero-emissions green hydrogen.

Whilst analysts note all of the different announcements that Fortescue Future Industries is making, investors are hoping for more financial details.

That was most recently reported by the Australian Financial Review. RBC’s Kaan Peker said that based on FFI’s goal, it could need total capital invested of between US$250 billion to US$350 billion:

For these targets to be achieved, capital allocation towards renewables cannot be constrained by the competition for capital with iron ore assets or the dividend policy.

A new business model for FFI is needed, one which enables growth in renewables. More clarity around this business model is required, in our view.

The post Fortescue (ASX:FMG) share price surges 9% to shrug off falling iron ore price appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Thursday
• Why Chalice, De Grey, Estia Health, and Fortescue shares are racing higher
• Why the Rio Tinto (ASX:RIO) share price underperformed the materials sector over the last 3 months
• Evergrande reportedly defaults, DMSA is preparing bankruptcy proceedings
• ASX 200 (ASX:XJO) midday update: Xero’s results and Nearmap’s guidance disappoint

Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. 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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Shares in tungsten miner King Island Scheelite Ltd (ASX: KIS) are gaining ground today and are now trading 21% higher at 17 cents apiece. The King Island Scheelite share price made the jump early on in the session, following a company announcement on the Dolphin Tungsten Mine.

For decades the mine produced scheelite, a form of tungsten, until it was mothballed in 1992 when the price of the rare metal began to crash.

At its peak, the mine employed more than 500 people and produced a tidy income for the economy of King Island, off Tasmania, where the project is located.

Now, following shareholder approval, King Island Scheelite is set to redevelop the project and subsequently restart mining and processing of tungsten at the site.

Here are the details seemingly driving the King Island Scheelite share price today.

What did King Island Scheelite announce?

In addition to confirming the redevelopment of the mine, the company also advised it is “committed to long lead-time items by paying deposits, ensuring that the project will be completed as rapidly as possible”.

It is set to commence the work program in the coming weeks. Earthworks are due to begin in December after the company ordered a heavy-duty Caterpillar D8 bulldozer.

According to King Island, the Dolphin project contains a JORC (2012) compliant indicated resource reserve of 4.43 million tonnes (Mt) at a grade of 0.92% tungsten oxide (WO3).

It also contains “probable mineral resources” and reserves of 9.6Mt at a grade of 0.90% WO3, plus another inferred resource of 1.76Mt @0.91% WO3.

The company also reckons it can produce average annual production of 400,000 tonnes of ore per annum, yielding 200,000 metric tonne units (mtu) of tungsten – with 1 mtu equal to 10kg.

It also has a mining lease on the site that is valid until 2029, according to the company’s website.

What is tungsten, you might ask?

Tungsten is a rare metal that is found naturally on Earth. It is known as boasting the highest melting point of all known metals at 3,422ºC. It also has the highest tensile strength of any metal.

To put it short, tungsten is super tough and almost impossible to melt, making it perfect for high-stress environments.

For instance, given its durability, density, and hardness, it is often used in military applications – such as projectiles that need to pierce tank or aircraft armour.

However, it is also extensively used in applications like electrodes and heating elements, as well as in filaments for lights and cathodes due to its properties.

As of 10 November 2021, the Europe Tungsten APT 88.5% in Warehouse Rotterdam index, was up at US$315/tonne, having gained 43% in a single year.

What is management saying?

Speaking on the announcement fuelling the King Island Scheelite share price, executive chair Johann Jacobs said:

As we move into the next stage of the company’s growth with the commencement of the redevelopment of the Dolphin Tungsten Mine, on behalf of all the board and management I wish to thank all of those who have assisted the company in reaching this pivotal moment. The company has worked tirelessly to progress to this stage, at which it is fully funded to commence its future trajectory to becoming a significant tungsten producer, and for all of those who have supported us on this journey, we thank you.

Jacobs continued:

The Dolphin Tungsten Mine is host to the highest grade tungsten deposit of significant size in the Western world, and we look forward to the recommencement of mining from this fantastic asset.

The King Island Scheelite share price has gained 64% over the past 12 months.

It has also rallied 72% this year to date, well ahead of the S&P/ASX 200 Index (ASX: XJO)’s return of almost 15% in the last year.

The post King Island Scheelite (ASX:KIS) share price soars 21% on ‘pivotal moment’ appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Thursday
• Why Liontown, Nearmap, Ramsay, and Xero shares are sinking today
• Oil Search (ASX:OSH) and Santos (ASX:STO) move closer to completing $23bn merger
• Nine Entertainment (ASX:NEC) share price climbs 3% amid earnings guidance
• Why is the Xero (ASX:XRO) share price tumbling 7% if the company is growing revenue?

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 S&P/ASX 200 Index (ASX: XJO) is having a pretty unpleasant day on the markets this Thursday. At the time of writing, the ASX 200 is down by 0.48% at 7,388 points. 

But rather than crying over that spilt milk, let’s instead check out the ASX 200 shares that are currently topping the ASX trading volume charts, according to investing.com.

3 most active ASX 200 shares by volume on Thursday

Telstra Corproation Ltd (ASX: TLS)

Telstra is our first ASX 200 share that’s experiencing high trading volumes this Thursday. This telco has seen a sizeable 14.36 million of its shares find new owners so far on the markets today. This could be a result of the volatile Telstra share price.

Telstra has been playing jump rope with the breakeven line all day today. It was down this morning, then flat, then down again, and now it’s up by 0.51% at $3.94 a share. It’s this volatility that has likely led to this company’s elevated trading volume today. Some on-market share buybacks might also be helping.

South32 Ltd (ASX: S32)

Mining company South32 is next up this Thursday. We have seen a hefty 15.54 million S32 shares swap hands thus far today. There’s not much in the way of news or announcements out of South32 that might explain this volume.

Thus, the high number of shares flying around is likely the result of South32’s modest 0.72% share price bump we see to $3.49. South32 is another ASX 200 blue chip that has been buying back its own shares, so this could also be pushing up the trading volume figures.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is our most traded ASX 200 share so far today. A whopping 16.95 million Fortescue shares have been bought and sold so far today.

We don’t have to look too far on this one to see why though. This ASX 200 mining giant has seen its share price rocket by more than 10% today, it’s currently at $15.66 at the time of writing, up 10.3%. My Fool colleague dug a little deeper into this rise earlier, but this is almost certainly why so many Fortescue shares are flying around the markets today.

The post These 3 ASX 200 shares are topping the volume charts this Thursday appeared first on The Motley Fool Australia.

More reading

• Nine Entertainment (ASX:NEC) share price climbs 3% amid earnings guidance
• Why Chalice, De Grey, Estia Health, and Fortescue shares are racing higher
• The materials sector is leading the ASX 200 today. What’s going on with the Lynas (ASX:LYC) share price?
• Why the Rio Tinto (ASX:RIO) share price underperformed the materials sector over the last 3 months
• Evergrande reportedly defaults, DMSA is preparing bankruptcy proceedings

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation 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 S&P/ASX 200 Index (ASX: XJO) is out of form and tumbling lower on Thursday. In afternoon trade, the benchmark index is down 0.5% to 7,384.9 points.

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

Liontown Resources Limited (ASX: LTR)

The Liontown Resources share price is down almost 10% to $1.68. This follows the release of the lithium developer’s definitive feasibility study (DFS) for the Kathleen Valley Project. The release notes that the project has a post-tax net present value (NPV) of $4.2 billion, a payback of 2.3 years, and post-tax Life of Mine (LOM) free cash flow of $12.2 billion. Investors may be concerned with the lofty long term lithium price the company is using as part of its valuation model.

Nearmap Ltd (ASX: NEA)

The Nearmap share price is down almost 11% to $1.92 following the release of its guidance for FY 2022. The aerial imagery and location data company advised that it expects annual contract value (ACV) of between $150 million and $160 million on a constant currency basis in FY 2022. This will be a year on year increase of 12% to 19%. This is short of its medium to long term target of ACV growth of 20% and 40%.

Ramsay Health Care Limited (ASX: RHC)

The Ramsay share price is down 4% to $69.32. This morning the private hospital operator released a trading update. That update revealed a 1.3% increase in unaudited first quarter revenue to $3.2 billion. However, on the bottom line, Ramsay reported an unaudited quarterly profit after tax of $58.1 million. This is down 39.5% on the prior corresponding period.

Xero Limited (ASX: XRO)

The Xero share price is down 7% to $137.27. This follows the release of the cloud accounting company’s half year results. For the six months ended 30 September, Xero reported a 23% increase in operating revenue to NZ$505.7 million but a 19% decline in EBITDA to NZ$98.1 million. This appears to be tracking at a rate that could make it hard for Xero to achieve the market’s full year expectations. For example, Goldman Sachs was expecting Xero to deliver revenue growth of 33% in FY 2022.

The post Why Liontown, Nearmap, Ramsay, and Xero shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Why is the Xero (ASX:XRO) share price tumbling 7% if the company is growing revenue?
• ASX 200 (ASX:XJO) midday update: Xero’s results and Nearmap’s guidance disappoint
• Nearmap (ASX:NEA) share price slips despite plan to boost contract value by 12%–19% in FY22
• Ramsay Health (ASX:RHC) share price falls 6% as earnings take a dive
• Liontown Resources (ASX:LTR) share price sinks 9% after Kathleen Valley DFS

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. owns shares of and has recommended Nearmap Ltd. and Xero. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and Xero. The Motley Fool Australia has recommended Ramsay Health Care 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 Oil Search Ltd (ASX: OSH) share price and the Santos Ltd (ASX: STO) share price remain in the red this afternoon despite the release of a merger update.

What was announced?

This afternoon the Oil Search-Santos merger took a big step towards completion after the Independent Expert concluded that it is in the best interests of Oil Search shareholders in the absence of a superior proposal.

In light of this, the Oil Search Board continues to unanimously recommend that its shareholders vote in favour of a scheme that will see Santos acquire Oil Search for 0.6275 new Santos shares for each Oil Search share owned. This values the combined entity at $23 billion.

Oil Search’s Chairman, Rick Lee, commented: “The Merger brings together two highly complementary businesses and creates an oil and gas company of significant size with a portfolio of geographically and product diversified long-life and low-cost assets. We look forward to Oil Search’s shareholders participation in the Scheme Meeting and encourage you to vote in favour of the Merger, which the Oil Search Directors believe, is in the best interests of Oil Search shareholders.”

This sentiment was echoed by Santos Chairman, Keith Spence. He said “The merger represents an attractive combination of two industry leaders to create a regional champion with the balance sheet and strong diversified cashflows necessary to fund growth, the energy transition to a lower carbon future including Santos’ leading carbon capture and storage capability, and deliver shareholder returns.”

“We look forward to integrating our businesses to create one high performing team – with a vision of becoming a global leader in the energy transition,” Mr Spence added.

What’s next?

The National Court of Papua New Guinea has today made orders that Oil Search convene a meeting of shareholders to consider and vote on the proposed Scheme. It has also approved the distribution to shareholders of an explanatory statement providing information about the Scheme and notice of the Scheme Meeting.

Shareholders will then meet online on 7 December 2021 to vote on the merger. This means the combination of the two energy giants could be just a matter of weeks away.

The post Oil Search (ASX:OSH) and Santos (ASX:STO) move closer to completing $23bn merger appeared first on The Motley Fool Australia.

More reading

• Here’s why the Santos (ASX:STO) share price is falling again on Thursday
• 5 things to watch on the ASX 200 on Thursday
• Santos (ASX:STO) share price slips as Oil Search merger delayed again
• Why is the Oil Search (ASX:OSH) share price having such a great start to the week?
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is having a rather lousy day of trading on the ASX boards so far this Thursday. At the time of writing, the ASX 200 is down around 0.37% at 7,396 points. But one ASX 200 share is shaking off that malaise convincingly. That would be the Nine Entertainment Co Holdings Ltd (ASX: NEC) share price.

Nine, the multimedia giant behind the Stan streaming service, the old Fairfax newspapers including The Sydney Morning Herald and the Australian Financial Review, and the eponymous TV channel, is rocketing today.

The Nine share price is currently up by a healthy 3.38% at $3.06 a share. Not only that, earlier today, Nine shares surged as high as $3.13, up around 5% at the time.

So what’s allowing Nine to so comprehensively defy the market selloff this Thursday?

Nine keeps investors watching with FY 2022 guidance

One possible explanation is the annual general meeting presentation the company released this morning. This presentation confirmed that all directors up for reelection were convincingly reelected. That was with more than 99% of votes in favour in all cases. Nine’s proposed remuneration package also passed with more than 99% of votes in favour.

But what probably got investors really excited is the trading update Nine included in this presentation. Nine announced it is expecting the first half of FY2022 to deliver earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately 10% over the $355 million of EBITDA the company delivered for the first half of FY 2021. That would be somewhere in the range of $390 million.

This, Nine estimates, will come from across the board of the company’s revenue streams. It’s expecting higher earnings from free-to-air TV, radio, and publishing. But especially from broadcaster video on demand Stan and its remaining stake in Domain Holdings Australia Ltd (ASX: DHG).

It’s probably this latter guidance that is exciting investors today. Certainty (especially of positive earnings numbers) is a valued commodity in the ASX investing space, and Nine investors have just got a spade of it.

Today’s boost in the Nine share price is just the latest piece of good news for investors though. Nine shares are now up a pleasing 31.5% year to date in 2021, and 224% over the past 5 years.

At the current Nine Entertainment share price, this company has a market capitalisation of $5.2 billion, with a dividend yield of 3.44%.

The post Nine Entertainment (ASX:NEC) share price climbs 3% amid earnings guidance appeared first on The Motley Fool Australia.

More reading

• The materials sector is leading the ASX 200 today. What’s going on with the Lynas (ASX:LYC) share price?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• CSL (ASX:CSL) share price is the latest to be upgraded by a top broker

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 Xero Limited (ASX: XRO) share price is deep in the red today despite reporting revenue growth in the first half of FY22.

Shares in the cloud-based accounting software provider are down 7.34% to $136.47 at the time of writing.

It appears investors were expecting a higher growth rate for the company’s revenue during the six months ending 30 September. In turn, the market is punishing the Xero share price.

For context, the S&P/ASX 200 Index (ASX: XJO) is off by 0.51% in afternoon trading.

Let’s look beyond the top line and grasp exactly what happened with Xero in 1H FY22.

Prioritising growth ahead of profits hits Xero share price

The shift in company earnings from a $34.5 million profit in 1H FY21 to a $5.9 million loss in 1H FY22 might have put investors offside today. However, Xero managed to continue its double-digit revenue growth during the period.

Notably, the now 15-year-old company reported growth across all of its operating regions. The strongest was the rest of world (ROW) segment with growth of 72% year on year to NZ$45.9 million.

While most other segments also reported double-digit growth, North America posted a steady 5% increase year on year.

Overall, Xero’s revenue grew by 23% year on year to NZ$505.7 million for the quarter. Similarly, most other operational metrics indicated sustained growth within the business. For instance, total subscribers climbed 23% to 3 million.

Likewise, net subscriber additions accelerated, increasing by 272,000 compared to 168,000 in the previous corresponding period.

Despite this, the Xero share price is moving to the downside today. This possibly indicates that the market had expected more considering the level of investments made by the company.

The net loss was the product of increased investment across both sales and marketing, and product development. Making the difference even more significant, the past comparable period was one in which Xero held a high focus on cost management due to COVID-19 impacts.

Management commentary

Commenting on the company’s reinvestment strategy, Xero CEO Steve Vamos said:

We are committed to delivering the world’s most insightful and trusted small business platform to make life better for people in small business, their advisors and communities around the world. To support this, we continue to prioritise investment in product development and partnerships, and execute our strategy to meet our customers’ evolving needs in both the short and long term.

The announcement specifies that total operating expenses are forecast to be 80%-85% of revenue in FY22. This is in line with the second half of FY21.

Today’s news hasn’t helped the Xero share price get out of its 2021 rut. Shares are still down 5.6% year to date. Meanwhile, the benchmark index is up 9.7% since the beginning of the year.

The post Why is the Xero (ASX:XRO) share price tumbling 7% if the company is growing revenue? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Xero’s results and Nearmap’s guidance disappoint
• ASX 200 tech shares in focus as Nasdaq plunges 1.7%
• Xero (ASX:XRO) share price on watch after delivering strong first half growth
• 5 things to watch on the ASX 200 on Thursday
• 10 top ASX shares to buy in November

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Xero. 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 Vital Metals Limited (ASX: VML) share price is soaring higher today despite no news having been released by the company.

However, its stock is also flying off the shelves. Right now, nearly 30 million shares in Vital Metals have swapped hands today in just 613 transactions.

For context, over the last 4 weeks, an average session sees around 13.5 million Vital Metals shares traded.

At the time of writing, the Vital Metals share price is 6.1 cents, 8.93% higher than its previous closing price.

That’s better than the performance of the broader market.

Vital Metals doesn’t call the S&P/ASX 200 Index (ASX: XJO) home. However, it’s worth noting that the index has fallen 0.8%. Meanwhile, the S&P/ASX 300 Metals and Mining Index (ASX: XMM) has gained 2.56%.

Let’s take a closer look at the market’s enthusiasm for the rare earth metals producer.  

A quick refresher

Vital Metals is a rare earths producer with one project in Canada and another in Tanzania.

The company began mining ore from its Canadian Nechalacho Project in June 2021.

Vital Metals also owns the Wigu Hill Project, located in Tanzania. The company’s waiting for a mining licence to be issued for the project.

Vital Metals has also recently entered agreements to acquire 2 heavy metals projects, both located in Canada.

What’s driving the Vital Metals share price today?

In short, there’s no obvious reason why the market’s interest in Vital Metals has increased today.

November has been quiet for the company. In fact, the last time the market heard from Vital Metals was on 29 October when it released its quarterly activities and cash flow report.

But whatever the reason, today’s rally seems to have pulled the Vital Metals share price out of a 10-day long slump.

Right now, the company’s shares are trading for 90% more than they were at the start of 2021. They’ve also gained 117% since this time last year.

The post Why is the Vital Metals (ASX:VML) share price up 7% on Thursday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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