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The Afterpay Ltd (ASX: APT) share price in 2021 resembles that of a rollercoaster ride.

After ascending to a peak of ~$160 by mid-February, the train tumbled some 35% to a trough of $100 on 31 March. 

Its shares were then pulled back up for a second, albeit a smaller peak of $129 by 20 April before free-falling down to $90 this week. 

With so much whip saw-like action this year, what’s next for the Afterpay share price? 

Most recent broker recommendation

Morgan Stanley (NYSE: MS) was the most recent broker to provide an update for its view on the Afterpay share price. The broker observes that Afterpay’s US app downloads in April were almost double that of a year ago. While this was not as strong as the record month of March, its April performance was still 20% higher than January and February figures. 

The continuation of strong app downloads leads Morgan Stanley to believe that Afterpay’s US segment is still maintaining a strong growth trajectory. On 6 May, the broker retained an overweight rating with a $149 target price. 

The forces dragging the Afterpay share price lower 

While Morgan Stanley’s commentary could be on the money, there are a number of recent factors that have dragged the Afterpay share price in recent weeks. 

This includes the slump in the S&P/ASX200 Info Tech (INDEXASX: XIJ) index, the Nasdaq Composite selloff, broader selling across the BNPL sector and rising concerns of higher interest rates. 

While the company from an operational and financial perspective might continue to kick goals, these factors have capped both the upside and bullishness for Afterpay shares. 

Macquarie’s assessment

On 24 March, Macquarie released a balanced assessment of what could be next for the Afterpay share price. The report painted a pain before gain narrative, saying that: 

BNPL has seen explosive growth in the past few years. As with many such trends (China Commodities in 2015, China Autos in 2018) we see short-term oversupply. We expect this to be followed by a few years of industry consolidation (i.e. pain for all players) before industry normalisation at a healthier supply/demand equilibrium. Despite the grim near term outlook case studies into other industries that have experienced this boom bust cycle typically see the industry overall emerge healthier than when entering the cycle, with the strong getting stronger and the weak losing out.

Foolish Takeaway

Afterpay continues to be a growth machine at the BNPL forefront of international expansion. But as a richly valued, loss-making company, the Afterpay share price has come under a heightened level of volatility. 

More reading

• Why Afterpay, CSR, Electro Optic Systems, & Estia Health are storming higher
• ASX 200 down 1%: CBA Q3 update, tech shares rise, Qantas update
• ASX 200 sinks, Boral rises, A2 Milk drops again
• Why a2 Milk, Afterpay, Nearmap, & REA Group shares are sinking
• Flight Centre and Zip were among the most traded ASX shares last week

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The TPG Telecom Ltd (ASX: TPG) share price has been a positive performer on Wednesday.

In afternoon trade, the telco giant’s shares are up almost 4% to $5.28.

Despite this gain, the TPG share price is still down a disappointing 25% since the start of the year.

This compares to a 15% gain by arch-rival Telstra Corporation Ltd (ASX: TLS) and a 5% gain by the S&P/ASX 200 Index (ASX: XJO).

Why is the TPG share price underperforming?

The main catalyst for the weakness in the TPG share price this year was the shock news that its Founder and Chairman, David Teoh, resigned from the company with immediate effect in March.

Mr Teoh revealed that he felt that now was the right time to step aside and pursue other interests.

Also putting pressure on the TPG share price was recent news that Stephen Banfield will be stepping down as Chief Financial Officer after 20 years with the company.

Though, he will remain in the role until November 2021 or until a replacement is appointed.

Why are its shares bouncing back today?

The TPG share price was given a boost today by the release of a second change of director’s interest notice in as many days.

On Tuesday, a notice revealed that the company’s Non-Executive Director, Robert Millner, picked up 100,000 shares via an on-market trade on Friday. Mr Millner paid a total consideration of $544,050, which equates to $5.44 per share.

This afternoon, a second notice reveals that the company’s Chief Executive Officer, Iñaki Berroeta, has snapped up 116,000 shares through an on-market trade today. Mr Berroeta paid a total of $599,580 for the shares, which equates to an average of $5.17 per share.

Judging by their purchases, these two executives appear to believe the TPG share price has been oversold in 2021.

One broker that is likely to agree is Morgans. Last week the broker put an add rating and $7.17 price target on its shares. This followed the release of a trading update which revealed that its performance in FY 2021 is tracking to internal expectations.

More reading

• This broker thinks you should buy the TPG (ASX:TPG) share price dip
• TPG (ASX:TPG) share price tumbles 6% as CFO resigns
• Why the Telstra (ASX:TLS) share price could be heading higher from here
• Is the Telstra (ASX:TLS) share price better value than the TPG (ASX:TPG) share price?
• What’s with the Telstra (ASX:TLS) share price and other telcos today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If small caps are a little too risky for your liking, then maybe mid cap ASX shares would be more suitable. These are often well-established companies that still have significant runways for growth ahead of them.

With that in mind, I have picked out two mid cap ASX shares that are rated highly. Here’s what you need to know about them:

Life360 Inc (ASX: 360)

Life360 is a San Francisco-based technology company. The company’s core offering, the Life360 mobile app, is a market leading app for families. Its features range from communications to driving safety and location sharing. At the end of March, it had more than 28 million monthly active users globally.

Despite facing tough trading conditions during COVID-19 (lockdowns, lower mobility), Life360 still delivered a 39% increase in normalised revenue to US$81.6 million during the 12 months ending 31 December. This strong form has continued during the first quarter of FY 2021.

Positively, with COVID-19 headwinds starting to ease, management is confident that this trend will continue. It is targeting Annualised Monthly Revenue in the range of US$110 million to US$120 million, which will be a 23% to 34% increase year on year.

Bell Potter is a fan of the company. The broker currently has a buy rating and $6.00 price target on its shares.

Bravura Solutions Ltd (ASX: BVS)

Another mid cap ASX share to look at is Bravura. It is a leading provider of software solutions for the wealth management and funds administration industries.

Bravura has a portfolio of solutions that are both high quality and have significant market opportunities. This is particularly the case for the Sonata wealth management platform, which is used by a number of large financial institutions.

After a couple of years of significant headwinds from Brexit and COVID-19, Bravura looks to be back on the right path again.

It recently reaffirmed its guidance for FY 2021 net profit after tax of $32 million to $35 million and second half revenue growth of 10% half on half.

Goldman Sachs is a fan of the company. Last week it retained its buy rating and lifted its price target on the company’s shares to $3.90. The broker believes it has a massive growth opportunity in the UK and ANZ markets.

More reading

• 2 beaten down ASX shares rated as buys
• 3 quality mid cap ASX shares rated as buys
• Broker tips Bravura (ASX:BVS) share price to storm 20% higher
• 2 exciting ASX tech shares that have been tipped as buys
• Brokers name 3 ASX shares to buy now

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 Bravura Solutions Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Life360, Inc. The Motley Fool Australia has recommended Bravura Solutions 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 ASX is sliding today, its second consecutive day of losses.

In early afternoon trading, the S&P/ASX 200 Index (ASX: XJO) is down 1.1%. That puts the ASX 200 down 2.1% from Monday’s all-time closing high.

The broader All Ordinaries Index (ASX: XAO) is sliding too, down 1%. The All Ords is currently down 2.2% from its own record closing high, also reached on Monday.

With the major indexes, and so many of the shares they contain, slipping following all-time highs, investors may fear that a deeper correction lies ahead. And that could lead to a bout of panic selling.

But that could prove a costly mistake.

Keep an eye on your ASX portfolio’s long-term profit potential

Online trading and brokerage company eToro’s Australian managing director, Robert Francis, told The Motley Fool that investors panic selling their ASX shares is an impulsive decision, “generally driven by fear, regardless of the quality, efficiency or effectiveness of their holdings”.

Investors who panic sell, often forget to abide by investing fundamentals or employ proper evaluation of a stock or market conditions, and rather do so as a result of an emotional reaction. 

We asked Francis why ASX investors fall into the panic selling trap. And what kind of ramification that tends to have on their portfolio.

According to Francis:

Instead of FOMO [fear of missing out], many investors who panic sell suffer the ‘end of the world’ syndrome, believing that if they don’t get out now, and fast, that their entire portfolio will be doomed. This knee-jerk ‘cut-your-losses’ mindset often drives investors to make irrational decisions in an attempt to minimise potential loss, but generally just limits long-term profit potential. 

Investment decisions based on fear or greed often explain why many people are buying at market tops and selling at market bottoms, despite the flawed logic behind this strategy. During the 2007-2008 market crash, the net fund outflows peaked at the market bottom, creating overly discounted investment opportunities, while fear dominated investor mindsets, causing many to avoid (and miss out on) buying back in.

Indeed, it’s rare you’ll find investors running for the exits when shares are charging higher. More often this will happen when they’ve already booked a loss on their investment, meaning panic selling will only serve to lock that loss in.

“If investors panic sell their investments during a down market or bear market, they are practically guaranteeing their loss,” Francis said. “If investors maintain a long-term vision and remind themselves of the intrinsic value they identified in the company in the first place, they can preserve their long-term vision, hold on to their investments until they come back up, and avoid selling at a loss.”

Know when to hold ’em, know when to fold ’em

Of course, not every share is going to gain in value. Not even over the longer-term.

At some stage, the laggards need to be identified and weeded out of your ASX portfolio.

Francis recommends the following questions and strategies to help decide when and if it’s time to sell some of your shareholdings.

First, before you invest, how much do you ideally want to make on the investment? Are you happy with a 10% gain or are you after a 10-bagger (where your investment goes up 10 times in value)?

Second, take the time to analyse the type of growth you can realistically expect from any given share. Be sure to listen to some expert analyst predictions as well.

Third, after you’ve held onto the share in question for some time, ask yourself what value you see in the company. Do you still agree with the initial analysis that convinced you to buy shares in the company? If that analysis has soured, it may be time to sell.

Finally, have a look at the profits you’ve already made from a specific company and ask yourself if there’s still room to grow. If you’ve made a large profit already, and you believe the future growth outlook is slowing, you can sell some of your shares in the company and reinvest it elsewhere.

When investors do this, Francis says, “It allows their profit to grow in the original stock and gives them the flexibility to top up their holding if the price dips.”

Stop losses… fixed or trailing?

Not every investor makes use of stop losses. But they can go a long way to preventing panic selling by taking human emotion out of the decision.

Before deciding where and how to set your stop losses, Francis says, “You should have an understanding of your risk appetite and your investing boundaries.”

He continues:

Stop losses are very important in protecting your portfolio against losses. If you’re an inexperienced investor and markets are more volatile, it’s particularly important to set stop losses.  If you’re considering trading with leverage, regulators require trading platforms in Australia to implement automatic stop losses to protect investors from significant losses. 

Now there are all types of stop-loss strategies you can employ. Two of the more popular and straightforward strategies are fixed stops and trailing stops.

Asked about his thoughts on these 2 exit methods, Francis told The Motley Fool:

Fixed stop losses are the safest bet to ensure your investments auto-sell if they dip below a certain price point. For the conservative investor, it may be more important to set stop losses slightly above or at the initial purchase price, so that in the event of a market crash, you neither lose, nor profit, but walk away breaking even. 

For investors with slightly higher risk appetites, you may consider trailing stop losses (which trail at a certain percentage away from the share price) to maximise profit potential, especially if you think a stock has a lot of growing to do. This gives you a little more leeway to make a profit but also exposes investors to slightly more risk.

There you have it.

Despite many shares falling over the past 2 days, selling out of your shareholdings in a panic is unlikely to yield the best long-term results.

Remember why you bought your ASX shares in the first place. And if you are considering selling shares, don’t do it on impulse and do stick to your investment strategies. 

More reading

• Is the Appen (ASX:APX) share price a bargain or should you wait?
• What the Federal Budget could mean for CSL (ASX:CSL) shares
• Why the Carpentaria (ASX:CAP) share price is rocketing 54% today
• Leading broker names 5 emerging ASX shares to buy today
• Is the Metcash (ASX:MTS) share price being smoked by the Federal Budget?

Motley Fool contributor Bernd Struben 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.

The post With the ASX sliding again today, why NOT to panic sell appeared first on The Motley Fool Australia.

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The Appen Ltd (ASX: APX) share price is pushing higher today at long last.

In afternoon trade, the artificial intelligence data services company’s shares are up 1% to $11.33.

Though, with the Appen share price still down 55% since the start of the year, it is far too soon to start celebrating.

Why is the Appen share price down 55% in 2021?

One word arguably sums up the reason for the decline in the Appen share price this year – uncertainty.

And uncertainty, as we have seen also with A2 Milk Company Ltd (ASX: A2M), does not mix well with high earnings multiples.

For a company to be able to command a sky high earnings multiple, there has to be some level of confidence that it will deliver on the market’s growth expectations.

For Appen, through no fault of its own, this simply isn’t the case right now because of the impact COVID-19 has had on the industry.

Lack of visibility

A recent note out of Bell Potter sums up exactly what the market is thinking and why the Appen share price is languishing in 2021.

It commented: “Appen delivered a speech at a broker conference that in our view was full of mixed messages and provided little clarity on how the company is tracking this year. The speech seemed to be aimed at providing an update on current market conditions and responding to some of the negative commentary in various recent broker reports on increased competition and self-supervised machine learning. Notably, there was no mention of the 2021 guidance.”

“Our overall impression of the speech was some of the challenges from last year are still ongoing but this relates more to customer behaviour and spending patterns rather than a shift in market dynamics and the competitive environment. We now wait for the AGM at the end of the month for a likely update on the 2021 guidance,” it concluded.

Bell Potter currently has a hold rating and $13.25 price target on its shares. It also estimates that its shares are trading at 24x FY 2021 earnings and 20x FY 2022 earnings at present.

And while the broker’s price target implies decent upside for the Appen share price over the next 12 months, it is worth remembering that this target could change depending on how the annual general meeting update goes.

More reading

• ASX shares that will benefit from the upcoming index changes
• Why a2 Milk, American Pacific Borate, Appen, & Incitec Pivot are tumbling lower
• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• These were the worst performing ASX 200 shares last week
• ASX tech shares are in a world of pain. There might be more to come…

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 Appen Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the Appen (ASX:APX) share price a bargain or should you wait? appeared first on The Motley Fool Australia.

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The Federal Budget has hit the headlines, and one ASX 200 biotech company might be affected by a number of measures within it.

Shares in CSL Limited (ASX: CSL), Australia’s only manufacturer of COVID-19 vaccines, may be in for an interesting year due to 2 key government initiatives.

This year’s Budget has granted an additional $1.9 billion of funding to vaccinate Australians. Though, most of the announced changes regard the Pfister-BioNTech and Modena vaccines instead of the AstraZeneca plc (LSE: AZN) vaccine which CSL produces.

Further, the government has incorporated a patent box into this year’s Budget.

Let’s take a look at what the 2021/22 Federal Budget might mean for CSL shares.

CSL could rejoice from Australia’s patent box

The Australian Government is the latest to introduce a patent box to encourage investment in the country’s biotech companies.

The patent box will see biotech and medical company incomes from products made with Australian patents taxed at a rate of 17%. That’s a decrease from the current tax rate of 25% to 30%.

The Government believes the patent box will encourage companies to conduct their research and development in Australia, as well as keeping their patents here afterwards.

CSL chief scientific officer Dr Andrew Nash had this to say this morning in the Sydney Morning Herald:

[The patent box is] an important reform and will help to ensure that the Australia of the future can more easily turn good science into products, professions, and local, advanced medical manufacturing capacity. It is an especially significant boost to the policy environment as the country navigates its way out of the pandemic.

Boosting vaccine rollout

The Federal Budget also includes another $1.9 billion of funding for the vaccine rollout.

The $1.9 billion includes $777.8 million to be spent over the next 2 years for the administration of COVID-19 vaccinations. Another $510.8 million will go towards the National Partnership on the COVID-19 Response, which will see states and territories also administering vaccines.

The remaining funding will go towards implementing, monitoring, and reporting the vaccine rollout; vaccine distribution, logistics, and storage; and a campaign to advertise the vaccination program.

In challenging news for CSL shares, the Government appears to be more focused on using mRNA vaccines like Pfister-BioNTech and Moderna. Prime Minister Scott Morrison said the Government was “better utilising the available stock of AstraZeneca doses” while announcing it had entered agreements to purchase 30 million doses of the Pfizer BioNTech vaccine. 

While this sounds like the Government might be starting to step away from AstraZeneca, the company is likely not to be banking heavily on AstraZeneca, no matter which vaccine the majority of Australians receive.

As The Motley Fool Australia has previously reported, CSL’s exposure to vaccines isn’t substantial, and its potential earnings from the AstraZeneca vaccine are small compared to its other business initiatives.

The Federal Budget also includes funding for the Department of Industry, Science, Energy and Resources, which will work with the Department of Health to set Australia up to manufacture mRNA vaccines.

It didn’t state how much funding will go towards mRNA manufacturing due to commercial sensitivities.

More reading

• Pfizer and BioNTech’s COVID-19 vaccine authorized by the FDA for adolescents
• The ASX shares poised to benefit from new spending in the 2021 federal budget
• Is the CSL (ASX:CSL) share price a clear buy?
• 2 fantastic ASX 50 shares that could be in the buy zone
• Should you worry about this threat to Moderna’s vaccine?

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. owns shares of CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Moderna Inc. 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 Carpentaria Resources Ltd (ASX: CAP) share price is one of the best performers on the ASX today. This comes after the company announced an update to acquire an interest in the Hawsons Iron Project.

At the time of writing, the miner’s shares are swapping hands for 7.1 cents apiece, up an astonishing 54.3%.

What did Carpentaria announce?

Investors are pushing Carpentaria shares higher following the company’s passing of certain obstacles that held up the Hawsons Project sale.

According to its release, Carpentaria advised it has finally reached an agreement with Pure Metals. While the details were kept under wraps, Carpentaria will acquire a 24.149% interest in the Hawsons Iron Project. In return, the company will issue Pure Metals 90.8 million Carpentaria shares.

The transaction gained shareholder approval at the company’s Annual General Meeting (AGM) in early November 2020. In that time, both companies managed to resolve all outstanding matters including the sale and purchase agreement conditions being met.

Completion of the deal is expected to occur around next Wednesday 19 May 2021.

In addition, Carpentaria noted that it has been looking for sophisticated investors to buy its 90.8 million shares once issued to Pure Metals. To facilitate the move, Pure Metals appointed Shaw and Partners’ Wholesale Trading team to act on their behalf.

Carpentaria executive chair, Bryan Granzien touched on the company’s plans to progress the Hawsons Project, saying:

We now expect to be able to do justice to the Hawsons Project and raise the funds necessary to complete the bankable feasibility study then proceed to development of the project. CAP will look to take advantage of the huge demand for the highest-quality iron ore products worldwide, and do so for the benefit of CAP shareholders, the community of Broken Hill and other stakeholders.

About the Carpentaria share price

Today’s announcement led Carpentaria shares to hit a multi-year high of 7.3 cents today. The last time its shares reached this level came back in late 2018.

Over the past 12 months, the Carpentaria share price has gained around 220%, with year-to-date performance sitting close to 70%.

More reading

• Leading broker names 5 emerging ASX shares to buy today
• Is the Metcash (ASX:MTS) share price being smoked by the Federal Budget?
• Why the Aerometrex (ASX:AMX) share price is soaring 18% today
• Why Ausnet, Qantas, Suncorp, & Sydney Airport shares are tumbling lower
• Thomson Resources (ASX:TMZ) share price surges 8%. Here’s why.

Motley Fool contributor Aaron Teboneras 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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Late last month Goldman Sachs hosted a total of 24 companies over three days at its 12th Annual Emerging Leaders Conference. Among the many small and mid cap ASX shares presenting were a few that Goldman Sachs is particularly bullish on.

Listed below are five emerging ASX shares that Goldman has buy ratings on at present:

Elders Ltd (ASX: ELD)

Goldman Sachs is a fan of this agribusiness company and currently has a conviction buy rating and $15.00 price target on its shares.

It commented: “Our positive thesis is predicated on a strong track record, favourable industry structure, the potential for a positive earnings surprise, and attractive value. The key long-term earnings drivers for ELD revolve around its proprietary product backward integration (increasing margins) and market share (organic and acquisition driven) strategies. In the short term current weather conditions are supportive for the upcoming winter crop and should boost demand for ELD’s products and services.”

Hipages Group Holdings Ltd (ASX: HPG)

This online tradie platform provider’s shares could be cheap according to Goldman Sachs. Its analysts have a buy rating and lofty $3.35 price target on its shares.

It commented: “We see HPG as an attractive medium-term growth stock – HPG currently captures c.5% of the total industry advertising spend; by contrast REA/CAR capture c.40-60% of spending in their respective categories. As HPG builds out its ecosystem (including the imminent launch of the new “TradieCore” field service software solution), we see scope for HPG to increase its share towards these levels over the long term as the marketplace leader.”

HUB24 Ltd (ASX: HUB)

Goldman is bullish on this investment platform provider and expects its strong fund inflows to continue for some time. Its analysts have a buy rating and $26.83 price target on its shares.

It explained: “We see solid earnings momentum for HUB where we expect custody flows of c. A$1.5bn/A$8.2bn/A$9.0bn in 4Q21E/FY22E/FY23E, which leaves us at the top-end of HUB’s guidance for platform FUA between A$43bn-A$49bn by FY22. We also like that adviser numbers have continued to increase steadily, and the opportunity for pipeline growth within the business. We see upside opportunity with the IFL private label solution, and the CVW transition as the white label solution continues to add new flows. We also see potential as the IT solution that HUB will provide to EAS will be rolled out in 4Q21, and as the PARS business separation from Ord Minnett progresses.”

Lifestyle Communities Limited (ASX: LIC)

Another ASX share that is on Goldman’s conviction list is Lifestyle Communities. The broker has a conviction buy rating and $15.95 price target on its shares.

Goldman commented: “We see the stock outperforming, driven by: (1) long-term structural growth, with demand for land-lease from a growing cohort of over 50s freeing up equity from the family home; (2) supportive property market dynamics which should support a significant increase in settlements and; (3) rising land lease asset valuations driven by cap rate compression which we think will come from the maturing of this low risk, annuity income stream. Residential land lease communities (RLLCs) are emerging as an institutional-grade property sub-sector with increasing demand in the space from offshore investors.”

PointsBet Holdings Ltd (ASX: PBH)

Goldman Sachs is a big fan of this sports betting company and believes it has a huge opportunity in the United States. The broker has a buy rating and $17.20 price target on its shares.

“We like PBH due to i) PBH’s leverage to the burgeoning US Sports Betting and iGaming market which we forecast to be a US$53 bn TAM opportunity at maturity, ii) our view that PBH is well-placed to achieve 10% share in states it operates in, iii) upside risk to long-run sustainable margins in Aus and the US which was reaffirmed by the strong margin result in 3Q21, iv) Scalability benefits ahead noting positive impacts from the NBCUniversal deal to come and imminent launch of iGaming (which we believe will provide both cost and revenue synergies), and v) strong management team and execution track record,” it explained.

More reading

• ASX 200 sinks, Boral rises, A2 Milk drops again
• Down 9%, the PointsBet (ASX:PBH) share price is struggling today. Here’s why.
• ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink
• The Hub24 (ASX:HUB) share price slides despite positive news
• PointsBet (ASX:PBH) share price lifts on acquisition news

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Hipages Group Holdings Ltd. and Pointsbet Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Elders Limited, Hub24 Ltd, and Pointsbet Holdings 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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Metcash Limited (ASX: MTS) shares have been under pressure today after the company released an update in response to yesterday’s Federal Budget.

After spending most of the morning in the red, the Metcash share price is currently trading 1.16% higher at $3.48. In comparison, the S&P/ASX 200 Index (ASX: XJO) is down 1.14% at the time of writing.

Let’s take a look at what the wholesale distributor announced. 

Tobacco excise

The Metcash share price is under pressure today after an update to investors in response to yesterday’s Federal budget.

In the update, Metcash flagged a $10 million hit to its earnings, noting that the budget did not include an increase in tobacco excise duty for September 2021.

Metcash advised that it has historically recognised a share valuation gain in its food pillar based on the value of tobacco stock on hand at the time of the excise duty and the related sales price increase. As a result, Metcash noted that this gain flowed through to earnings as the tobacco was sold.

With no excise increase in September, Metcash expects a net adverse impact in fiscal 2021 of $10 million in earnings before interest and tax (EBIT). The company noted that the impact would be reflected in its financial statements for the first half of FY22.

Metcash added that should the government reduce or discontinue its 12.5% tobacco excise, the company would work with tobacco suppliers to ensure appropriate remuneration.

About the Metcash share price

Earlier this year, the Metcash share price hit a new 52-week-high of $3.84 per share. Shares in the company went flying after Metcash reported strong retail sales and market share growth in March. The conglomerate highlighted strong sales momentum for all business segments in the second half of 2021.

As a result of a strong balance sheet and underlying cash flow, Metcash also announced an increased target dividend payout ratio. As a result, the company announced that 70% of underlying net profit after tax would be paid to investors effective FY21.

However, the Metcash share price has fallen more than 11% since hitting a new 52-week high in March. Its shares continue to be targeted by short-sellers. According to ASIC’s short position report, Metcash has a short interest of 7.3% with investors predicting a drop in the company’s market share.

More reading

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Motley Fool contributor Nikhil Gangaram 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 Aerometrex Ltd (ASX: AMX) share price is flying higher in early afternoon trade. This comes after the company announced a purchase order for one of its products, along with an investor presentation.

At the time of writing, the aerial mapping company’s shares are swapping hands for 92.5 cents, up 18.5%.

What’s driving the Aerometrex share price?

Investors are driving up Aerometrex shares higher, pricing in the company’s future attractive prospects.

According to its release, Aerometrex advised that Alphabet Inc (NASDAQ: GOOGL) subsidiary, Google LLC has signed a significant purchase order.

Under the agreement, Aerometrex will capture a 3D model of downtown San Francisco to add to its 3D data archive. While the revenue amount of Google’s order is not material, the demand for Aerometrex’s products validates its 3D data capabilities.

Furthermore, other companies within the same area of the San Francisco Bay have signalled their interest in the 3D dataset. Aerometrex is capturing the city with a very high resolution of 2-centimetre pixels.

This follows the company’s efforts in establishing a United States base, which has employed high-resolution oblique aerial imagery. 3D models that have recently been constructed include the cities of Denver and Miami.

Aerometrex noted that its 3D model data is being used across a number of diverse industries. This includes urban planning, civil engineering, computer gaming, asset management, mining and coastal erosion.

The company will retain full Intellectual Property (IP) ownership of the San Francisco 3D model.

Aerometrex managing director, Mark Deuter commented:

I am very encouraged by our developments in the US market and believe that the purchase order with Google endorses our strategy and our 3D data capture capabilities.

We are gaining greater attention from large organisations whose operations cover multiple US cities and municipalities and we see significant potential to contract with these types of organisations moving forward.

What about the investor presentation?

In further news booting Aerometrex shares, the company highlighted some key points in its investor presentation to investors.

It stated that Data-as-a-Software (DaaS) subscription model is focused on the development and growth of MetroMap. The total addressable market for this segment is estimated to be around $80 million per annum in Australia. Aerometrex holds a $4.26 million slice as of March 2020, with it targeting $40 million in the foreseeable future.

In addition, 3D modelling is on track to capture more datasets within the United States market. Discussions are continuing with large global organisations with respect to their 3D opportunities. Aerometrex is looking into markets such as virtual reality and augmented reality, property and real estate, and tourism. The addressable market size for this opportunity is open-ended as international projects could reach outside the United States.

The Aerometrex share price has lost close to 50% over the past 12 months, and it’s down 28% year-to-date.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares). The Motley Fool Australia has recommended Alphabet (A shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Aerometrex (ASX:AMX) share price is soaring 18% today appeared first on The Motley Fool Australia.

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