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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to bounce back strongly from Monday’s decline. At the time of writing, the benchmark index is up 1.1% to 6,736.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bathurst Resources Ltd (ASX: BRL)

The Bathurst Resources share price is down 12% to 6.8 cents. This may have been driven by profit taking after some strong gains in recent trading days. In fact, its gains were so strong it prompted a price query by the ASX. The company believes the strong rise its share price was driven by favourable movements in the Hard Coking Coal Premium Low Vol benchmark. It notes that this increased from US$102/tonne to US$124.50/tonne over the last week.  

Megaport Ltd (ASX: MP1)

The Megaport share price has fallen over 2.5% to $12.65 following the release of its second quarter update. The global elastic interconnection services provider reported a 10% increase in underlying monthly recurring revenue (MRR) quarter on quarter to $6.3 million. This brought its quarterly revenue to $18.7 million. It appears as though some investors were expecting stronger growth from Megaport.

Orocobre Limited (ASX: ORE)

The Orocobre share price is down 1.5% to $5.04. This may be due to profit taking after a very strong gain by the lithium miner’s shares over the last few months. Prior to today, the Orocobre share price had doubled in value since the start of November. A rebound in the lithium price and an increasingly positive outlook for the battery making ingredient were behind this rise.

Splitit Ltd (ASX: SPT)

The Splitit share price is down 5% to $1.43 despite there being no news out of the buy now pay later provider. But as with Orocobre, the Splitit share price has been on form recently, which could have led to some profit taking today. Thanks largely to its deal with Google in Japan, the Splitit share price was up 30% in the space of a month prior to today.

More reading

• Why the Megaport (ASX:MP1) share price is sliding lower today
• Why Beach, Orocobre, Premier Investments, & QBE shares are dropping lower
• The Whispir (ASX:WSP) share price is 30% lower than its 52-week high
• ASX 200 rises 0.4%
• Could this be why Afterpay (ASX:APT) and other BNPL shares are soaring today?

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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Bathurst Resources, Megaport, Orocobre, & Splitit shares are dropping lower appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is back on form on Tuesday and charging higher. In late morning trade, the benchmark index is up a solid 1% to 6,730.4 points.

Four shares that are climbing more than most today are listed below. Here’s why they are zooming higher:

Bingo Industries Ltd (ASX: BIN)

The BINGO share price has surged 21.5% higher to $3.33 after a much-speculated takeover approach was made for the waste management company. This morning BINGO revealed that it has received an unsolicited, highly conditional, non-binding, indicative proposal from funds advised by CPE Capital. The indicative cash price currently offered to BINGO shareholders under the proposal is $3.50 per share.

Creso Pharma Ltd (ASX: CPH)

The Creso share price is up 9% to 24 cents following the release of another sales update. According to the release, the cannabis company has received a repeat order from Virbac Switzerland for its leading range of animal health products anibidiol. Combined with other recent orders, management expects this to lead to revenue of almost $1.1 million for the first half of FY 2021.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price has jumped 6% to $88.12. This appears to have been driven by a broker note out of Macquarie this morning. According to the note, the broker has upgraded the pizza chain operator’s shares to an outperform rating with a $90.30 price target. It believes the company is winning market share from its rivals and feels it is well placed for growth.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has stormed almost 17% higher to $2.71. Investors have been buying the company’s shares after it responded to a short seller attack this morning. Tyro stated that Viceroy Research’s claims are false. This includes the allegation that 50% of Tyro’s payment terminals had been bricked by a software update.

More reading

• Why the Tyro (ASX:TYR) share price is rocketing 17% higher today
• Why the Creso Pharma (ASX:CPH) share price is smoking the market today
• 3 ASX 200 shares that keep growing their dividends
• Risk vs uncertainty: why one is a lot worse
• Why the Tyro (ASX:TYR) share price is on watch today

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 Tyro Payments. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher today appeared first on The Motley Fool Australia.

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With Joe Biden due to take office this week, many investors are wondering what this could mean for ASX shares. Ahead of his inauguration Biden has revealed a $1.9 trillion coronavirus relief plan aimed at combating the pandemic and the economic crisis it has triggered.

In the short term, this additional fiscal stimulus should help bolster the battered US economy, but it has also impacted global share markets. Prices of commodities used in infrastructure projects have rallied since Biden announced the package, while technology stocks have struggled. 

A splurge of issuance in the government bond market is expected, alongside higher inflation. This could prompt the Federal Reserve to increase interest rates earlier than expected.

In the US, there has been a rotation away from the tech sector into economically sensitive sectors such as small caps and value stocks. The rollout of the coronavirus vaccine combined with additional government stimulus is expected to lift sectors which were hit hardest by the pandemic.

Longer term, the Biden administration is expected to increase spending on infrastructure and clean energy. So which ASX shares are set to benefit? 

Clean energy 

Biden is proposing a $1.7 trillion federal investment in green technologies and wants the US to reach zero net emissions by 2050.

Biden is seeking to accelerate the deployment of clean technology throughout the economy, as well as rallying the world to take urgent and additional climate action. The Biden administration’s policy focus on clean energy could provide tailwinds to companies in the sector and accelerate the structural shift towards sustainability.

This could be good news for ASX shares such as Lynas Rare Earths Ltd (ASX: LYC). The rare earth miner produces minerals crucial to the manufacture of high-tech products. Increased demand for electric vehicles, green technologies, robotics, and consumer technologies should boost demand for rare earths.

In April 2020, Lynas was awarded a contract for the development of a heavy rare earth separation facility in the US. There are currently no such facilities outside China, and the US is looking to rebuild its rare earth processing industry to escape dependence on China.

In 2020, Trump signed an executive order to boost domestic production of rare earth metals, which are crucial in defence technologies. Lynas is helping the US secure a reliable supply. With Biden in power, however, the renewable-energy applications of rare earths could become even more important. 

Lithium miners are also likely to benefit from Biden’s green credentials. Lithium is a key ingredient in the batteries used to charge electric vehicles.

The demand for these batteries is expected to grow under Biden and Lithium miners could expect to see the benefits of this. It is expected that Biden’s green initiatives will kickstart lithium and battery projects in the US.

ASX miners in the lithium area include Vulcan Energy Resources Ltd (ASX: VUL) and Piedmont Lithium Ltd (ASX: PLL).

Piedmont Lithium signed an agreement with Tesla last September to supply the automaker with spodumene concentrate, while Vulcan has developed a world first zero-carbon lithium process.

Nickel is also a vital ingredient in lithium-ion batteries that power electric vehicles. This means nickel producers such as Western Areas Ltd (ASX: WSA) and Panoramic Resources Ltd (ASX: PAN) could also benefit under a Biden administration.

Western Areas has a portfolio of low-cost, high-grade nickel mines with an active exploration program. Panoramic Resources operates nickel mines in Western Australia and is engaged in exploration in Australia, the US, and Canada. 

Green shoots for cannabis shares

During the campaign, Biden stated his administration will pursue cannabis decriminalisation and that he supports medical cannabis legalisation.

Democratic control of the Senate also means federal cannabis reform proposals are more likely to make it to the floor of the Senate. Federal legislation in the US could push forward efforts to legalise recreational cannabis in Australia. This could be a boom for ASX cannabis shares such as Althea Group Holdings Ltd (ASX: AGH), Little Green Pharma Ltd (ASX: LGP), and Cann Group Ltd (ASX: CAN). 

Althea is already taking advantage of Canada’s cannabis 2.0 legislation with its Peak Processing facility. The company already has a growing client base of Australian medical marijuana customers. Little Green Pharma has been manufacturing Australian medical grade cannabis products since 2018 and provides a range of THC and CBD oils. Cann Group has established R&D and cultivation facilities in Australia and is looking to establish a leading position in plant genetics, breeding, cultivation, and production. 

Ethical investing on the rise

Socially responsible investing is likely to gain momentum under Biden. Although most companies are aware that being environmentally friendly and socially responsible is good for both customers and shareholders, the sector will likely receive a boost under a Biden administration.

This is because his cabinet and regulator choices look to be ESG-friendly. Further, his administration has flagged an intention to require public companies to disclose more climate-change related data, which will allow ethical investors to make more informed decisions. There are a number of ETFs listed on the ASX that give Australian investors access to the ESG sector. These include BetaShares Global Sustainability Leaders ETF (ASX: ETHI) and VanEck Vectors MSCI International Sustainability Equity ETF (ASX: ESGI). 

Biden brings new future 

The incoming Biden administration marks a distinct shift in direction for the United States. Many of Biden’s priorities are in sharp contrast to those of his predecessor. With control of Congress, Biden is in a prime position to lead the United States to a new future. This will have flow on effects for ASX shares, with investors eagerly awaiting the outcome of Biden’s policy initiatives.  

 

More reading

• Why the Vulcan Energy (ASX:VUL) share price is up 4,000% in 12 months
• The Vulcan (ASX:VUL) share price is hitting new highs today. Here’s why
• Here’s why the Sayona (ASX:SYA) share price has surged 235% higher this week
• Iluka (ASX:ILU) share price surged higher on a potential $1bn+ valuation uplift
• The sector that’ll grow 480% this year, expert says

Motley Fool contributor Kate O’Brien 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 HUB24 Ltd (ASX: HUB) share price is pushing higher on Tuesday following the release of its second quarter and half year update.

In morning trade the investment platform provider’s shares are up 2% to $23.46.

This latest gain means the HUB24 share price is now up 97% since this time last year.

How is HUB24 performing?

HUB24’s strong form continued during the three months ended 31 December.

Its Custodial Platform Funds Under Administration (FUA) reached $22 billion at the end of the period, which was up 38.7% on the prior corresponding period. Total FUA came to $31 billion, including the $9.3 billion of non-custodial FUA from the Ord Minnett PARS acquisition.

This strong growth was driven by record platform quarterly net inflows of $1.7 billion, an increase of 36.7% on the net inflows it recorded in the same period a year earlier. This was also $360 million higher than its first quarter net inflows.

Pleasingly, the future looks positive, with HUB24’s new business pipeline continuing to grow following the signing of 24 new licensee agreements during the December quarter. These include agreements with both large boutique licensees and self-licensed practices.

Additionally, the company has recently entered into a binding agreement with IOOF Holdings Limited (ASX: IFL) to develop a range of solutions. This includes an investment and superannuation wrap platform utilising HUB24’s custody, administration and technology capabilities, and a suite of managed portfolios.

Commenting on its outlook, the company stated: “As well as continued focus on growing the current platform business and supporting our customers, the company is leveraging opportunities for further growth and diversifying into non-custody administration in line with our HUBconnect strategy. With the completion of the acquisition of the Ord Minnett PARS business, non-custodial FUA of $9.3 billion for this quarter will now be included in the company reporting.”

More reading

• The latest ASX “buy” recommendations from top brokers
• Brokers name 3 ASX shares to buy right now
• Why the Hub24 (ASX:HUB) share price could go higher

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 Hub24 Ltd. The Motley Fool Australia has recommended Hub24 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 Ecofibre Ltd (ASX: EOF) share price is on the rise today following the announcement of an exclusive distribution alliance between Ananda Health and Medisca.

Ecofibre’s Ananda Health division is the number one provider of hemp-derived cannabidiol (CBD) for retail pharmacies in the United States. The business produces nutraceutical products, topical creams and ointments.

In existence for over 30 years, Medisca is a company that is focused on compounding pharmaceutical chemical products. The business offers personalised medicine, educational training and support to its partners prescribers, pharmacists, and pharmacist technicians. Medisca has a global footprint across 55 countries including Europe, the United States, Canada, and Australia. The company supplies compounds to more than 10,000 pharmacies world-wide.

In early trade, shares in the hemp products producer are up 3.88% to $1.88.

What’s driving the Ecofibre share price?

In today’s announcement, Ecofibre advised that it has entered an exclusive distribution agreement with Medisca to roll out its products.

Under the terms of the deal, Ananda will have access to the Medisca network in the United States. This will enable the company to supply Ananda Professional products to more than 5,000 pharmacies from February 1, 2021.

The contract will be valid for 3 years, with an additional 2-year extended option. A minimum sales target will be set 6 months after the contract start date, which must be met to continue to agreement.

Ananda will have exclusive distribution access to the United States, Canada, and Australia. However, Medisca is able to dispense the products to other parts of its extensive network on a non-exclusive basis.

Management commentary

Ananda Health CEO David Neu welcomed the new partnership, saying:

This partnership is one of the most important milestones in the professionalisation of the CBD industry. This is the first time a multinational distributor will be carrying ingestible hemp-derived CBD products.

Medisca global strategy and innovation SVP, Panagiota Danopoulos, added:

Medisca has been closely monitoring the CBD segment over the past several years and we have seen awareness and demand increase for compounding pharmacists across many geographies. To ensure that we can provide our pharmacists the best-in-class CBD product range we are very pleased to announce our exclusive distribution partnership with Ananda Health.

CBD is an exciting new category that still requires significant research and education to ensure it can help as many patients as possible. In conjunction with Ananda Health, we are very excited to be able to give our pharmacists access to the research, tools and training to improve patient outcomes.

More reading

• 5 top ASX cannabis shares in 2020

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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The Tyro Payments Ltd (ASX: TYR) share price has returned from its trading halt on Tuesday after responding to a short seller report.

At the time of writing, the payments company’s shares are rocketing 17% higher to $2.72.

What did the short seller claim?

Late last week Viceroy Research alleged that the Tyro payment terminal outage was far greater than it admitted and labelled the company “the most unreliable & technologically inferior fintech in Australia.”

Viceroy claimed that its research suggests that Tyro rendered useless around half of its terminals across the country via a software update. This “left businesses, including medical facilities, without any means to collect payment from customers.”

What was Tyro’s response?

This morning Tyro revealed that it has reviewed and rejected Viceroy Research’s report. It notes that the report follows a “familiar playbook used by overseas domiciled and unregistered operators seeking to generate uncertainty, so as to directly profit from or facilitate others to profit from their research.”

While the company has intentionally not commented on each individual opinion of the authors of the report, it has responded to a number of key factual misstatements, noting that these falsehoods are the foundation for many of the opinions expressed within the report.

Tyro’s responses.

The first falsehood the company tackled was the number of terminals that are offline.

“At no time have 50% of Tyro’s terminals been offline. As advised to the ASX today 15% of Tyro’s merchants remain impacted.”

Tyro also stressed that the cause of the outage was not a software patch.

“The root cause of the connectivity event has been identified as arising from an issue residing in specific versions of the terminal platform software supplied by the manufacturer of the terminals, Worldline. This issue caused valid, forward dated, certificates on the impacted terminals to be incorrectly interpreted as expired, due to the interplay of the selected expiry date and any date on or after 5 January 2021.”

Viceroy claimed that fixing the terminals would be capital intensive and cost up to $12 million to replace. Tyro has refuted this claim.

“The repair involves collecting the impacted terminals from the field and implementing an immediate software update. If the terminals were not in a disconnected state this fix would have been achieved via a remote download. There is no capital-intensive terminal repair or replacement required of the nature suggested in the Report.”

Another claim that has been refuted is the age of Tyro’s terminal fleet, which Viceroy said was over a decade old.

“Tyro terminals are exclusively Worldline manufactured and the fleet is not aged as implied in the Report, specifically: – ~60% of the fleet is 3 years old or less; – ~80% of the fleet is 5 years old or less.”

Finally, the short seller claimed that Tyro floats its operating cash flows through customer deposits. Tyro confirmed that its cash flows are audited and in compliance with Australian Accounting Standards and International Financial Reporting Standards.

“Tyro has cash and investments excluding depositor funds of $137 million as at 31 December 2020. Tyro is an Authorised Deposit-taking Institution (ADI). Deposits are generated to fund merchant loans and not to support operating cash requirements. The reporting of customer deposits in our audited Statement of Financial Position and Statement of Cash Flows is in compliance with Australian Accounting Standards and International Financial Reporting Standards.”

“The adjustments in the Report to Tyro’s cash flows include non-cash items (ie share based compensation) and furthermore to extract ‘movements in deposits’ without adding back ‘movements in loans’ is an inconsistent treatment for an ADI and will lead to an incorrect assessment of cash movements as it excludes the banking business.”

More reading

• Risk vs uncertainty: why one is a lot worse
• Why the Tyro (ASX:TYR) share price is on watch today
• ASX 200 ends flat on Friday
• Why Advance Nanotek, Polynovo, Resolute, & Tyro shares are dropping lower
• Tyro Payments (ASX:TYR) share price crashes 12% on short seller attack

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 Tyro Payments. 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 Creso Pharma Ltd (ASX: CPH) share price is on the move on Tuesday morning following the release an update.

At the time of writing, the cannabis company’s shares are up 16% to 25.5 cents.

What did Creso Pharma announce?

This morning Creso Pharma announced that it has secured a new purchase order for its leading range of animal health products anibidiol.

According to the release, the order has come from its existing commercial partner, Virbac Switzerland, and is a repeat of a previous order.

The order is valued at CHF171,000 (A$247,826) and is expected to be delivered to Virbac Switzerland in April 2021.

Management notes that this adds to a number of orders that Creso Pharma has secured in the recent weeks including three for anibidiol valued at CHF277,000 (A$401,4491) from current commercial partners.

The company expects to fulfil these orders during the current quarter, with the sale to be banked shortly after.

Strong demand.

In addition to this, Creso Pharma advised that it is also witnessing strong demand for its products in Latin America.

It has recently secured regulatory approval for its animal health product line from the Ministry of Agriculture and Animal Feed in Uruguay and received an initial order for anibidiol valued at CHF60,000 (A$86,957). This will be delivered around April 2021.

Further, this month it finalised the delivery of its second order valued at CHF220,000 (A$318,841) for its cannaQIX products from the South African subsidiary of Lupin International. These products were delivered during January, allowing Creso to bank the total value of the order.

All in all, the total value of these combined orders represents CHF728,000 (A$1,055,072), which Creso Pharma expects to recognise as revenue within the first half of FY 2021.

Management believes this is a major achievement for the company and highlights the growing demand that it is witnessing for its leading product ranges on a global scale.

Creso’s Commercial Director, Jorge Wernli, commented: “We are very pleased with the recent developments and receipt of a number of purchase orders for both the anibidiol and cannaQIX product lines.”

“Our capabilities to generate and deliver ongoing POs, and deliver a record start to FY2021 leaves Creso in a very favourable position to capitalise on the fast growing demand we are witnessing for our offering and the large market opportunity the health sector represents,” he concluded.

More reading

• Afterpay and Creso Pharma were among the most traded shares on the ASX last week
• Here’s why the Creso Pharma (ASX:CPH) share price is jumping 13% higher today
• Why ASX cannabis shares are cheering the US elections
• Why Accent, Afterpay, Creso Pharma, & Thorn shares are charging higher
• Why the Creso Pharma (ASX:CPH) share price rocketed 47% higher

Motley Fool contributor James Mickleboro 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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In morning trade the Megaport Ltd (ASX: MP1) share price is sliding lower following its second quarter update.

At the time of writing, the global elastic Interconnection services provider’s shares are down 1% to $12.88.

How did Megaport perform in the second quarter?

For the three months ending 31 December, Megaport recorded solid quarterly growth with underlying monthly recurring revenue (MRR) up 10% quarter on quarter to $6.3 million. This was despite facing currency headwinds from the stronger Australian dollar.

This led to total revenue coming in at $18.7 million for the quarter, which was up 8% compared to the first quarter.

They weren’t the only metrics on the rise. The release advises that customers grew 3% quarter on quarter to 2,043, ports lifted 6% to 6,691, total services rose 6% to 19,278, and Megaport Cloud Routers increased 11% to 382.

Cashflow positive.

Megaport recorded positive net cashflow from operations for the first time during the second quarter. This was earlier than the company expected and was driven by record customer collections.

However, the company isn’t expecting to remain positive with its cashflow in the third quarter. This is due to some one-off annual prepayments. Though, management expects to revert back to positive cashflow from operations on a recurring basis in FY 2022.

Outlook.

Management appears positive on its outlook thanks partly to new data centre partnerships and product launches. These new partnerships include ones with Sungard, Kao Data, and NorthC.

In addition to this, Megaport has continued to bolster its ecosystem of leading service providers with the addition of European cloud provider OVHcloud.

Another key driver of growth could be the impending launch of Megaport Virtual Edge (MVE) in the second half. MVE will provide a platform to virtualise network functionality to enable businesses to connect to services through Megaport from more locations around the globe. This includes branch offices, corporate campuses, and point-of-sale locations.

Cisco is the first technology partner to announce MVE integration with more integration partners planned in the coming quarters.

Megaport’s Chief Executive Officer, Vincent English, commented: “At the halfway mark through Fiscal Year 2021, Megaport is in an excellent position to continue growing our market share for cloud connectivity. The launch of MVE in 2H FY21 will increase our addressable market and open new channel opportunities to strengthen our revenue growth.”

“Achieving EBITDA breakeven on a run rate basis this Fiscal Year remains a priority as we continue to optimise our footprint to maximise margins and move to profitability. As part of our commitment to providing greater value to our customers and partners, we will continue to enrich our ecosystem with new service providers in the coming quarters.”

“Additionally, we have developed an extensive Technology Partner pipeline and are engaged in integration projects which will provide more functionality to MVE. This will continue to expand our addressable market and provide greater choice to our customers as they architect their next generation IT services,” he concluded.

More reading

• The Whispir (ASX:WSP) share price is 30% lower than its 52-week high
• These were the worst performing ASX 200 shares last week
• ASX 200 drops 1.1%
• How to invest in ASX shares in a post-COVID world 
• Here’s how the S&P/ASX All Technology Index fared in 2020

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 MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT 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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After soaring to a 52-week high of $1.60 in late October, shares in ASX junior software company Bigtincan Holdings Ltd (ASX: BTH) have fallen more than 35% to just $1.01 as at the time of writing. The Bigtincan share price decline has continued despite the company making a number of strategic acquisitions over the last few months.

Bigtincan was just one on a list of up-and-coming ASX technology companies that saw their share prices surge to new highs during the lockdowns last year. Shares in cloud network company Megaport Ltd (ASX: MP1), communications platform developer Whispir Ltd (ASX: WSP) and document workflow management company Nitro Software Ltd (ASX: NTO) all raced higher in 2020, but have also since come off the boil.

What drove the Bigtincan share price increase in 2020?

Despite the challenges posed by COVID-19, Bigtincan’s results for FY20 were strong across just about all financial metrics. Revenues increased 56% year on year to $31 million, with organic growth of 38% coming in at the top of the company’s guidance range. Bigtincan also ended the year with a strong balance sheet, with $71 million in cash and equivalents, thanks mostly to two successful capital raisings conducted during the year.

The company also made three key acquisitions during FY20, the most in its history.

What does Bigtincan do?

Bigtincan develops software to help streamline and automate its business clients’ sales and marketing functions. The company’s flagship sales enablement automation platform is a centralised, integrated software solution that is designed to support businesses throughout their entire sales and marketing lifecycle, from onboarding and training new staff, to engaging new customers and providing accurate reporting.

More recent news from the company

Bigtincan has kept up the mergers and acquisitions (M&A) activity in FY21. In October, it announced the acquisition of Danish digital sales enablement company Agnitio. Then, in December, Bigtincan announced it had also acquired US-based sales engagement technology company ClearSlide. And, just last week, Bigtincan revealed it had bought United States voice analytics company VoiceVibes.

The company also announced a significant contract win in November. It entered into a 3-year contract valued at approximately $1 million with US-based global financial services firm John Hancock Investors Trust.   

Outlook for FY21

Despite the flurry of M&A activity, Bigtincan has so far had a mixed start to FY21. Total operating cash payments were down 7% versus the prior quarter to $11.5 million, but the company did state that the September quarter is generally seasonally lower due to slowdowns in the US market over summer. Bigtincan did still manage to notch up some significant contract wins in the quarter, including a $1.8 million deal with Red Bull.

Bigtincan stated it was on track to meet its previous guidance for FY21, which was for annual revenue growth of between 32% and 42% to between $41 million and $44 million.

More reading

• Why the Bigtincan (ASX:BTH) share price is edging higher today
• These ASX shares are growing at a rapid rate in FY 2021
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• 2 explosive ASX tech shares to buy in January
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Rhys Brock owns shares of BIGTINCAN FPO, MEGAPORT FPO, Nitro Software Limited, and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO, MEGAPORT FPO, and Whispir Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, MEGAPORT FPO, Nitro Software Limited, and Whispir 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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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.

Tesla Inc (NASDAQ: TSLA) returned more than 720% for investors in 2020. That’s a huge year by any standard, and holders should be very excited by that performance. However, for many, it creates an allocation problem that requires rebalancing.

As I see it, the worst mistake that Tesla investors can make is to ignore the need to diversify. This suggestion may fall on deaf ears for speculators or Tesla disciples, but it’s a great time to sell a portion of your shares while retaining some for future growth.

The auto-maker grew aggressively in 2020

Tesla was one of the most popular stocks among investors coming into 2020, and many people held it as part of their portfolios. That stock has almost certainly grown to take up a much larger portion of their portfolios since the start of last year. A hypothetical portfolio that was 5% Tesla at the start of 2020, with the remainder spread between the S&P 500 Index (SP: .INX) and the Nasdaq Composite (NASDAQ: .IXIC), would now be roughly 25% Tesla due to that one position’s excellent performance.

There’s some dissent among Fool contributors and the investment community on this topic, but I’m a staunch advocate of diversification and rebalancing. This is especially important if stock performance is being driven by valuation inflation rather than fundamental growth. In the above example, investors established a volatile, high-growth position with 5% of the portfolio. Having exploded in value, Tesla now has less upside potential and more downside risk. To replicate this year’s performance, the company would have to grow to $5.6 trillion in value. Tesla is likely to continue performing well, and that huge valuation may indeed be attained eventually. However, it’s going to take a while, and I expect that we’ll go through some market corrections before that day comes.

Tesla holders should be excited-the stock delivered your gains ahead of schedule without a corresponding rise in sales, and there’s a good chance you’ll be able to purchase more again later at a less aggressive valuation.

Rebalancing, taking gains, and allocation

Even if you fundamentally agree that rebalancing is important, the actual moves required to rebalance may be difficult to accept. Tesla is looking at 30% sales growth in 2020, and it achieved quarterly profits for the first time last year. Analysts are forecasting rapid growth again in 2021.

It might seem strange to sell a stock that’s delivered great returns while reporting strong fundamentals and looking at another great year. However, that’s exactly what you have to do to effectively rebalance.

The bull narrative for Tesla has not been disrupted. In fact, the auto maker’s sustained growth and recent profits validate the optimism about the stock. Why would you need to sell some, if that’s the case? Because risk is still present here.

Tesla trades at a forward price-to-earnings (P/E) ratio of 175, a price-to-sales of 24.5, and a price-to-book ratio of 41.7. Investors should expect promising growth stocks to attract high valuation ratios like these, but Tesla holders need to recognize that significant amounts of future success are already assumed in this price. Continued strong results are necessary to justify the current price. Any indication that Tesla might fall short of the market’s optimistic forecasts could send shares tumbling, even if the company keeps growing.

That might not be an issue for bullish long-term holders who just want exposure to the eventual market leader they expect Tesla to become, but others recognize the opportunity to redeploy that capital into other stocks that can deliver strong returns without as much risk concentration. Growth investors can sell some Tesla shares and use the proceeds to buy several other high-growth stocks. Recent big-name IPOs and hot stocks from industries such as e-commerce, cybersecurity, or telehealth can offer tremendous upside along with the opportunity to dilute the risk that any single stock performs poorly.

Don’t overreact

Rebalancing shouldn’t mean completely abandoning a good position, either. It makes sense to lock in some gains and retain a smaller position in Tesla to take advantage of potential future growth. Investors might be nervous about Tesla’s aggressive valuation, but that company may well become a leader in multiple major industries for the next several decades. Most investors who allocated a certain proportion of their portfolios to Tesla last year should feel comfortable allocating a similar percentage of their holdings to the stock this year. 

Tesla may have attracted large numbers of speculative growth investors, and they might not like to hear it, but this is a great moment to take some gains and reinvest them elsewhere. The stock has outperformed the rest of the market so drastically over the past 12 months that it has left portfolios over-exposed to its performance. This is especially risky with Tesla’s high valuation ratios. Bullish investors should keep some of this stock in their portfolios to benefit from future growth, but there are more than enough high-potential companies out there to warrant diversification.

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

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Ryan Downie 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 Tesla. 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 The worst mistake Tesla investors can make right now appeared first on The Motley Fool Australia.

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

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