Tag: Motley Fool

The S&P/ASX 200 Index (ASX: XJO) fell by 2.15% today to 5,879 points.

It has been a tough September so far for share market investors. The NASDAQ has dropped by around 10% over the past week. This is hurting the local Australian share market as well.

There was a sea of red today, particularly in the technology and resource sectors.

Biggest ASX 200 declines

Oil saw some of the biggest declines, the Beach Energy Ltd (ASX: BPT) share price dropped 9.2%, the Oil Search Limited (ASX: OSH) share price dropped 7.8% and the Santos Ltd (ASX: STO) share price fell 5.4%.

Looking at technology, the Megaport Ltd (ASX: MP1) share price fell 6.1%, the Afterpay Ltd (ASX: APT) share price recovered to just a 1.3% drop, the Appen Ltd (ASX: APX) share price fell 4.1% and the Nearmap Ltd (ASX: NEA) share price dropped 3.7%.

The other big falls in the ASX 200 was the Graincorp Ltd (ASX: GNC) share price falling 8.9% and the Credit Corp Group Limited (ASX: CCP) share price dropped 7.75%.

Australia’s big four ASX banks also suffered a decline. The Commonwealth Bank of Australia (ASX: CBA) share price dropped 2.5%, the Australia and New Zealand Banking Group (ASX: ANZ) share price fell 3%, the National Australia Bank Ltd (ASX: NAB) share price declined 2.6% and the Westpac Banking Corp (ASX: WBC) share price went down 3.3%.

There were a few businesses that managed to rise. The Nufarm Limited (ASX: NUF) share price went up 2.7%, the GUD Holdings Limited (ASX: GUD) share price grew 2.4% and the IPH Ltd (ASX: IPH) share price rose 2.1%.

Qube Holdings Ltd (ASX: QUB)

The company announced today that Patrick Terminals has entered into lease arrangements extending Patrick’s tenure at the Port of Melbourne to 2066. Qube holds a 50% interest in Patrick Terminals.

The company said that the arrangements secure Patrick’s long-term strategic footprint at East Swanson Dock and an adjoining logistics site at Coode Road. Patrick has recently upgraded its capabilities at the East Swanson Dock.

Qube also said that it has secured funding for a new rail terminal. The Coode Road logistics site will be developed over the next few years to deliver rail capacity and to interface with Patrick’s container terminal.

Patrick has entered into a development deed with the Port of Melbourne to co-fund and build the rail terminal. Patrick’s share of the cost is expected to be funded from its operating cashflow and available, undrawn debt facilities.

The Qube share price fell 2.6%.

Codan Limited (ASX: CDA)

Codan announced today that it had won a significant contract.

It said that Codan Communications has won a contract with a large African government to supply tactical communications equipment. The contract has a value order of more than US$10 million to supply Sentry-H radios and accessories. Codan expects to deliver the order in the second half of FY21.

The radios are intended for national security purposes in military operations in a country-wide program. The contract is a one-off purchase and there are no material conditions that are required to be satisfied prior to delivery.

Management said that this is a significant contract for Codan, as it reinforces its strength in providing such equipment to the African market and enhances its strategy to successfully penetrate the security and military sector globally.

More reading

• Why the Clean TeQ (ASX:CLQ) share price fell 10% today
• Why Brainchip (ASX:BRN) shares are topping the ASX today
• Graincorp (ASX:GNC) share price tumbles 9%. Here’s why it looks like a bargain
• Why the Laybuy (ASX:LBY) share price is tanking today
• ASX banks facing new battle with zombie army

Tristan Harrison 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’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Is this the start of the next crash for ASX shares and indeed the global share market?

We’ll see, but what’s clear is that share prices have dropped lower. Whether you look at BetaShares NASDAQ 100 ETF (ASX: NDQ), iShares S&P 500 ETF (ASX: IVV) or ASX tech shares like Afterpay Ltd (ASX: APT) – everything is down.

There are some great businesses on the ASX. There were loads of opportunities six months ago. Now some ASX shares are looking good value again. Something like A2 Milk Company Ltd (ASX: A2M) looks very interesting to me.

I’m interested in buying the best quality ideas, but some haven’t dropped far enough yet. However, if they dropped another 10% (or more) then I’d be very interested in these two ideas:

Altium Limited (ASX: ALU)

Altium is an electronic PCB software business. I have often written about Altium as a top ASX growth share idea. It has a lot of growth potential with the way the world is steadily getting more technological.

It can point to a very impressive client base. Customers include Tesla, Space X, Boeing, Bosch, Google, Amazon, Microsoft, Apple, Disney, Broadcom, Qualcomm, Siemens, Honeywell, CSIRO and so on.

FY20 has seen a significant slowdown due to COVID-19 impacts. Revenue only grew by 10% to US$189.1 million. The company still has a long-term goal of US$500 million of revenue, though that target is expected to take six to twelve months longer than before.

But many of the things that attracted me to Altium about its long-term potential are still there. The ASX share is still debt free, it still doesn’t capitalise its research and development costs, it still has a high earnings before interest, tax, depreciation and amortisation (EBITDA) margin (of around 40%) and so on.

Whilst COVID-19 is difficult, Altium is doing its best to offer clients the products to help them to continue to operate. Altium 365 is a cloud offering and it now has over 5,000 active users with more than 2,600 active accounts.

Due to these economic difficulties, I’m not as inclined to pay as high of a price for Altium shares as before. At the current Altium share price it’s priced at 52x FY22’s estimated earnings. However, I don’t think I would want to buy the ASX share at a share price above $30 for now.  

Pro Medicus Ltd (ASX: PME)

Pro Medicus is a healthcare IT business which specialises in enterprise imaging and radiology information system software.

The company had a really strong result in FY20. Underlying revenue grew by 23.9% to $56.8 million, underlying profit before tax grew 33.4% to $30.3 million, profit after tax went up 20.7% to $23.1 million.

Pro Medicus has a lot of attractive features. The ASX shares’s earnings before interest and tax (EBIT) margin increased to 52.5%, its cash balance rose 34.3% to $43.4 million and it remains debt free. The full year dividend was increased by 14.3% to $0.12 per share.

COVID-19 impacts were limited and over FY20 it won a few big contracts. Management disclosed that its sales pipeline continues to be very promising.

Pro Medicus is a very strong business and it has a very effective offering for doctors. However, I’m not buying it today because it’s still priced highly.

At the current Pro Medicus share price it’s trading at 66x FY22’s estimated earnings. That’s a high valuation despite the recent falls.

Foolish takeaway

I really like both of these ASX shares. They have great products and balance sheets. However, as investors the price we pay matters. I’d only want to think about buying if both of them fell by another 10%. There are other opportunities out there I’d buy first.

More reading

• 3 ASX tech shares to buy for the long term after the Nasdaq selloff
• 3 high quality ASX shares for smart investors to buy today
• 3 ASX shares for growth, income, and value investors to buy right now
• Broker picks best ASX small cap stocks to buy from the reporting season
• 4 of the best ASX shares to buy before 2021

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia owns shares of A2 Milk and AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Clean TeQ Holdings Limited (ASX: CLQ) share price was smashed today, slumping 10.53% lower.

What does Clean TeQ do?

Clean TeQ is an Aussie metals recovery and industrial water treatment company. The group’s proprietary Clean-iX continuous ion exchange technology is being used to deliver innovative environmental solutions.

The company has both Clean TeQ Sunrise, a metals and mining processing plant, as well as Clean TeQ Water, a water treatment division.

The Clean TeQ share price has been on an impressive bull run in recent months and is up 54.5% for the year. That means the Aussie company now boasts a market capitalisation of $253.8 million despite today’s fall.

Why is the Clean TeQ share price is getting smashed

Today’s share price decline comes amid a broader sell-off in Australian and global tech shares.

There have been heavy losses across the S&P/ASX 200 Index (ASX: XJO). However, the Clean TeQ share price has been hit hard as investors have sold out of the Aussie environmental technology group.

The ASX Industrials share started the day at a 52-week high but retreated quickly in the broader sell-off.

Why Clean TeQ’s value has surged in 2020

Even accounting for today’s hammering, the Clean TeQ share price is still up 54.5% this year.

That includes a huge run in recent weeks with shares in the environmental technology company surging 142.9% higher since its 24 August full-year results announcement.

The bullish run drew the attention of the exchange operator due to a surge in trading volume and share price.

There have been some big updates in recent months from Clean TeQ including an update on its Sunrise Nickel-Cobalt-Scandium Project.

According to the release, global electric vehicle sales surged in June and July after weaker Chinese sales in the first half of the year.

That is good for lithium and lightweight aluminium alloy demand in key transportation markets. 

Foolish takeaway

The Clean TeQ share price is one of many ASX shares under pressure today but remains up 54.5% for the year at $0.34 per share.

More reading

• Why Brainchip (ASX:BRN) shares are topping the ASX today
• ASX banks facing new battle with zombie army
• Why you should use the market sell-off to buy these ASX stocks
• Correction or crash for ASX 200 shares?
• Why the Afterpay Ltd (ASX:APT) share price is falling again

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Brainchip Holdings Ltd (ASX: BRN) shares are once again topping the ASX charts today. You might think it would be because of a share price movement. After all, the Brainchip share price has quickly become one of the hottest stocks of discussion around the proverbial watercooler in recent weeks. That’s what tends to happen when a share goes from 5 cents in May to 75 cents by September (a 1,400% return). In fact, just today, Brainship shares have fluctuated between 97 cents and 64 cents a share. Talk about volatile!

But no, Brainship’s share price movements today are not what we’re here to talk about. At the time of writing, the shares are ‘only’ up 2.74%. Very ‘ho-hum’ when you consider other All Ordinaries Index (ASX: XAO) shares like Nitro Software Ltd (ASX: NTO) are up more than 5%.

No, today we’re talking about Brainchip in terms of volume.

Volume refers to the sheer number of shares that are swapping hands on any given day. Normally, it’s the S&P/ASX 200 Index (ASX: XJO) blue chip shares like Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS) and CSL Limited (ASX: CSL) that top the volume charts most days, as they are the largest, most liquid and most heavily traded companies on the market.

So according to data from Commonwealth Bank of Australia‘s (ASX: CBA) CommSec platform, around 10.28 million Westpac shares have been traded today. For Telstra, it’s 53.33 million. CSL shares? Just 1.14 million (probably explained by CSL’s relatively large share price).

Brainchip?

Hold onto your seats. According to CommSec, 367.15 million Brainchip shares have changed hands today. That’s more than Westpac, Telstra, CSL, CBA, Wesfarmers Ltd (ASX: WES), Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) — put together.

Yowser! No wonder Brainship went from 97 cents to 64 cents back up to 76 cents in one day.

Why Brainship shares are topping the volume charts today

This mindboggling volume figure can only be put down to one thing in my view – short-term trading. When a share like Brainchip gives investors such ridiculous gains in a very short space of time, you are going to see a lot of investors flood in to try and make a quick 10-20%. Those kinds of investors typically have a lot riding on the ‘bet’, so they tend to be very ‘trigger-happy’ with their buying and selling.

We Fools don’t really like to see this kind of thing play out. It’s opportunism at its worst and just evident of pure gambling in my view. So if you’re bullish on Brainchip, just ignore this kind of noise and focus on your long-term thesis. If you’re looking to buy into Brainchip (hopefully not because of its recent share price moves alone), I think waiting until some of this froth has subsided is probably a good idea.

More reading

• Why the Clean TeQ (ASX:CLQ) share price fell 10% today
• ASX banks facing new battle with zombie army
• Why you should use the market sell-off to buy these ASX stocks
• Correction or crash for ASX 200 shares?
• ‘We could be heading for a lot of pain’

Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Nitro Software Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Graincorp Ltd (ASX: GNC) share price fell sharply today, closing the day down 8.86%.

That’s a far steeper loss than the All Ordinaries Index (ASX: XAO), which finished the day down 2.1%.

Year-to-date, however, Graincorp has handily beaten the index, with a share price gain of 8.7%, even after today’s losses. Meanwhile, the All Ords is still down 11% since 2 January.

What does Graincorp do?

GrainCorp is an Australian agribusiness founded in 1916, when it was administered as a branch of New South Wales’ Department of Agriculture. Today it operates in more than 30 countries, providing a range of products and services with a focus on grains, oilseeds, pulses, edible oils and feeds.

The company has an integrated supply chain, starting from accumulation and storage which links up to road and rail freight options as well as port facilities. GrainCorp’s malt segment was spun-off into a new ASX-listed entity, United Malt Group Ltd (ASX: UMG), in early

Graincorp’s shares first began trading on the ASX in 1998.

Why could the Graincorp share price run higher from here?

A large part of Graincorp’s business stems from the storage and transport of grains. Logically then, if the grain harvest goes up, so too does Graincorp’s business, and potentially its share price.

That’s where the latest Australian crop report – released yesterday by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) – comes in handy. And the report indicates Australia’s agricultural output, overall, is in for a large uptick.

That’s largely due to the solid rainfall and favourable weather patterns most regions experienced in spring, seeing winter crops flourish and offering a good start for the coming summer crops.

ABARES forecasts that Australia’s winter crop production will increase by 64% in 2020–21. If that proves correct, production will be at levels 20% higher than the previous 10-year average.

Wheat is looking particularly strong, with production forecast to increase 91% year-on-year, up 22% from its 10-year average. Barley production is also forecast to swell, up 23% from the 10-year average.

With crops, as a whole, off to a good start in spring, ABARES is also forecasting a 194% increase in Australia’s summer crop output.

With the Graincorp share price down over 11% since Tuesday’s opening bell, investors don’t appear to be pricing in a likely big increase in the demand for its services over the coming months. But if the ABARES forecast pans out, that increase should be coming.

More reading

• Top brokers are urging you to buy these ASX stocks in this market meltdown

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With interest rates at record lows and unlikely to be lifting any time soon, if I had $10,000 in a savings account, I would consider putting it to work in the share market instead.

After all, the potential returns on offer from the share market are many times greater than the return you’ll get from a bank account.

But where should you invest $10,000 right now? Here are four ASX shares I would buy with these funds:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX share to consider investing $10,000 into is Aristocrat Leisure. Although this gaming technology company’s poker machine business has been hit hard by the pandemic, the majority of casinos globally are now open again. I expect this to lead to a rebound in demand for its industry-leading machines in the near future. This could mean that both its core business and its fast-growing Digital business will soon be pulling together.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a fast-growing donor management platform provider for the faith and not-for-profit sectors. I think it would be an excellent place to invest $10,000. Pushpay has been growing at an impressive rate over the last few years and shows no signs of stopping any time soon. It recently provided guidance for more strong growth in FY 2021. Looking even further ahead, the company is targeting a 50% share of the medium to large church market. This is a US$1 billion opportunity, which is many times greater than its current revenue.

REA Group Limited (ASX: REA)

Another option to consider is REA Group. It is the owner and operator of the dominant realestate.com.au website and several international equivalents. I’ve been very impressed with the resilience of its business and the way it has successfully delivered earnings growth even in the toughest of trading conditions. I’m optimistic that conditions will improve greatly once the pandemic passes, and its growth will accelerate.

ResMed Inc. (ASX: RMD)

A final ASX share to consider investing $10,000 into is ResMed. It is a medical device company which is focused on the sleep treatment market. Thanks to its world class products, growing addressable market, and exciting software business, I believe it is well-placed to deliver strong earnings growth over the long term.

More reading

• 2 top ASX shares I’d buy with $2,000
• 3 ASX shares I’d buy to quickly add diversification
• A practical guide on how to invest in ASX shares
• 3 unstoppable ASX shares to invest $2,000 into right now
• Invest like Warren Buffett and buy and hold these ASX shares

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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX, REA Group Limited, and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re on the lookout for a little exposure to the small side of the market, then you’re in luck.

I believe there are a good number of small cap shares on the Australian share market which have strong long-term growth potential.

Three to add to your watchlist this week are listed below. Here’s why I like them:

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider. It is best known for its innovative Dante audio over IP networking solution which is used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. Demand for its industry-leading products has been hit this year because of the pandemic, but I’m confident it will bounce back strongly once the crisis passes.

Bigtincan Holdings Ltd (ASX: BTH)

Another small cap to watch is Bigtincan. It is a fast-growing provider of sales enablement software. This increasingly popular software provides businesses with the information, content, and tools sales teams need to sell more effectively. Demand for its platform has been growing strongly in recent years and even during the pandemic. This led to it recording strong recurring revenue growth in FY 2020 and guiding to more of the same this year.

Volpara Health Technologies Ltd (ASX: VHT)

A final small cap share to watch is Volpara. It is a provider of very smart software that uses artificial intelligence imaging algorithms to support the early detection of breast and lung cancer. Volpara has been growing its recurring revenues at a very strong rate over the last few years. This has been driven by its increasing market share in North America and value enhancing acquisitions. The good news is that due to the growing popularity of its software with radiologists and those recent acquisitions, I expect this positive form to continue in the coming years.

More reading

• 3 small cap ASX growth shares I’d buy with $1,000
• Broker picks best ASX small cap stocks to buy from the reporting season
• New to investing? More ASX growth shares to buy now
• 4 exciting small cap ASX tech shares to watch
• Why Brainchip and these ASX shares just surged to new highs

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 BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and VOLPARA FPO NZ. The Motley Fool Australia has recommended AUDINATEGL FPO, BIGTINCAN FPO, and VOLPARA FPO NZ. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The current market sell-off has created some great opportunities to add some ASX shares to your portfolio. At times like these, you should be looking at the ASX shares that you’ve always wanted to buy but were previously too expensive.

While no one can predict the absolute bottom of the market, choosing quality ASX shares coupled with time is a fool-proof way to build wealth.

Listed below is my top three ASX shares that I believe won’t be trading at bargain prices for very long.

Origin Energy Ltd (ASX: ORG)

As one of Australia’s leading energy retailers, Origin operates across a number of portfolios. Its diversified business model includes energy sales to customers, renewable energy such as wind and solar, gas exploration and production, and power generation from traditional fuels.

The slump in oil prices overnight has had an adverse effect on the Origin share price. At the time of writing, the Origin share price is trading at $4.84, down 5.1%. This reflects a total loss of 45% from its 52-week high of $8.89 achieved in January.

I believe the weakness in this ASX share presents a buying opportunity for long-term investors. Oil is symbolised as the engine of the world, and although it has come to a halt for now, the economy will eventually recover. In light of this, I would be happy to add Origin to my portfolio at its current price.

Cochlear Limited (ASX: COH)

Another ASX share that I think is undervalued is Cochlear. The company is a world leader in implantable hearing solutions. The impacts from COVID-19 have caused difficult trading conditions for this medical business.

During early February, the Cochlear share price reached an all-time high of $254.40 but has since pulled back to $189.55 at the time of writing. This represents a discount of 25% in just a number of months for this quality ASX share.

While management has noted a small fall in patient assessments for cochlear and acoustic implants, the company remains confident that sales will resume post COVID-19. I agree with this statement and think that the Cochlear share price trading at a bargain price.

Woolworths Group Ltd (ASX: WOW)

Woolworths is an Australian conglomerate that has diversified interests in supermarket, liqueur and drink outlets, discount retail chains, and hotels.

Woolworths performed with mixed results of recent times. Its supermarket business has been delivering strong growth while its hotel portfolio has been weighing down group earnings. The company is awaiting approval of its $552 million acquisition of PFD Food Services, a distributor and wholesaler or fresh produce.

The Woolworths share price is down 1.6% today to $36.75 at the time of writing. However, the supermarket giant has tumbled 16% from its all-time high of $43.96 in February.

Woolworths is in the middle of a process to demerge its hotel division to seek a leaner business model. I believe that the Woolworths share price presents value and would class it as a buy.

More reading

• Saudi oil price cut to hit ASX shares
• Here’s why some ASX dividend shares just go nowhere
• Leading brokers name 3 ASX shares to sell today
• 5 things to watch on the ASX 200 on Tuesday
• Here’s why stock-picking is hard (but you should do it, anyway)…

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 Cochlear Ltd. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bubs Australia Ltd (ASX: BUB) share price fell today by 4.65% at the time of writing to 82 cents. This came as the company’s share purchase plan opened to retail shareholders.

What are the terms of the share purchase plan?

The company advised that eligible shareholders would be able to apply to buy up to $30,000 of new fully paid ordinary shares at a price of 80 cents per share.

To participate, eligible shareholders need to have been holding Bubs shares on 2 September 2020 at 7pm Sydney time, with a registered address in Australia or New Zealand. Additionally, those who participated in the company’s previous share purchase plan in December 2019 could only apply for $30,000 less the amount that they subscribed for under the previous share purchase plan. The share purchase plan may be scaled back if retail shareholders apply for more than $11.7 million of shares or at the company’s discretion.

The share purchase plan closes on 23 September 2020 at 5pm Sydney time.

Earlier this month, Bubs Australia raised $28.3 million through a placement to institutional and sophisticated investors at a price of 80 cents per share.

The funds raised by the company will be used to improve balance sheet flexibility, grow the company’s capital, acquire an ownership interest in an infant formula manufacturing facility in China and to expand into new markets with ‘in market’ manufacturing where possible.

About the Bubs Australia share price

Bubs Australia is a producer of infant formula and nutritional products in Australia. Its products are supplied to Australia, China and various other countries in Asia and the Middle East. It has been listed on the ASX since 2017. 

In the year to 30 June 2020, Bubs Australia’s revenue increased 32% to $62 million. Infant formula sales increased 58% to $30 million. The company posted a statutory loss after tax of $8 million in the 2020 financial year compared to a loss of $36 million in the 2019 financial year. 

In July, Bubs Australia entered a memorandum of understanding to produce infant formula in China with the use of Australian goat milk.

Also in July, the company announced that it had appointed celebrity Jennifer Hawkins as its global brand ambassador. 

The Bubs Australia share price is up 107.5% since its 52-week low of 40 cents. However, it has fallen 14.43% since the beginning of the year. The Bubs Australia share price has fallen 29.66% since this time last year.  

More reading

• 2 ASX shares I’d buy with $750 right now
• Bubs share price trading at a 5-month low. Is this a buying opportunity?
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• ASX 200 rises 0.8%, investors bet on SkyCity
• Why Bubs, Perseus, WiseTech, & Xero shares are dropping lower

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Laybuy Holdings Ltd (ASX: LBY) share price is tanking today, down 6.55% at the time of writing to $1.92 a share. LBY shares opened at $1.94 this morning and have essentially remained flat for the rest of the trading day after closing at $2.06 yesterday.

It’s been a topsy-turvy ride for Laybuy, the ASX’s newest buy now, pay later (BNPL) share to get investors’ blood pumping. Laybuy only IPOed on the ASX boards earlier this week. We are talking about an ASX baby here.

That being said, the company has been around since 2017 and has been growing quickly in Australia as well as New Zealand and the United Kingdom. It is not even close to being in fellow BNPL rivals’ Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) in terms of market capitalisation. Even so, today’s moves still value the company at around $360 million, which is nothing to sneeze at given the company has just joined the share market.

A recent IPO

And what an entrance it was. The IPO listing price for Laybuy shares was just $1.41, which the share price handily breezed past when the shares hit the market. Even though Laybuy shares finished at $2.08 on its first day of trading (41% above its IPO price), at one point the shares were asking $2.30, a good 63% above where it started.

Laybuy shares, however, have been in a downwards trend ever since, a trend that today’s trading has only added to.

Why has the Laybuy share price tanked today?

You have to pity this company’s IPO timing. BNPL shares have not had a good 2 weeks. Afterpay is down more than 20% since 25 August, whilst Zip shares are down 31.5% over a similar period. Investors have been bailing out of BNPL shares ever since it was announced that global payments giant PayPal Holdings Inc (NASDAQ: PYPL) will be joining the BNPL fray with its own product offering ‘Pay in 4’.

Add that to the global sell-off in tech shares we’ve seen over the last few days and we can see why the Laybuy share price has been cooling off over the week and today.

Laybuy or Laylow?

Laybuys’ prospects as an investment do look promising. The company has told investors that the gross merchandise value (GMV) of the payments going through its system was up 161% year on year for July and August 2020.

However, I’m increasingly worried about the BNPL sector today. We are now seeing a lot of different players all vying for the relatively small (albeit rapidly growing) BNPL pie. Not only do we have the market leaders in Afterpay and Zip, but we also have Sezzle Inc (ASX: SZL), Splitit Ltd (ASX: SPT), Openpay Group Ltd (ASX: OPY) and the soon to be renamed FlexiGroup Ltd (ASX: FXL). And that’s just on the ASX alone. There’s also Paypal, American Express Company (NYSE: AXP), Mastercard Inc. (NYSE: MA) and Visa Inc (NYSE: V) to think about.

As such, I’m staying away from the sector, and especially from smaller players like Laybuy that still (in my view) have a lot to prove. This is a growing space to be sure, but I don’t think the rising tide will lift all boats.

More reading

• ‘We could be heading for a lot of pain’
• Why the Afterpay Ltd (ASX:APT) share price is falling again
• Why Accent, Afterpay, Nine, & PointsBet shares are dropping lower today
• Tech share prices are down but not out. When should you buy?
• ASX 200 down 2.4%: Afterpay (ASX:APT) and Oil Search (ASX:OSH) sinking lower

Sebastian Bowen owns shares of American Express, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard, PayPal Holdings, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited, Mastercard, PayPal Holdings, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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