Why the WiseTech Global share price crashed 27% lower today

The WiseTech Global Ltd (ASX:WTC) share price was the worst performer on the ASX 200 on Wednesday with a massive 27% decline…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The WiseTech Global Ltd (ASX: WTC) share price was the worst performer on the ASX 200 on Wednesday by some distance.

The logistics solutions company's shares crashed a disappointing 27% lower to end the day at $21.40.

Why did the WiseTech Global crash 27% lower?

Investors were heading to the exits in their droves today after the company released its half year results and downgraded its earnings guidance.

In the first half of FY 2020, WiseTech Global reported a 31% increase in revenue to $205.9 million. This was driven by a combination of organic growth of $24.3 million from its CargoWise platform and revenue growth of $24.9 million from customers on acquired platforms.

The company's EBITDA grew almost as quickly during the half. It was up 29% on the prior corresponding period to $62.5 million. Management notes that this is a reflection of the strength of its CargoWise business and strategic actions, along with increased adoption by the world's largest logistics organisations.

Whilst this result put the company roughly in line with its full year guidance for EBITDA growth of 34% to 42%, the coronavirus outbreak has ended any hopes of it achieving this now. Management warned that the outbreak could have a profound impact on its second half performance.

As a result, it has been forced to downgrade its guidance materially. It now expects growth in the region of just 5% to 22%, which will mean full year EBITDA of $114 million to $132 million. These are unfortunately not the growth rates you would associate with a share that is changing hands on such sky high multiples, so I can't say I'm surprised to sees its shares come under pressure today.

The company's founder and CEO, Richard White, explained: "The unexpected outbreak of coronavirus (COVID-19) and the effective shutdown of China, a critical driver of the global manufacturing supply chain and a ~16% contributor to global GDP, is creating negative flow-on effects to manufacturing, slowing supply chains and economic trade across the world. While we have a diversified array of revenue drivers that provide resilient organic revenue growth across our global platform, we do anticipate that the manufacturing slowdown will delay execution of logistics activities by logistics service providers."

Also falling heavily on the ASX 200 on Wednesday were the shares of EML Payments Ltd (ASX: EML) and Tabcorp Holdings Limited (ASX: TAH). They fell 13.5% and 5.5%, respectively, following the release of their own half year results.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Emerchants Limited. The Motley Fool Australia owns shares of WiseTech Global. 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.

More on Share Market News

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing hump day session for the ASX today.

Read more »

Young man with a laptop in hand watching stocks and trends on a digital chart.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Market News

Why A2 Milk, Boss Energy, Evolution Mining, and Lifestyle Communities shares are sinking

These shares are under pressure on hump day. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Market News

Why Botanix, Dexus, Strickland, and Telix shares are charging higher today

Let's see why these shares are having a good session on hump day.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Market News

What does Macquarie think Origin Energy shares are worth?

Let's see what the broker is saying about this energy giant.

Read more »

A female sharemarket analyst with red hair and wearing glasses looks at her computer screen watching share price movements.
Broker Notes

Up 34% this year, can Challenger shares keep rising according to Macquarie?

The leading broker has released a new research note.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Share Fallers

Guess which ASX 200 stock is crashing 42% on big news

Big bad news is weighing heavily on this stock today.

Read more »

An analyst wearing a dark blue shirt and glasses sits at his computer with his chin resting on his hands as he looks at the CBA share price movement today
Opinions

Expert's verdict on 3 ASX 200 shares (2 have doubled in value and the other has lost 29%)

Two of these stocks were the best performers of their sectors in FY25. Should you buy, hold, or sell?

Read more »