The best performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday has been the Netwealth Group Ltd (ASX: NWL) share price.
In afternoon trade the investment platform provider's shares rocketed as much as 25% higher to $7.40.
They have since dropped back a touch, but are still up 17% to $6.76 at the time of writing.
Why is the Netwealth share price rocketing higher?
Investors have been fighting to get hold of the company's shares this afternoon following the release of a market update.
According to the release, despite the recent adverse equity markets due to the coronavirus outbreak, Netwealth advised that it remains in a very strong financial position, is debt free, profitable, and has significant cash in the bank.
Furthermore, the company's fund inflows have remained very strong. Funds under administration (FUA) net inflows for the quarter to date are $2.9 billion. This brings its year to date FUA net inflows to $7.3 billion.
However, overall FUA have been impacted by negative market movements of $3.9 billion, resulting in a FUA of $27.6 billion on March 17.
RBA cut.
In response to today's cash rate cut by the Reserve Bank, Netwealth has amended its revenue and EBITDA guidance. This reflects the impact on its ancillary revenues following its decision to absorb the reduction in its cash transaction accounts.
It now expects FY 2020 revenue in the range of $116 million to $120 million. This compares to previous guidance of $120 million to $122 million.
Whereas, underlying EBITDA is now expected to be in the range of $58 million to $62 million, compared to prior guidance of $61 million to $63 million.
Management has also revised its FUA net inflows guidance down from $9 billion to $8.5 billion in order to reflect potential disruption to transitions relating to market volatility and uncertainty.
This outlook assumes no further RBA cuts in FY 2020.
