The Nearmap (ASX:NEA) share price is down 15% this month

The Nearmap (ASX: NEA) share price has been in the wars recently, falling heavily after a short-seller report and legal concerns in the US.

| More on:
asx share price fall represented by lady in striped tshirt making sad face against orange background

Image source: Getty Images

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

Niche ASX technology company Nearmap Ltd (ASX: NEA) has endured a pretty rough time in recent months. Since climbing as high as $3.22 in late August, its share price has slid all the way back down to just $1.80 as at the time of writing.

And the bloodshed shows no signs of abating – in just this month alone, the Nearmap share price has plunged more than 15% lower. The company's shares are now getting worryingly close to the 52-week low of $1.50 they reached all the way back in May last year.

Company background

Nearmap is an aerial imagery company that provides up-to-date high resolution images and geospatial data to its business and government clients. Nearmap gives private companies and government agencies the ability to conduct virtual site visits without ever having to physically leave their offices.

This allows people working in fields like engineering, infrastructure development, mining and construction to plan and analyse complex projects.

Recent news

The most recent round of selloffs may have been sparked by Nearmap's early May announcement that a complaint had been lodged against its American subsidiary in the US District Court in Utah. The complaint was filed on behalf of two companies, Eagle View Technologies and Pictometry International Corp, and alleges that the rooftop estimation technology used by Nearmap's subsidiary, Nearmap US, infringes upon their copyright.

Nearmap's announcement went to great lengths to stress that the allegations were "without merit" and didn't relate to the company's core proprietary technology. But the Nearmap share price still plunged on the news, dropping more than 20% on the day of the announcement.  

This extended a rough period for Nearmap. Back in February the company had to defend itself against a short seller report issued by J Capital Research – the same research firm that attacked ASX darling WiseTech Global Ltd (ASX: WTC) back in October, 2019.

However, there's no doubting that the one-two punch of the short-seller report and now these legal concerns – even if neither have any merit – have made some shareholders nervous. This is particularly true in a market where growth shares are under increased pressure due to inflation fears.

Financials

The big question for investors now is whether Nearmap shares have been oversold on the news.

Just two days prior to announcing the allegations made against its subsidiary, Nearmap had upgraded its FY21 annual contract value (ACV) guidance. Based on its strong performance over the first half of the year, the company stated that it now expected full-year ACV to be in the range of $128 million to $132 million (up from its previously issued guidance of $120 million to $128 million).

This came after the company reported strong results for the first half of FY21, driven by record incremental ACV growth in its North American portfolio. Total ACV increased by 21% over the prior comparative period to $112.2 million, while group statutory revenue jumped 18% to $54.7 million.

While some uncertainty remains around the copyright allegations made against Nearmap, the company's own outlook for the remainder of the financial year clearly remains bullish.

Rhys Brock owns shares of Nearmap Ltd. and WiseTech Global. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. and WiseTech Global. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

Three businesspeople leap high with the CBD in the background.
Technology Shares

Guess which ASX All Ords stock is leaping 12% today

Why is this stock having a strong start to the week? Let's find out.

Read more »

A young man working from home sits at his home office desk holding a cup of tea and looking out the window
Technology Shares

Pro Medicus shares higher on $30m contract win

Good news is lifting this high-flying stock on Monday. Let's dig deeper into it.

Read more »

Robot humanoid using artificial intelligence on a laptop.
Technology Shares

The best ASX AI stock to invest $500 in right now

The team at Morgans thinks this is one of the best ways to invest in AI on the ASX.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Technology Shares

This ASX All Ords stock just crashed 25%! Here's why

Let's find out what is making investors rush to the exits on Thursday.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Technology Shares

What's going on with Xero shares today?

The tech stock has made an announcement this morning relating to its CEO.

Read more »

Three analysts look at tech options on a wall screen
Technology Shares

Why did this small-cap ASX tech stock just explode 39%?

Investors are piling into the ASX tech stock on Wednesday. But why?

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Technology Shares

Investors should put these 2 top ASX tech shares on the watchlist

These tech companies have enormous potential, in my view.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Small Cap Shares

ASX small-cap stock halted amid global semiconductor deal

Investors are awaiting details of a capital raise.

Read more »