Zip announces losses, EML shares slide and KKR pulls bid: What we learned this week
Tesla completes stock split and Oz Minerals is confident about copper prices.
EML faces fraudulent merchants
EML Payments took a beating this week after more fraud challenges. On Tuesday, the company identified fraudulent activity with its Sentential business. The company addressed this in an announcement on Wednesday stating that they had identified a set of fraudulent merchants within the direct debt processing business which amounted to losses of $7.9 million.
EML (ASX:EML) ensured investors that it was “taking steps to investigate and understand the circumstances supporting the fraud and has commenced steps to recover any losses.” In an announcement issued by EML in July, the company said the bank had “identified shortcomings in components of the remediation programme.”
EML shares have fallen 73% since the start of the year and are currently trading at $0.90.
Tesla splits stocks
On Wednesday Tesla completed its second stock split in two years. The company proposed a split earlier this year which subsequently approved by investors during the annual meeting on August 4. The 3-for-1 split provides two additional shares for each share owned by investors.
Morningstar equity analyst Seth Goldstein marginally updated Tesla’s fair value on Thursday to $255 from $253.33 as a reflection of the recently enacted stock split. However, Goldstein’s outlook for the electric vehicle maker remains unchanged.
“We continue to forecast the company will deliver around 1.5 million vehicles in 2022 as production returns at the Shanghai factory and volumes grow at the two new factories that opened earlier in the year,” he says.
Tesla shares have fallen 26% since the beginning of the year and are currently trading at $296.07 per share.
KKR calls it quits
Private equity firm KKR has withdrawn its $88 per share bid for Ramsay Health Care. The offer made in April this year was pulled on Friday when KKR sent a letter to Ramsay letting them know the deal was off.
The healthcare company went into a trading halt on Friday morning after the announcement was made. However, in an additional announcement made by Ramsay (ASX:RHC) just after midday on Friday, the company outlined an alternative proposal made by KKR.
The private equity firm proposed that Ramsay shareholders would be paid $78.20 in cash for Australian operations. Investors who have less than 5000 shares would be able to receive the full $88 per share in cash.
Trading resumed after the announcement and the stock ended the day down 3.3%.
Zip reveals further losses
Australian buy-now pay-later company Zip Co (ASX:ZIP) announced fiscal 2022 results on Thursday which led to an 8% decline in share price. The company announced a 48.7% increase in losses before tax, bringing losses from $743 million last year to $1.1 billion during fiscal 2022.
Co-founder and chief executive Larry Diamond provided an update along with the announcement. “I want to share that we have already delivered on a number of initiatives to reduce cash burn, manage credit losses and improve unit economics,” he says.
Chief operating officer and co-founder Peter Grey also addressed the change in consumer behaviour as inflation continues to increase the cost of living. “There’s been a marginal decrease in certain discretionary spending categories,” he told the Australian Financial Review. “[Zip’s account based] concept allows consumers to pay for their bills, groceries, fuel and the utilisation has increased significantly over the course of this calendar year,” he added.
Oz Minerals confident about the future
On Friday, copper miner Oz Minerals (ASX:OZL) announced a dip in revenue since the first half of last year. Revenue slid 7.8% from $986 million to $908.6 while profit before taxes dropped 52%.
The miner believes brewing recession fears due to rising inflation caused the copper price to fall from first quarter highs. However, the company maintains a confident outlook for the future.
“The long-term copper price forecast however remains strong due to forecast global demand for electrification and investments in emissions reduction initiatives,” says Oz Minerals.
The company’s share price fell 0.76% over the day to $26 and is down 9.8% since the start of the year.
What we are watching:
- Monday: Australian retail sales data, A2 Milk earnings, Tyro earnings
- Tuesday: Link Administration earnings, Woodside earnings
- Friday: US unemployment rate
One good read:
Listening to European electricity traders is very, very scary