Why Vocus Group Shares Fell Today

Shares of Vocus Group Limited [ASX:VOC] is down 3.07% today at time of writing.

Why did Vocus Group’s Share Price Fall?

Vocus Group has been taken off the MSCI Australia Index.

The MSCI Australia Index measures the performance of large and mid-cap segments in the Australian market. The fund has a 42% sector weighting in financials, 14.85% in materials, and 8.64% in real estate. In the last 52 weeks the index has gained 10.24%.

In July 2013, Vocus shares were trading around the $2 mark. Since then, the company has had an impressive rally, where shares have almost quintupled to $9.292 in June 2016. The share price has since tumbled back down to $2.365 today.

On 8 May, the company announced its full-year underlying profits would be in the $160–165 million range — significantly lower than the previously forecasted $205–215 million range. As reported by The Australian, the telco cited slower than expected inflows in several large projects as the reason. This is the second of two profit downgrade announcements in the last seven months.

Also, last October, the company experienced a failed boardroom coup, in which founder James Spenceley and board member Tony Grist tried to unseat CEO Geoff Horth.

Vocus owns and operates independent data networks in the US, China, Hong Kong, Singapore, Australia and New Zealand. Vocus has grown to be one of Australia’s biggest telcos through acquisitions of brands including Engin and Dodo.

What now for Vocus Group?

Pressure is mounting on Vocus. As it delivers lowers than expected earnings, investors need to decide whether the share price will hit rock bottom or start treading higher in the future.

Regards,

Selva Freigedo

Money Morning 


Selva Freigedo is an analyst at Money Morning. She has a background in financial economics, but what makes Selva´s experiences different to many are the places she has lived and worked. Born in Argentina, she has also lived in Brazil, the US, Spain, and now Australia. She has seen up close many of the economic phenomena that worry Fat Tail Investment Research readers, like hyperinflation, bank bail-ins and governments burdened with so much debt it cannot possibly be repaid.

Every week, she goes through each article, research note and recommendation produced by our experts around the world to give you information on how to build and protect your wealth. Selva packages the week’s best ideas into one easy to read report: Port Phillip Insider Extra.


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