QANTM Intellectual Property Ltd’s [ASX:QIP] share price plummeted 32.54% today.
What caused the drop?
QANTM announced revised forecast earnings for the 2017 financial year, with total revenue likely to be down roughly 10% from earlier estimates, while EBITDA (earnings before interest, tax, depreciation and amortisation) is also expected to drop 16% from initial numbers. According to management, an unusual seasonal downturn and a soft start to 2017 are to blame.
Managing Director Leon Allen said:
‘We are obviously very disappointed to be providing the market with this update, particularly in our first year as a listed company. At the half year our expectation was that the costs we have taken out of the business would offset any softness experienced in our revenues. A decline in activity since this time, however, has resulted in today’s update.’
What now for QANTM?
The company will be looking to bounce back from a poor opening year, with positive factors including reduced expenses, free cash flow, and a marginally positive balance sheet.
The problem is whether QANTM can make amends with a stronger performance moving into 2018. Investors will need to decide whether they have as much confidence in the company’s future as the board.
For Money Morning