Why Harvey Norman’s Share Price Fell Today

By ,

Shares of Harvey Norman Holdings Ltd [ASX:HVN] opened significantly higher today than they had closed yesterday. But they gave up much of those gains over the course of the morning.

Harvey Norman shares have been largely stagnant, since falling more than 17% in a handful of days from 27 February to 5 March.

At time of writing they are trading for $3.63 a share.

Harvey Norman’s market cap is currently $4.045 billion and enterprise value stands at $4.81 billion.

Dairy investment ends in failure

Recently, Harvey Normal wrote down over $20 million of its investment in Coomboona.

This resulted in triggering a chain of events which eventually bought down the company.

There have been legal action between the shareholders. The directors and shareholders have agreed to appoint voluntary administrators.

Despite the state of Coomboona, the company is continuing to trade.

The result of this unfortunate business partnership simply came from underperforming sales, as well as the joint venture partner being short on cash.

The breakoff resulted in Harvey Norman taking a $20.67 million hit.

Harvey Norman acquired 49.9% of Coomboona holdings back in 2015 for $34 million.

Retail real estate concern

The Coomboona partnership was not Harvey Norman’s only concern.

The value of the company’s property went up under $23 million in the six months going into December 31, which is low in comparison to $76 million during the same period last year.

Mr Harvey continues to be un-phased by the unfortunate real estate price, as he believes their real estate portfolio would continue to add to the company’s earnings.

ABC.net reported that Harvey stated:

If things stay as they are, then all that will happen is that every six months we will have another revaluation and properties will keep going up in price.

The fact that most of their opposition don’t own any properties gives him confidence, and little worry on any real estate drops that may occur.


Ryan Clarkson-Ledward,
For Money Morning

PS: Investing in Aussie real estate can be a real handful, as what goes up must sometimes go down. Phil Anderson and Terence Duffy from Money Morning have all the detailed information you need to know on the best forms of Aussie real estate investments in their free report, ‘Australian Real Estate Game Plan’.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

Nanosonics Share Price Flat on Business Update

Healthcare stock Nanosonics [ASX:NAN] announced a transition to a direct sales model in North America.

TechnologyOne [ASX:TNE] Shares Flat Despite Record H1 FY22 Profit

Enterprise SaaS stock TechnologyOne [ASX:TNE] has released its half-year results, notching its 13th year of ‘record first half profit’.

BrainChip [ASX:BRN] Shares Dip on Annual General Meeting

AI tech developer BrainChip Holdings [ASX:BRN] released its annual general meeting CEO and chairman’s address on Tuesday as shares dipped.

The Future of Growth Stocks: Is It Bleak?

In today’s Money Morning…growth funds take a hit…a lost decade for stocks?…distinguishing value from price…and much more…

Imugene [ASX:IMU] Shares Rise as Management Seeks to Reassure Shareholders

Australian immune-oncology stock Imugene [ASX:IMU] released a letter this morning addressing shareholder discontent at the recent share price decline.

[WATCH] Closing Bell — The Bear Wakes Up

In today’s Money Weekend…US equities have reached a crossroads…perhaps a balancing-up period is coming…gold has bounced as a result of US dollar weakness…and more…