Why Is Metcash’s Share Price Down by 17.66%?

Metcash Ltd [ASX:MTS] shares were trading at $2.96 in early morning trading, indicating a drop of 17.66%.

After the wholesale distribution and marketing company flagged a potential $270 million sales hit yesterday morning, it’s easy to see why investors might be running for the hills.

This is a wild turnaround in performance for Metcash.

Last week, the company enjoyed a 52-week high on news that Wattle Health Australia Ltd [ASX:WHA] had secured an arrangement to supply its baby food range to Metcash, its wholly owned subsidiary company.

But Drakes Supermarkets have rejected Metcash’s proposal of supplying supermarkets from its new South Australian distribution centre. Total sales, including tobacco, to Drakes Supermarkets in South Australia were about $270 million in the 12 months to 30 April.

And now the share price has plummeted.

What’s Next for Metcash?

Metcash has informed investors they will provide an update by the time it releases its results from the full year on 25 June. Until then, it will be thoroughly considering the implications.

Regards,

Ryan Dinse,

Editor, Money Morning

 

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:


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