Seek Ltd [ASX:SEK] announced their FY20 earnings today and the market reacted.
The results ended up knocking the SEK share price down over 11%, to trade at $19.05 at the time of writing.
What’s been happening at Seek?
Seek now has a global presence with offices in parts of Latin America, Africa, the UK, and all over Oceania.
All of these regions are feeling the pain of the COVID-19 pandemic, with millions of people being forced to stay home.
This totally rearranged the normal work/hire process along with a sky-rocketing unemployment rate.
Here in Australia the unemployment rate currently sits at 7.4%. There were hopes this figure would drop as Australia’s job advertisements in newspapers and on the internet grew by 16.7% month-over-month to 104,916 in July 2020.
With the ‘second wave’ coming through Victoria and a complete lockdown underway, this will surely impact the growth in job figures.
ANZ senior economist Catherine Birch mentioned:
‘The second wave of virus cases and return to Stage 3 restrictions in Melbourne and the Mitchell Shire have undoubtedly weighed on the recovery in labour demand so far.’
On an annual basis, ads plunged 34%.
You can see the employment rate for Australia below:
With the unemployment rate dramatically up, a lockdown in place, and COVID-19 still raging, it makes for very difficult business conditions for Seek.
In their FY20 announcement Seek reported revenue growth of only 3% and EBITDA decline of 9%.
Where to from here for the SEK share price?
Given its core business, the SEK share price is a bit of a proxy for job market sentiment.
Overall things are still not great for the job market here or abroad.
There is a long way to go before we are back at a 2019 level of advertised jobs. Over the next few weeks it will be interesting to see what numbers are reported from the job market and the unemployment rate.
As far as Seek goes, over the last couple of weeks the SEK share price plateaued out at around $22.50 on declining volume, before falling.
If this fall continues, then the levels of $18 and $16.60 may halt the fall.
Conversely, should it turn to the upside once again, then the levels of $21.25 and $22.50 may provide future resistance.
For Money Morning
PS: Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well-placed to capitalise on post-lockdown mega-trends. Click here to learn more.