Why the Nearmap share price crashed 10% lower today


Red arrow downward chart

It has been a very disappointing end to the week for the Nearmap Ltd (ASX: NEA) share price.

In afternoon trade the aerial imagery technology and location data company’s shares are down approximately 10% to $3.33.

What happened?

This morning Nearmap released its preliminary full year results which revealed another year of record growth in its key annualised contract value (ACV) metric.

For the 12 months ended June 30, the company expects to report an ACV of $90.2 million, which will be an increase of 36% from its ACV of $66.2 million in FY 2018.

The biggest driver of the company’s record ACV growth was its North America business. Nearmap’s expansion in the country continues to yield impressive results, with the company reporting a 76% increase in ACV to US$9.8 million.

This means that despite its short time operating in the region, 36% of the company’s ACV is now generated in the massive market.

Supporting this impressive growth was its ANZ operations. Nearmap recorded a $9.1 million or 19% increase in ACV to $57.9 million in the region.

So why are its shares crashing lower today?

Whilst this was undoubtedly a strong result and looks to be roughly in-line with expectations, some investors appear to have been betting on Nearmap outperforming expectations.

Prior to today the Nearmap share price had gained a remarkable 145% since the start of the year, making it the best performer on the ASX 200 ahead of Magellan Financial Group Ltd (ASX: MFG) and Appen Ltd (ASX: APX). Clearly expectations were very high.

In addition to this, the lack of guidance for FY 2020 could also have weighed on its shares today.

Nearmap’s CEO and managing director, Dr Rob Newman, appears very confident on the company’s prospects in FY 2020, but stopped short of giving any concrete guidance at this stage.

He said: “We continued to enhance our market leadership position in Australia and New Zealand, and momentum in North America is clearly building. Our commitment to innovation and our investment in new product and content such as 3D and Artificial Intelligence mean that we are well placed to continue to deliver sustained growth and expansion in our core markets into FY20 and beyond.”

Whilst this decline is a disappointment for shareholders, for non-shareholders I think this could be a buying opportunity.

When the dust settles I would suggest investors consider making a patient buy and hold investment in the company’s shares along with these top growth shares.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019