WiseTech share price rises as second short rebuttal is issued

WiseTech’s second response to Jcap’s second short attack looks to have been well received by the market, with the WTC share price rising after exiting its trading halt.

WiseTech (ASX: WTC) has today staunchly responded to the second short report issued by Jcap on Monday.

In a six page rebuttal, WiseTech – the global SAAS logistics company – flat-out rejected Jcap’s second report, noting that many claims within it were simply wrong.

Tellingly, when the WiseTech share price resumed trading today it soared 8.44% to A$28.5 per share in the first thirty minutes of trade. Even this optimism was somewhat short-lived however, with the stock levelling off to around A$27.38 per share in the next couple of hours.

Attrition, investment and acquisitions

The company used today’s media release to refute many of Jcap’s claims, from both its first and second short reports.

On the front-line, WiseTech reiterated its strong global reach and impressive customer retention rate. Indeed, as we previously wrote, WiseTech has an exceptionally low attrition rate of just 1%.

On the matter of organic growth – which formed a core part of Jcap’s first short attack – WiseTech further noted that its organic growth is strong, citing an ‘average organic growth range of 20%-30% per annum.’

Specifically, during FY18 and FY19 organic growth figures came in at 37% and 33%, respectively.

On the claim that WiseTech's acquisitions are poorly integrated and underperforming, the company commented that its primary focus on acquisitions is to bring new entities into the 'WiseTech group [so as to] amplify knowledge, resources and access to new markets, or accelerate the convergence of technology.’

Claims that the company doesn't invest significantly in its technology and products were also knocked down. Here, WiseTech noted that:

‘In FY19, we invested over $113m, in maintaining and adding new developments to our products and technology pipeline for both CargoWise One and our adjacency and geographic acquisitions.'

FY20 guidance in focus

WiseTech (ASX: WTC) also used today’s announcement to reiterate its 2020 outlook; with the company confirming 'our guidance for FY20 of revenue of $440m - $460m, with revenue growth of 26% - 32% and EBITDA of $145m - $153m with EBITDA growth of 34% - 42%.'

WiseTech share price: where next?

Even when considering all this, where the share price will head in the short or for that matter, medium-term looks hard to determine.

The market seemed either unconvinced by WiseTech’s first response – or maybe more realistically – not wanting to tolerate the risk associated with a company under attack by an aggressive, internationally-based, short seller.

Jcap’s opportunistic second report likely didn’t help matters.

Yet today’s bounce – which saw the WTC surge 8% at first (now at a more modest 6%) – may suggest that this dynamic has changed; that faith in WiseTech has potentially been restored.

Even so: the high-low share price range was extreme: between the A$24.32 and A$29.38 mark – before noon.

I guess we’ll just have to wait and see what else Jcap has left up their sleeve.

Short report mark-3 perhaps?


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
China 300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.