Insights

Here’s why the Nearmap (ASX:NEA) share price is in a trading halt

Here’s why the Nearmap Ltd (ASX:NEA) share price was placed into a trading halt on Wednesday after rocketing 14% higher in earlier trade…
The post Here’s why the Nearmap (ASX:NEA) share price is in a trading halt appeared first on The Motley Fool Australia. –

The Nearmap Ltd (ASX: NEA) share price was in sensational form on Wednesday before being placed in a trading halt.

The aerial imagery technology and location data company’s shares were up 14.5% to $2.36 before the halt.

Why is the Nearmap share price rocketing higher?

The catalyst for the rise in the Nearmap share price on Wednesday was the release of a trading update after the market close yesterday.

That update revealed that the company’s strong performance has continued since the end of the first half.

As a result, management now expects to deliver annual contract value (ACV) of $128 million to $132 million in FY 2021.

This is up from its previous guidance of $120 million to $128 million and represents a 20% to 24% increase on FY 2020’s ACV of $106.4 million.

What about the trading halt?

Late this morning the Nearmap share price was placed in a trading halt at the company’s request.

Management made the request to allow the company time to respond to potential legal proceedings.

Nearmap didn’t provide any colour on what the legal proceedings relate to. However, it is worth noting that earlier this year J Capital appeared to suggest that legal proceedings from Eagleview were in the works.

This is what the short seller wrote:

“Roof reports” form the foundation of 41% of Nearmap’s sales in North America, to the insurance sector. Insurance companies routinely buy these reports to assess claims for damage caused by a weather event like wind or hail. Eagleview appears to be the only company with the technology to produce the reports, following successful legal action against Verisk for patent infringement of its roof-measurement technology in October 2019. Eagleview sells to 47 of the top 50 property and casualty insurers in the US. Nearmap’s 2019 $4.8 mln acquisition of Pushpin was designed to capture a technology for roof measurements that could make Nearmap more competitive in insurance claims.

That technology may infringe on Eagleview patents. According to a former senior manager at Eagleview, lawyers have issued warning letters to insurers. Should Nearmap be challenged, it may be required to pay a royalty to Eagleview, find a different way to do a map, or stop producing roof measurements and roof reports altogether in the US. This would shut Nearmap out of the $120 mln roof-measurement market. We believe Nearmap is required to indemnify insurance customers to make any sales. Not only does Nearmap stand to lose revenue, but it has substantial legal risk from the customers it has indemnified.

Nearmap admitted that it could not provide roof reports without infringing Eagleview’s technology, according to a former salesperson. That salesperson told us that Nearmap could not put in a tender for a U.S. federal government project called “Blue Roof” for post-disaster roofing because of this legal case. The RFP specifically requested roof reports, but the legal team at Nearmap said they could not do that as it infringed Eagleview’s patents. Eagleview has a browser platform where anyone can sign up and immediately purchase a roof report for $30.

Though, this is pure speculation at this point. Investors will need to wait for Nearmap’s response to know for sure.

The Nearmap share price will remain in its halt until the sooner of the release of an announcement or the commencement of trading on Friday.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s why the Nearmap (ASX:NEA) share price is in a trading halt appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!