What has caused the sudden rise in the share price?
The post The Damstra Holdings (ASX:DTC) share price is up 50% in a month! appeared first on The Motley Fool Australia. –
The share price of ASX workplace technology company Damstra Holdings Ltd (ASX: DTC) has been on an absolute tear recently. In just the last month alone, Damstra shares have skyrocketed almost 50% higher (to $1.20, as at the time of writing). So, what is behind this sudden rally in the Damstra Holdings share price?
First, a quick look at what Damstra actually does – because it’s actually quite interesting.
Damstra operates in a fairly niche industry. It develops tailored workplace management solutions for corporate clients operating in specialised fields like mining, construction and utilities. These sorts of workplaces often have very specific safety, compliance and regulatory standards they need to meet in order to remain operational. Damstra partners with these clients to develop the systems and processes required for them to exceed the unique demands of their industries.
For example, Damstra recently worked with a mining company to fully digitise its safety compliance forms, delivering a bespoke technology solution that ended up saving the company $1 million a year.
The Damstra share price really took off following the release of the company’s fourth-quarter FY21 activities report on 22 July. In it, Damstra reported record quarterly revenues of $9.1 million, a massive jump of 75% over the prior comparative period. The company also brought in record cash receipts during the June quarter, amounting close to $10 million.
Commenting on the results, Damstra CEO Christian Damstra hinted that Damstra had a strong sales pipeline and that further growth could still be on the way. He stated that Damstra remains “in productive contractual negotiations with several potentially material clients in the United Kingdom and North America, all recognised leaders in their respective fields and each with more than 10,000 users.”
Recent moves in the Damstra Holdings share price
Although the recent gains in the Damstra Holdings share price have been great news for shareholders, it’s worth pointing out that it comes at the end of a pretty rough period for Damstra shares.
After surging to a new all-time high price of $2.44 last October, Damstra shares shed close to 70% of their value. Just prior to the company releasing its quarterly activities report, the Damstra share price had plunged to a new 52-week low of just $0.75.
It’s important to keep this context in mind because even despite the recent surge, the Damstra Holdings share price is still down over 20% this year. Investors may still be concerned about the impacts of continued lockdowns in Australia, as well as the resurgence of the delta strain of COVID-19 internationally. However, the announcement of major infrastructure projects in the US could also create possible tailwinds for Damstra.
All these competing factors make Damstra a really interesting company to watch, particularly over the short term. And all eyes will be on the Damstra Holdings share price when the company reports its full-year FY21 results to the market on 26 August.
Should you invest $1,000 in Damstra right now?
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Motley Fool contributor Rhys Brock owns shares of Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.