Insights

Why the Jumbo Interactive (ASX:JIN) share price has plunged 17% in 2 days

Shares in the lottery business have seen selling pressures over the last few days
The post Why the Jumbo Interactive (ASX:JIN) share price has plunged 17% in 2 days appeared first on The Motley Fool Australia. –

The Jumbo Interactive Ltd (ASX: JIN) share price has spent the last two trading days firmly in the red.

In afternoon trade today, Jumbo shares are down 8.53% to $15.02. They also lost 8.5% yesterday, the same day the company reported its FY21 full-year results.

So what’s behind these latest moves for the Jumbo Interactive share price? Let’s dive in a little deeper to gain some insight.

A quick refresher on Jumbo Interactive

Jumbo Interactive is in the lottery business and has operations in Australia and Germany. It is recognised as a pioneer in Australian e-commerce after establishing one of the world’s first online shopping outlets.

Jumbo’s flagship service is Oz Lotteries, which is often abbreviated as Oz Lotto. This service has a turnover of more than $150 million in lottery ticket sales annually.

At the time of writing, Jumbo Interactive has a market capitalisation of $1.02 billion.

What’s pushing the Jumbo Interactive share price lower?

Shares in the digital lottery business are on the decline despite the company reporting a robust financial performance in its FY21 earnings on Thursday.

In its report, Jumbo recognised a 37% increase in total transaction value (TTV) to reach $487 million. As a result, revenue also gained 17% year-on-year and underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA)  grew 13% to just shy of $50 million.

This came through to net profit after tax (NPAT) of $28 million, a 7% increase from the year prior. In addition, the company also reported a total FY21 dividend of 36.5 cents per share.

Jumbo also announced its full acquisition of Stride Management Inc on 26 August, which saw the company pay $11.7 million in available cash on its balance sheet. The transaction gives Jumbo a “strategic foothold” in the Canadian charity lottery market, which it says has “significant growth potential”.

The transaction finalised on a net profit before tax (NBPT) multiple of 4.8 times, “based on forecast performance” for FY21.

Despite these seemingly positive points to the Jumbo Interactive share price, investors appear less than impressed by the lottery giant’s progress.

Jumbo shares have sunk 17% over the last two days from the closing price of $18.28 on 25 August. The last time the Jumbo share price was at these levels was back in mid-June.

There is no market-sensitive information out of the company today. Therefore, it stands to reason that investors may be selling Jumbo Interactive shares on the back of its FY21 earnings report and/or the acquisition announcement.

Jumbo Interactive share price snapshot

The Jumbo Interactive share price has had a choppy year to date, posting a return of just 8% since January 1.

Jumbo shares have also gained 15% over the last 12 months, and are 7% in the red over the last month.

These returns have lagged the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post Why the Jumbo Interactive (ASX:JIN) share price has plunged 17% in 2 days appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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