Vista Group International [NZX:VGL] has fallen victim to bearish trading today, experiencing a sharp drop of 18.82%.
Vista specialises in cinema-management software, allowing theatres to track sales and carry out promotions. It supplies to a diverse range of clients in over 80 countries.
Vista is dual-listed on both the Australian and New Zealand stock exchanges. At the time of writing, the company has a market capitalisation of $906 million, and the share price sits at $4.40.
Why has the [NZX:VGL] share price decreased today?
The market sentiment soured today as news broke of a 22.7% decline in first-half profit.
Two key factors are to be blamed:
- Vista’s partnership with MoviePass, an American subscription-based ticketing platform, has been discontinued. This has happened due to a freeze in MoviePass subscriptions because of financial difficulty.
- Vista’s revenue in China has slowed. This is a possible consequence of the trade dispute with the United States.
Naturally enough, this negativity has given rise to a fearful reaction, hence a rapid sell-off of Vista shares.
Where could [NZX:VGL] go from here?
Despite today’s shock response, the outlook for [NZX:VGL] may be positive in the long-term.
Two reasons here:
- Vista is pushing ahead with ambitious plans to upgrade their platform to Software as a Service (SaaS). This means embracing a business model that will be cloud-based and more competitive.
- While revenue from China has slowed, Vista’s growth in market share has actually increased. In particular, Vista’s presence has grown by 39% for overseas theatres with 20 screens or more.
This strategic developments are a much-needed silver lining.
Once the emotional jitters driven by speculation settle down, Vista Group International may be in a good position to recover from its share-value loss and resume an upward trajectory.
John is the Chief Investment Officer at Wealth Morning. His responsibilities include trading, client service, and compliance. He is an experienced investor and portfolio manager, trading both on his own account and assisting with high net-worth clients. In addition to contributing financial and geopolitical articles to this site, John is a bestselling author in his own right. His international thrillers have appeared on the USA Today and Amazon bestseller lists.