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.