What: Shares in mobile money company eServGlobal Limited (ASX: ESV) have plunged nearly 30% in two days despite the company remaining partnered with one of the world’s largest companies and remaining on track to hit full-year guidance.
So What? eServGlobal’s shares have dropped from 48 cents on Tuesday to just 34 cents this morning following an interesting AGM on Tuesday where Deputy Chairman Stephen Baldwin reiterated that 2014 was below market expectations and forecast a better-than-flat year for 2015.
While these comments were viewed as in line with expectations, it appears that the rejection of the company’s remuneration report (with 66 million votes versus 34 million) and a couple of downgrades by analysts has hit the share price.
The report saw massive salaries of over $1.1 million to recently-resigned CEO and MD Paolo Montessori and nearly $1 million to COO Stephen Blundell. It appears that shareholders were upset that management should receive such high salaries when they produced a fall in gross profit and would have delivered a fall in net profit had they not received over $31 million for selling part of the business.
What Now? eServGlobal is one of those companies that relies on a “if we can just capture 1% of the Chinese market” mantra. The company has a joint venture with Mastercard that is attempting to capture a portion of the world’s US$436 billion international remittance market and a core business that provides mobile money solutions to telecommunication and finance companies worldwide.
Brokers have downgraded the stock on the slower-than-expected takeup of the HomeSend joint venture and the long-term share price direction will depend largely on the success or otherwise of the rollout.
I’m a long-suffering shareholder but certainly wouldn’t recommend buying until a new CEO is in place and some more concrete results are seen from the joint venture.