SMACKED: Why Vocus Communications Limited shares dropped 15%

Shares of Vocus Communications Limited (ASX: VOC) were hammered this morning!

The shares plunged as much as 15% at one stage to a low of just $4.895. They did rebound a little and were trading 12.7% lower at $5.03 at the time of writing, but shareholders will still be left shaking their heads.

If that’s you, you may want to look away now…

Source: Yahoo! Finance

Source: Yahoo! Finance

What happened to Vocus?

Vocus has been on the nose with investors for some time now. Indeed, shares traded for as much as $9.40 in May this year but have since crashed 46.5%. They’re now sitting at their lowest price in more than two years.

Some of this has to do with tempered expectations for the telecommunications industry as a whole, with its rival TPG Telecom Ltd (ASX: TPM) also down 44.2% since it peaked at $12.93 in August.

However, today’s loss appears to have stemmed from a trading update provided by Vocus ahead of its annual general meeting.

It said revenue is expected to be around $1.9 billion for the full-year, with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) between $430 million and $450 million. In turn, underlying net profit is expected to be in the range of $205 million and $215 million.

Investors clearly weren’t impressed by the update, with many reassessing their position in the business going forward. That said, given that the shares have come off the boil, others may see this as an opportunity to snap up shares in a quality business at a more reasonable price.


Attention investors: The Motley Fool's dividend expert Andrew Page has just released his #1 dividend stock for 2017. Chances are you've never heard of this little company, yet it's a fast-growing consumer favourite - with the shares up 155% in just the last five years! Even better, it's throwing off loads of cold, hard cash. As we speak, these shares are trading on 4.2% dividend yield, fully franked (6.0% gross). Making it a 'best bet' for growth AND income... No credit card required.

Simply click here to discover the name, code and a full investment analysis in our brand-new FREE report, "The Motley Fool's Top Dividend Stock for 2017."

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.