Why the Amaysim Australia Ltd share price was crushed today

One of the worst performers on the local share market on Thursday has been the Amaysim Australia Ltd (ASX: AYS) share price.

At the time of writing the growing telco company’s shares are down 13% to $1.94, wiping out all of its 2018 gains.

What happened?

This morning Amaysim put out a trading update ahead of its half-year results release on February 26.

According to the release, the company expects to report first-half statutory net revenue of approximately $292 million to $294 million and underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of approximately $17 million to $18 million.

It is worth noting that this does not include a $6 million receivable relating to the first-half which will be reported as a subsequent event in its accounts. Including this would mean underlying EBITDA of approximately $23 million to $24 million

This compares to revenue of $136.6 million and EBITDA of $17.3 million it achieved in the first-half of FY 2017.

Whilst this is a solid increase of approximately 114% and 36%, respectively, on the prior corresponding period, it still fell short of the market’s expectations.

Yesterday Goldman Sachs advised that it expected Amaysim to deliver revenue of $298 million and EBITDA of $28 million. Representing growth of 118% and 62% on the prior corresponding period.

Should you invest?

Whilst this trading update was a touch underwhelming, I think the share price decline today has been largely overdone and left its shares trading at an attractive price.

In light of this, I would consider snapping up its shares with a long-term view once they have settled down.

Alternatively, investors could snap up Telstra Corporation Ltd (ASX: TLS) shares instead. I believe Telstra is over the worst of its issues now and could be a great option, especially for income investors.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.

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