Why the SEEK share price just hit a 52-week low

The SEEK Limited (ASX: SEK) share price hit a 52-week low of $16.30 this morning as investors continue to fret over the outlook for new job listings in Australia in 2019.

Recently broker Citigroup estimated that new job listings for SEEK fell around 1% over November 2018 and its core business remains reliant on the revenue from new job listings.

SEEK is probably more leveraged to the economic cycle than digital classifieds rivals REA Group Limited (ASX: REA) or Carsales.Com Ltd (ASX: CAR) as companies in the mining or hospitality sectors for example will hire a lot more during good economic times. For example when commodity prices are high and rising miners will hire a lot more, although the reverse is true on the way down.

As such the outlook for SEEK in 2019 looks tough, despite its South East Asian operations and Chinese business Zhaopin.

The latter is growing its top-line strongly, but at a heavy investment cost, which is a similar pattern across the group for SEEK at the moment as it reinvests heavily in order to defend its competitive position, develop technology and grow its businesses. However, it still trades on a high valuation given the flat profit growth.

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Motley Fool contributor Tom Richardson owns shares of SEEK Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended SEEK 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 Scott Phillips.

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