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Why the Adacel share price cratered today

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The Adacel Technologies Limited (ASX: ADA) share price is down 17% to 69 cents today after the air traffic management software business announced that both its CEO, Gary Pearson, and chairman, Peter Landos, will leave the company on March 31 2019.

A double departure is an unusual development for a listed company and given no explanation was provided over the news it’s not surprising investors have taken a sell first, ask questions later approach.

Adacel has endured a tough 18 months or so on the back of rising competition and some reportedly lost contracts with it now forecasting fiscal 2019 profit to be 35% to 45% below fiscal 2018, when using accounting methods prior to the adoption of AASB15.

The company is still profitable, pays a dividend, and has a net cash position of $3.14 million as at December 31 2019, therefore it still looks in a reasonable position for investors prepared to do further research into its beaten-down valuation.

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Returns as of 6th October 2020

Motley Fool contributor Tom Richardson has no position in any of the 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 Scott Phillips.

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