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Why the WiseTech Global share price crashed 27% lower today

The WiseTech Global Ltd (ASX: WTC) share price was the worst performer on the ASX 200 on Wednesday by some distance.

The logistics solutions company’s shares crashed a disappointing 27% lower to end the day at $21.40.

Why did the WiseTech Global crash 27% lower?

Investors were heading to the exits in their droves today after the company released its half year results and downgraded its earnings guidance.

In the first half of FY 2020, WiseTech Global reported a 31% increase in revenue to $205.9 million. This was driven by a combination of organic growth of $24.3 million from its CargoWise platform and revenue growth of $24.9 million from customers on acquired platforms.

The company’s EBITDA grew almost as quickly during the half. It was up 29% on the prior corresponding period to $62.5 million. Management notes that this is a reflection of the strength of its CargoWise business and strategic actions, along with increased adoption by the world’s largest logistics organisations.

Whilst this result put the company roughly in line with its full year guidance for EBITDA growth of 34% to 42%, the coronavirus outbreak has ended any hopes of it achieving this now. Management warned that the outbreak could have a profound impact on its second half performance.

As a result, it has been forced to downgrade its guidance materially. It now expects growth in the region of just 5% to 22%, which will mean full year EBITDA of $114 million to $132 million. These are unfortunately not the growth rates you would associate with a share that is changing hands on such sky high multiples, so I can’t say I’m surprised to sees its shares come under pressure today.

The company’s founder and CEO, Richard White, explained: “The unexpected outbreak of coronavirus (COVID-19) and the effective shutdown of China, a critical driver of the global manufacturing supply chain and a ~16% contributor to global GDP, is creating negative flow-on effects to manufacturing, slowing supply chains and economic trade across the world. While we have a diversified array of revenue drivers that provide resilient organic revenue growth across our global platform, we do anticipate that the manufacturing slowdown will delay execution of logistics activities by logistics service providers.”

Also falling heavily on the ASX 200 on Wednesday were the shares of EML Payments Ltd (ASX: EML) and Tabcorp Holdings Limited (ASX: TAH). They fell 13.5% and 5.5%, respectively, following the release of their own half year results.

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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 Emerchants Limited. The Motley Fool Australia owns shares of WiseTech Global. 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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