Carbon Revolution share price tanks 30% on trading update

The Carbon Revolution (ASX:CBR) share price has crashed more than 30% lower in early trade following the company's recent trading update.

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The Carbon Revolution (ASX: CBR) share price crashed more than 30% lower in early trade following the company's recent trading update. Carbon Revolution shares are currently sitting at $1.40 per share, a drop of 29.75%.   

COVID-19 impacting demand

Earlier today, Carbon Revolution released a market update that highlighted the impact of COVID-19 on its global automotive supply chains. Given the evolving nature of the COVID-19 pandemic, Carbon Revolution informed the market that sales growth and demand for its wheels in the first quarter of FY21 will be affected.

As a result, the company also withdrew is guidance for FY20 and has implemented a series of operational changes. These changes include a reduction in its production workforce and the restructuring of working shifts. The company's management believe that the changes will have no effect on the medium to long-term demand for its wheels or growth prospects.

How has Carbon Revolution performed?

Carbon Revolution is an Australian-based company that manufactures lightweight, carbon fibre wheels for the global automotive industry. The company produces wheels which are about 40% lighter than conventional wheels to car makers including Ferrari, Ford and Renault.

In late April, the company released a business update that highlighted the impact of CVOID-19 on its sales. Carbon Revolution noted that the business had been impacted by disruption of global supply chains, which has affected freight availability, costs and also resulted in supply issues for raw materials. Despite the setbacks, Carbon Revolution reported that wheel sales grew 184% for the third quarter ending 31 March 2020, in comparison to the third quarter of 2019.  

Carbon Revolution began trading on the ASX in late November after a public float with an issue price of $2.60. Market volatility during the COVID-19 pandemic saw the company's share price sink to an all-time low of 80 cents in late March. Despite the share price volatility, Carbon Revolution was added to the All Ordinaries Index during the June rebalance.

It is also important to note that Carbon Revolutions operations are based in Geelong and could be further impacted given the new restrictions imposed in Victoria.

Foolish takeaway

At the time of writing the Carbon Revolution share price is trading more than 29% lower for the day at $1.40 per share, having hit an intra-day low of $1.36.

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Carbon Revolution Limited. 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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