Could this business update drive the Tesserent (ASX:TNT) share price higher?

The Tesserent Ltd (ASX: TNT) share price has slumped 33% year-to-date. Could this business update put its share price back on track?

| More on:
A hand outstretched with questionmarks floating above it, indicating uncertainty about a ahreprice

Image source: Getty Images

As a leading cybersecurity stock, the recent Tesserent Ltd (ASX: TNT) share price performance has been far from inspiring. Its shares are down 33% year-to-date and almost 50% from its all-time record high of 44 cents. 

What might drive the Tesserent share price today 

On Tuesday, Tesserent announced that it will be expanding its business to make strategic investments in proprietary IP-based products and companies, and launching a cyber academy to address the industry’s skill shortages. 

Investors can view the new organisational structure as three separate business divisions. 

Firstly, Tesserent Cyber represents the ‘old’ Tesserent and its existing and core consulting, product and services business. 

Tesserent Innovation is a new division focusing on developing and investing in new cyber technologies. The objective of Tesserent Innovation is to enable high growth potential cyber IP businesses to leverage the company’s existing customer base, deep skill sets, geographic coverage, and funding ability. 

Finally, Tesserent is launching the Academy to help drive an industry-wide capability uplift and reduce the skill shortage gap.

Besides the new business divisions, the business update did not contain any market sensitive news or financial updates. 

Tesserent reiterates its growth narrative and future focus 

The update reiterates the company’s narrative of exponential growth. In addition, it also reaffirmed its ambition of a $150 million turnover run rate by 30 June 2021. 

The company has taken significant strides towards profitability, from a negative earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.7 million and $679,000 in 2Q20 and 3Q20, to $405,000 and $1.4 million in 1Q21 and 2Q21. 

In addition to Tesserent Innovation and Academy, the company said that it will continue to drive its acquisition strategy. The intention of this is to expand on Tesserent Cyber’s capabilities and market share. This will translate to increasing shareholder value through incremental earnings growth.

While the announcement sounds very positive for the Tesserent business moving forward, its share price is still down some 30% for the year. 

The Tesserent share price opened 6% higher to 25 cents on Tuesday. However, it still needs to rise another 35% to breakeven for the year. 

 

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

No tickers found. You need to add tickers and save as draft before fetching disclosure

More on Share Market News