The Altium Ltd (ASX: ALU) share price hit a one-year low of $23.66 on 13 May. Just as things began to look dire, its shares staged near-perfect V-shaped recovery to finish the month down just 4.5% instead of 20%.
Despite the Altium share price still down around 17% year-to-date, investors are likely relieved to see signs of strength as it hovers around last year’s COVID-19 lows.
A harsh selloff without any news
The first half of May was brutal for the Altium share price, sliding 20% from $29.71 to lows of $23.66 on 13 May.
Such a significant downside move typically accompanies a poor company announcement or in-depth broker downgrade. However, Altium did not release any market sensitive news last month, nor was there any negative broker commentary.
Much broader factors could have been in play for Altium’s weakness, with its sharp decline coinciding with the ~18% fall in the S&P/ASX200 Info Tech (INDEXASX: XIJ) index between 3 and 13 May. This selloff was driven by a rotation out of tech and other richly valued shares, and back into cyclical and value sectors such as financials, real estate and consumer staples.
Altium share price bounces off lows
Altium shares staged a late rally, bouncing almost 20% from lows to finish the month at $28.32, or a month-on-month decline of 4.5%.
This late resurgence also came without any market sensitive announcements. This could again be driven by the broader market, with the ASX200 tech index bouncing 8% between 20 to 31 May.
The last time we heard from Altium
Despite Altium’s bounce off 1-year lows, the last time we heard from the company was back in February reporting season. The company’s half-year results flagged a 15% decline in continuing earnings before interest, tax, depreciation and amortisation (EBITDA) to US$27 million while underlying EBITDA margins fell from 35.95% to 30.6%. This translated to a 12% fall in continuing profit after tax to US$16.6 million.
With the Altium share price down 17% year-to-date, investors are likely eager for an update as to whether or not its business has recovered from the challenging COVID-19 conditions experienced in the first half of FY21.