AMA Group (ASX:AMA) share price drops 6% following media criticism

The AMA share price is tumbling as media speculation surrounds its finances

| More on:
Frustrated woman crouches next to wrecked car after a car crash feeling shocked by glad she has QBE insurance

Image source: Getty Images

The AMA Group Ltd (ASX: AMA) share price is in the red today after the company knocked back media criticism.

AMA has acknowledged an unnamed media outlet’s claims its business is in dire straits by pointing to its current capital structure review.

The company hopes its review will help it beat a massive $99 million dint in its bottom line, caused by the impact of COVID-19 and reported on in the company’s financial year 2021 earnings report.

AMA’s response hasn’t seemed to quell the market. Right now, the AMA share price is 42 cents, 5.62% lower than its previous close.

Let’s take a closer look at today’s news that could be impacting the automotive smash repair and parts supplier’s shares.

What’s weighing on the AMA share price?

The AMA share price is tumbling after it rebutted media reports.

While the company acknowledged a publication had questioned its capital position, it only repeated news already published within its financial year 2021 report.

While AMA didn’t name the publication speculating on its finances, the Australian Financial Review (AFR) did report on them last night.

And it may be the AFR’s reporting that’s weighing on the AMA share price today.

Within the AFR’s article, it noted AMA needs to restructure its debt before the end of the year – as the company previously announced.

However, the AFR reported the company is strapped for cash, a claim AMA hit back against. The AFR also claimed AMA’s lenders are concerned with the company’s annual report.

AMA’s response to media speculation stated its banking syndicate is supportive of its business. It also noted AMA’s directors are confident the capital structure review will result in positive findings. It said:

While the business is experiencing COVID-19 related repair volume decreases, these impacts are being actively managed. With $64 million in cash as at 30 June 2021 and a low level of net debt versus normalised earnings (pre-COVID-19 effects), the company’s liquidity position remains strong. The group’s insurer partners remain supportive, and we look forward to returning to normal operations as restrictions ease.

Unfortunately, AMA reiterating its confidence hasn’t been enough to save its share price today.

Should you invest $1,000 in AMA Group right now?

Before you consider AMA Group, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and AMA Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Industrials Shares

A man leans out of his car window with a massive smile on his face and waves.
Industrials Shares

‘Too early to brake for the next exit’: What this top broker likes about Transurban shares

Analyst sentiment appears to be bullish on Transurban.

Read more »

military drone with weapons representing electro optic share price
Industrials Shares

Here’s why the Electro Optic share price is avoiding the bloodshed today

Electro Optic Systems announced the successful testing of its directed energy drone defence system.

Read more »

piggy bank at end of winding road
Industrials Shares

The Transurban share price has leapt 13% in 2 months. Too late to buy?

Here's why brokers are bullish on the toll road operator's stock.

Read more »

A woman wearing a hard hat holds two sparking wires together as energy surges between them. representing the rising Li-S Energy share price today
Industrials Shares

Why is the Li-S Energy share price powering ahead today?

What's the go with Li-S Energy shares today?

Read more »

Many cars travell on a busy six lane road way with other cars in the background travelling in the opposite direction, going the other way.dway
Share Gainers

What drove the Transurban share price higher on Monday?

Let's check why the toll road operator's performance beat the ASX 200 on Monday.

Read more »

A young bearded man wearing a white t-shirt with a yellow backdrop holds up his arms to his chest and points to the camera in celebration of ASX shares rising today
Industrials Shares

Downer share price edges higher on military contract win

Downer shares are set to finish the week on a positive note.

Read more »

a man stands amid a building site featuring brick walls with building equipment in the background.
Industrials Shares

Is the CSR share price fully valued in April 2022?

CSR shares have moved sideways in recent times but what do brokers think?

Read more »

four hands making numbers one through four representing 4 asx shares to buy
Industrials Shares

4 reasons it could be time to look at the Brickworks share price

Brickworks shares could be an interesting investment to consider.

Read more »