The Nexted Group Ltd (ASX: NXD) share price has been sold off on Thursday.
In morning trade, the ASX All Ordinaries stock crashed as much as 41% to 70.5 cents.
Its shares have recovered a touch since then but remain down 33% to 80 cents.
Why is this ASX All Ordinaries stock crashing?
Investors have been selling this education services provider's shares after it released an update on emerging implications of the Australian Government's temporary COVID-19 408 Visa.
The release notes that the 408 Visa provides onshore non-residents – including previous student visa holders – unlimited working rights for 12 months without needing to study. This could mean demand for NextEd's services falls materially in the near term.
At this stage, the ASX All Ordinaries stock advised that the impacts of this change are uncertain. It observes the following:
1. The industry expected the temporary COVID-19 408 Visa to end in July 2023, to coincide with the change in working rights for international students. This did not happen. 2. Emerging impacts of continuation of the 408 Visa include: a. some existing ELICOS students are studying for shorter durations to move to the 408 Visa; and b. fewer ELICOS students are progressing into vocational courses. 3. However, a higher volume of ELICOS students are expected to enrol into NextEd to get into Australia, with the aim to access the 408 Visa.
Based on this, NextEd estimates the current annual revenue impact from international students abandoning their studies and moving to the temporary COVID-19 408 Visa to undertake unskilled work is over $0.7 billion to the industry.
Guidance
It is worth noting that management is still expecting the company to deliver strong growth in FY 2024 despite this development. Though, judging by the performance of its shares, investors aren't confident it will achieve its guidance.
NextEd expects revenues for the first half of FY 2024 to be in the range of $59 million to $63 million, which will be 35% to 44% higher than the prior corresponding period.
Furthermore, management currently expects its second-half FY 2024 revenue to be higher than both the first half and the prior corresponding period.
Time will tell if that is the case.
