Why did ASIC take a look when Qantas shares fell last year?

The regulator was asking questions.

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Qantas Airways Ltd (ASX: QAN) shares encountered turbulence in FY24, "flying backwards" on the chart as my colleague Bernd put it.

At the time of writing, shares in the iconic flying kangaroo are swapping hands 0.082% higher at $6.11 apiece.

Reports have surfaced that The Australian Securities and Investments Commission (ASIC) recently raised questions about certain price movements in Qantas shares last year.

This came around the time Qantas was under investigation by the Australian Competition and Consumer Commission (ACCC), according to The Australian Financial Review.

Here's a closer look.

ASIC queries Qantas' knowledge

As a reminder, the ACCC began proceedings against Qantas in August 2023.

It alleged Qantas sold tickets for flights that had already been cancelled during the COVID-19 pandemic. This resulted in Qantas paying a $120 million settlement.

But from 24 July to 20 October last year, as news of the probe surfaced, Qantas shares plunged from highs of $6.69 to lows of $4.77, respectively.

ASIC reportedly wrote to its fellow corporate watchdog at the ACCC shortly after Qantas shares fell.

It was asking about the timeline of the ACCC's investigation into the airline.

It aimed to determine if Qantas directors or executives knew about the investigation before it happened or before the significant drop in the company's share price tied to these events.

The regulator also inquired about the board-approved share sales of its former CEO, Alan Joyce.

Joyce reportedly sold $17 million of his Qantas shares in June last year – equivalent to more than 90% of his stake – shortly before the ACCC made its proceedings against the airline public.

What's next for Qantas shares?

Despite ASIC's requests for information, there is no indication it will follow up with an investigation, or that Joyce and the company's board acted on insider information.

The news is also a media report and not a market-sensitive update, so it's unsurprising that Qantas shares did not react. However, the same couldn't be said for the last financial year.

In FY24, the Qantas share price dropped nearly 6%, closing at $5.85 on the last trading day of the financial year.

This decline occurred despite strong financial results for FY23, which saw a 118% year on year increase in revenue to $19.8 billion and a pre-tax profit of $2.5 billion.

Despite this, Qantas shares have rebounded in FY25 and are up 13% this year to date.

The airline's February H1 FY24 results showed revenue of $11.1 billion and a solid underlying profit before tax of $1.3 billion.

It also authorised another $400 million share buyback.

Goldman Sachs rates Qantas as a buy, with a price target of $8.05. This indicates a potential upside of nearly 32% from the current price.

Meanwhile, consensus rates it a buy, according to CommSec.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

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