WiseTech Global Ltd (ASX: WTC) shares have plunged into the red during early Wednesday trading, currently down 11.7% to $108.21.
The drop extends losses for WiseTech investors to more than 18% over the past week of trade, as seen in the chart below.
While the company has no price-sensitive news today, the recent price plunge follows a set of controversies involving WiseTech's founder and CEO, Richard White.
As a result, the company has called emergency meetings with its board and executives to deal with the matter.
The big question now is, what does this mean for the future of WiseTech shares? Let's take a look.
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WiseTech shares sharp selloff
The sharp fall in WiseTech shares comes after reports surfaced with a series of past allegations against Richard White, the company's founder and major shareholder.
According to my colleague Seb, White currently owns about a third of the company, even after reducing his stake by more than $100 million in the past month.
Allegations regarding a former partner were made against the CEO earlier this month, and the matter entered Federal Court.
Now, the company has to review the situation again after a series of fresh allegations have emerged against the logistics software company's founder.
According to The Australian Financial Review, these claims date back to 2020 and involve a relationship between White and a former partner.
Only two WiseTech directors were initially aware of these claims, given their tenure dates back to this time. But now, with the recent media attention, the entire board is involved.
This led to a flurry of crisis meetings over the weekend to reassess the situation. In a response to media reports released today, the company had this to say:
[WiseTech] notes further media coverage today regarding Chief Executive Officer & Executive Director, Richard White, including an historical claim.
The Board is currently reviewing the full range of matters raised in today's media reports and is actively seeking further information and taking external advice.
The Board will continue to meet regularly to consider and monitor the situation, and keep the market updated in line with its continuous disclosure obligations. It is conscious of the potential impacts on the Company and will carefully evaluate all relevant factors in its assessment.
While the update wasn't labelled as price sensitive, unsurprisingly, it appears to have put pressure on the stock price today.
Now, the board faces a tough balancing act. All at a time when WiseTech shares are under intense scrutiny.
What are brokers saying?
The market's reaction to the updates hasn't changed the general view of brokers on WiseTech shares.
According to CommSec, the consensus of analyst estimates still rates the stock a buy.
Meanwhile, Bell Potter recently maintained a hold rating on WiseTech after all of the recent updates. The broker is "very positive on the outlook" for WiseTech shares but sees a headwind from valuations.
The stock currently trades at a price-to-earnings (P/E) ratio of more than 171 times. This means investors are paying $171 for a dollar of WiseTech's earnings if they do not grow.
When it's put that way, Bell Potter might have a point. Time will tell if it is. And what impact these latest updates will have.
Foolish takeaway
WiseTech shares are currently under the pump as the company deals with a number of headlines. What's more, these involve its founder and CEO.
With the updates being front and centre, the market has some digesting to do. WiseTech is still up 80% in the past year.
