WiseTech Global Ltd (ASX: WTC) shares have faced a tumultuous period over the past few weeks.
Shares in the software solutions company are down more than 22% in the past week as the market digests the fallout from CEO Richard White's personal life.
With the stock down another 4.93% today, trading at $100.84, investors must be wondering when WiseTech shares will stop falling.
Market watchers are split on whether the stock has found a bottom or if this presents a buying opportunity. Let's dive in.
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What's behind the drop in WiseTech shares?
We can trace WiseTech's recent rapid share price decline to a series of personal allegations against the company's CEO, Richard White. These have attracted significant media attention.
White has sold around $100 million worth of WiseTech shares in recent months. Initially, it was claimed the sales aimed to meet investor demand.
However, reports later surfaced suggesting that the funds were used for a settlement with a former partner.
Adding to the drama, reports have emerged that White provided a home worth $7 million to a former employee with whom he had a personal relationship.
This prompted WiseTech's board to announce a review of the situation, further fuelling uncertainty and speculation among investors.
Investors are also paying attention to this, as indicated when shares swung higher this week on news that White's court case with former partner Linda Rogan had been abandoned.
Has WiseTech found a bottom?
Opinions on WiseTech's outlook are mixed. Citi analyst Siraj Ahmed has taken a cautious stance, noting that the recent developments could hurt the company's reputation and potentially slow new customer acquisitions.
Ahmed suggests that it might be too early to buy into WiseTech shares, given the ongoing scrutiny of its leadership.
On the other hand, Richard Coppleson, head of institutional sales at Bell Potter, remains more optimistic.
Coppleson sees the recent sell-off as a knee-jerk reaction to the headlines rather than a reflection of the company's long-term potential.
As a long-term shareholder, the analyst emphasised the strength of WiseTech's core business and suggested that patient investors could benefit once the dust settles.
Time will tell which side of the coin is right.
Whatever happens, the long-term outcome will likely be influenced by the company's economic performance rather than the latest news cycle.
In FY24, the company reported a 28% increase in revenue, reaching $1.04 billion. This brought it to a net profit of $284 million, up 15%.
Furthermore, WiseTech rewarded shareholders with a final fully franked dividend of 9.2 cents per share, marking a 10% increase from the previous year.
As a result, analysts like CLSA remain bullish on WiseTech's growth prospects, suggesting that the sell-off has been overdone.
The firm recently upgraded WiseTech shares citing a robust addressable market and the company's competitive advantage in the logistics software space.
According to CLSA, WiseTech is a buy, with a price target of $121 per share.
Foolish takeaway
For investors considering WiseTech shares, it's crucial to balance the company's strong growth profile with the uncertainties surrounding its leadership.
Opinions are mixed on when the stock will find a bottom. In any case, it is critical to stay focused on the long term.
WiseTech shares are up nearly 70% in the past 12 months.
