The WiseTech Global Ltd (ASX: WTC) share price has suffered significant volatility over the last two months, as shown on the chart below. I get excited when companies sell off because it may mean there's an opportunity for brave investors.
The sell-off isn't that much, considering the business is still up by approximately 60% in 2024 to date.
But, those declines may have been unsettling considering the first sell-off involved a lot of uncertainty about the founder and talisman Richard White, and then the second decline related to the company reducing its guidance for FY25.
While it would have been better to buy WiseTech shares at the start of 2024, I still think it could be worth considering for a few different reasons.
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Delayed revenue
At the company's 2024 AGM update, the business noted that, due to the distraction from recent media attention and the organisational changes that have been implemented, the commercial launch of its new product, Container Transport Optimization, has been delayed. It is now expected to launch in the second half of FY25, resulting in a delay to anticipated revenue.
The company reduced its guidance for FY25 revenue to between $1.2 billion and $1.3 billion, representing revenue growth of 15% to 25% year over year. Operating profit (EBITDA) is now expected to grow between 15% and 25% to a range of between $600 million and $660 million.
Broker UBS noted that the guidance downgrade suggests the company was expecting between $50 million and $100 million of additional revenue in the second half of FY25. This gave the broker "comfort on the total addressable market opportunity in Landside", which it sized at between $4 billion and $19 billion.
Richard White can focus on the operational side
Founder Richard White has been instrumental in building the company into what it is today. The issues that have been raised have been distracting, but White is planning to stay working within the business, which I view as a positive.
Stepping back from the CEO and director roles will allow White to focus on the operational side of the business rather than dealing with the requirements of being an ASX-listed business, communicating with various shareholders and so on.
In the long term, White's focus on product development could lead to stronger returns for the company.
Strong profit growth expected
Ultimately, if the ASX tech share can grow its profit, then the WiseTech share price can go higher.
The broker UBS is predicting that WiseTech's profit can grow to $351 million in FY25. This would put the WiseTech share price at 118x FY25's estimated earnings. It certainly doesn't look cheap today, with an earnings multiple that high.
However, over the next few years, WiseTech's net profit is expected to climb strongly until it reaches $1.2 billion in FY29. That'd be a rise of 241% between FY25 and FY29.
At the current WiseTech share price, it's valued at 35x FY29's estimated earnings. If profit keeps growing strongly from there, today's price could seem cheap by 2030.
