To make things worse for the IT giant, it also lost the contract to be a Microsoft software licence reseller in March. EOH stated that Microsoft did not provide any reason for terminating its contract with EOH Mthombo, a subsidiary of EOH. It was later rumoured it was also due to a questionable defence contract.
Looking at the line chart below we can see the abrupt sell-off when the dealings came to light which sent the share price has been in free fall. The EOH stock is down over 90% from it’s highs at 16812c per share and with the latest trading statement it might see some more downward pressure.
Source - Bloomberg
Take away from the Trading Statement:
In accordance with section 3.4 (b) of the JSE Listings Requirements, shareholders are advised that the financial results for the Group for the six-month period ended 31 January 2019 (the “H1 2019”) will differ by more than 20% from that of the previous corresponding period.
Take note: the next earnings date for EOH Holdings Limited (EOH) is scheduled for the 16th of April 2019 and more volatility might be expected on the stock.
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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.