{"id":55695,"date":"2014-08-08T20:04:30","date_gmt":"2014-08-09T00:04:30","guid":{"rendered":"http:\/\/countingpips.com\/?p=55695"},"modified":"2014-08-08T20:04:30","modified_gmt":"2014-08-09T00:04:30","slug":"why-the-rea-group-ltd-share-price-tanked-today","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/08\/why-the-rea-group-ltd-share-price-tanked-today\/","title":{"rendered":"Why the REA Group Ltd Share Price Tanked Today"},"content":{"rendered":"
August 8, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

What Happened to REA Group Ltd\u2019s Share Price?<\/h2>\n

\nShares in property advertiser realestate.com.au REA Group Ltd [ASX:REA]<\/strong> took an 8.7% pounding today. That selloff was much sharper than the risk-off mood of the broader stock market<\/a>. REA Group shares have now sold off by more than 18% since hitting an all-time high in early March.\n<\/p>\n

Why Did This Happen to REA Shares?<\/h2>\n

\nThis morning REA Group<\/strong> reported a result for the year ending 30 June 2014 that most Aussie-listed companies would kill for.<\/p>\n

Net profit grew by 37% to almost $150 million. That\u2019s a great headline result, but less so when you consider that many market analysts had expected an even better result.<\/p>\n

The culprit seems to have been softer sales. Annual revenue \u2018only\u2019 grew 30%, to $437.5 million. <\/p>\n

When the stock market puts an extremely high valuation multiple on a stock, it generally wants to see the company generate strong profits through robust sales. Any chinks in the armour can cause the share price to fall far and fast.<\/p>

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What\u2019s more, the company\u2019s mention of \u2018challenging conditions\u2019 in certain markets seems to have caused a minor panic among investors. It seems that life without former chief Greg Ellis won\u2019t be easy.<\/p>\n

For a share price to keep rising, the company has to keep on positively surprising investors. That\u2019s why REA shares gapped down today.<\/p>\n<\/p>\n

What Now for REA Group Ltd?<\/h2>\n

\nREA Group has been a sensational growth story for several years. But it has well and truly become a blue-chip large cap company. It\u2019s at a point where continued outperformance becomes more and more difficult. <\/p>\n

As long as realestate.com.au remains the market leader, agents will want to advertise their real estate on the site. But today\u2019s result will lead many investors to question whether a sky-high valuation is appropriate for this stock.<\/p>\n

Cheers, Tim Dohrmann<\/strong>+<\/strong><\/a>
\nSmall-Cap Analyst, Australian Small-Cap Investigator<\/em><\/strong>
\nJoin Money Morning on Google+ <\/span><\/a><\/strong><\/p>\n

The post Why the REA Group Ltd Share Price Tanked Today<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au What Happened to REA Group Ltd\u2019s Share Price? Shares in property advertiser realestate.com.au REA Group Ltd [ASX:REA] took an 8.7% pounding today. That selloff was much sharper than the risk-off mood of the broader stock market. REA Group shares have now sold off by more than 18% since hitting an all-time high in […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-55695","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=55695"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55695\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=55695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=55695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=55695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}