A bearish mood has hit Pushpay Holdings Ltd [NZX:PPH] today, causing the share price to dip by over 8%.

Pushpay is an online donor-management system with a strong presence in over 7,000 churches globally. Its goal is to simplify the user experience and boost financial engagement for religious organisations and non-profits.

At the time of writing, the stock currently sits at $8.44, and the company has a market capitalisation of $2.54 billion.

Pushpay is listed on both the NZX and ASX.

 

Why has the [NZX:PPH] share price fallen?

 

The company made a shock announcement this morning, which set the tone for a pessimistic round of trading.

Here the key highlights:

  • The Huljich family, who are the biggest shareholder in Pushpay, have sold 25% of their holdings.
  • 14.24 million shares have been liquidated at $8.60 per share.
  • The total sale price is estimated to be roughly $123.9 million

Peter Huljich issued a statement, saying:

‘The outlook for Pushpay remains positive. We look forward to continuing to support the company as it seeks to deliver upon its strategy of becoming the preferred provider of mission-critical software to the US faith sector.

‘The Huljich family confirms that it does not have any current intention to sell further shares in Pushpay and has provided an undertaking to the Underwriters not to sell further shares in Pushpay until after Pushpay’s FY21 Interim Results are announced on the NZX and ASX.’

Understandably, this announcement has caused discomfort among investors. Primal instincts took over. And we witnessed a sustained sell-off throughout the day.

 

Where could [NZX:PPH] go from here?

 

Despite this significant event, the Huljich family will still remain the largest shareholder in Pushpay. For the time being, they still appear to hold around 43.2 million shares.

  • As we noted in our last update, Pushpay has met or exceeded all guidance provided to the market since its initial listing in August 2014.
  • The annual results for the year ended 31 March 2019 showed positive earnings.
  • Today’s sell-off may well be a short-term overreaction.
  • Confidence over the longer-term may still remain intact.

It’s important to keep in mind that key risk factors still remain — most notably the ongoing economic impact from COVID-19.

Pushpay currently trades at a P/E of 95x, which is way above the New Zealand market average of 18.5x. This makes it a speculative investment, with optimism priced in for the future.

Will Pushpay continue to exceed these heady expectations? Only time will tell.

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Regards,

John Ling
Analyst, Wealth Morning