Something strange has been happening to Transcorp stock lately and it is no longer funny. Shareholders of the stock who bought it for speculative reasons are wailing in despair as value continues to be lost on a weekly basis.
Transcorp shares has fallen 44.6% this year to date making it one of the worst performers this year. From opening the year at N3.7 the stock now trades at a share price of N1.80 its worst this year and the worst since October 2013. It was also one of the worst performers last week posting a 12% week to date loss.
It is unclear what is causing this sell-off which began in mid September this year. From a share price of about N2.46 on the 15th of September 2015 Transcorp has nose-dived to about N1.8. In fact, it has closed higher only 6 times out of 32 days of trading since that date.
Transcorp’s result has also not helped matters as it has continued to report a decline in profits all through the year. In its 9 months results to September 2015, the company reported a 27% decline in pre-tax profits. Nevertheless, fundamentals haven’t always been the main driver for Transcorp shares as investors predominantly view the stock as one that is strong on technicalities.
One can point to the broader market and the high liquidity of the stock as a possible reason but no one is quite sure if that is the case. A school of thought suggest that it could be a major shareholder selling down. Another believe it’s just investors exiting the stock pointing to over 80 million units of the stock having exchanged hands in the last 5 days. Indeed the stock as witnessed volumes of over 10 million more often than not.
With the share price dropping without a bottom in sight, many wonder if now is the time for the “market makers” to throw in a life line. Speculators sure wouldn’t mind that
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