Shares of SA's biggest taxi financier Transaction Capital, which also owns a majority stake in vehicle trader WeBuyCars, crashed 40% on Tuesday morning, a day after it warned shareholders that it expected interim earnings to fall by more than a fifth.
Shares in the company, valued at more than R21 billion at market open, had fallen 40.17% to R16.83 as of 11am, taking them to levels last seen in late 2020.Transaction said after markets closed on Monday that it expects core earnings per share from continuing operations to fall by more than 20% in its half year to end-March, but by no more than 50%. It also said it would need to"reset" financier SA Taxi.
"The industry’s profitability remains stressed due to stubbornly elevated fuel prices, vehicle price increases, sharp interest rate hikes, persistently low commuter volumes and the lack of corresponding fare increases. Record levels of load shedding are adversely impacting economic activity, with a further negative knock-on effect on commuter activity," it said.
"In the short term, we believe it is prudent to acknowledge and decisively tackle the issues facing SA Taxi, and to reset this business for future growth. While we understand that this does come at a cost to our upcoming half year results, and will weigh on the full year outlook to September 2023, we are confident that the group’s swift response in rebasing this business will give it the operational, financial and strategic flexibility to recover and grow," he said.
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