Why Naspers Lost over 200 Billion Rand in Share Value in Six Days

What?

It has not been all “Kumba ya” in the last six consecutive trading days for African media giant NASPERS Ltd. The company has lost R200 billion in share value over the past six days or a total of 16 percent of its market share on the Johannesburg Stock Exchange (JSE).

Why?

Following the publication of a damaging report on Naspers by Investec Ltd on Jan 22, investors have responded with pulling off their rands and cents from Naspers with a 16 percent loss in market share on the JSE.

value loss

According to the Investec report, David Smith and Thapelo Mokonyane analyst at INVESTEC  said Naspers should be valued at a 30 percent discount to its assets. This is because of the gradual increase in the number of outstanding shares over 11 years, taxation issues and costs associated with financial transactions, referred to in the report as friction costs, they said. In response, NASPERS is of the view that the report has some “inaccuracies and misleading information” according to head of investor interest at Naspers, Meloy Horn.

So What?

Naspers is asking investec to withdraw the report in an effort to reverse the damage caused by the report. Naspers also states that some of the issues raised in the report are being dealt with by Naspers. However, whether this trend will be reversed in the coming trading day remains to be seen. If you were considering adding Naspers to your portfolio, maybe this is the right time to take advantage of the falling price. However, you need to do your homework and speak to your financial adviser.

 

 

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