NS please (LSE: GOG) Stock prices are falling a little free. Shares plunged nearly 25% after the company announced a scandal yesterday. Once famous for British rail transport, the company lost its grace after losing its southeastern rail franchise agreement. So what exactly happened? And is this sudden drop an opportunity to buy stock in my portfolio?
Go Ahead Stock Price Collapse
Since the privatization of the UK rail network in the 1990s, companies have been able to bid on franchises that provide passenger transport. And for a long time, Goahead was responsible for about 30% of the entire UK itinerary through the Gobiatemslink Railway (GTR) and southeastern routes.
Yesterday, the government announced that it would control rail services in the southeast. The investigation revealed that the company had not declared £ 25 million in taxpayer funds to be returned in 2014. This is a breach of contract and as a result Go-Ahead no longer operates services in the Southeast. October 18..
Needless to say, this is not good news. In particular, South Eastern generated 26.8% of last year’s revenue. In other words, a quarter of the company’s revenue is about to evaporate.And after 13 years of service, CFO Elodie Brian Resign with immediate effect Behind this scandal. It’s not surprising to see Goahead’s share price plunge for fear that the Serious Fraud Office could intervene.
This situation is damaging, but it is certainly not the end of the world. The company still has other rail businesses to make money, such as the GTR line mentioned above and ventures in Germany and Scandinavia.
During that time, its bus transport activity is completely unaffected. Also, passenger numbers are recovering rapidly, according to the latest information on the latest transactions. In fact, they have reached their highest points since the beginning of the pandemic. This is especially encouraging, as these activities make up 88% of the Group’s operating profit. After all, the bus transportation network and rail margins are significantly higher.
There is no doubt that the loss of the franchise will have a significant impact. But it may not be as bad as you currently expect when investors see profits. Therefore, if the bus business can be expanded, Go Ahead’s stock price may be ready for high growth in the future.
Without solid numbers, it is difficult to determine the direct impact of this situation. However, the company has postponed the announcement of its 2021 annual financial results, which was originally scheduled to be announced tomorrow.
Go-Ahead shares may recover and rise in the long run. But for now, I’ll keep it on my watchlist until more information is available.
Zaven Boiler Zian There are no positions in any of the listed shares. Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by examining different insights, Better investors than us.
What is the stock price of Go Ahead?
https://www.fool.co.uk/investing/2021/09/29/whats-going-on-with-the-go-ahead-share-price/ What is the stock price of Go Ahead?