The third week in October came with unprecedented losses for Airtel Africa Plc that shook the Nigerian exchange market and left many in dismay.
Earlier in the year, at the end of the Q1 period, June 30th, 2022, the Telecom giant, released its financial statement which showed a revenue increase of 13.0% at $1.2 billion compared to $1.1 billion in the same period in the previous year. The significant increase in revenue was attributed to a strong performance in the voice, data, and mobile money segments of Airtel’s business operations.
However, just last week, things unexpectedly took on a drastic turn for Airtel.
October 17th, 2022
It was a shocking day of trade for investors of Airtel Africa PLC on Monday, 17th October as they recorded a loss of N676 billion, causing Airtel to lead the loser’s chart on the Nigerian Exchange Plc (NGX).
The Telecom stock dropped significantly by 10% from N1,800 which opened the trading week to N1,620 at the end of Monday due to the pressure to sell by holders of the stock.
Read Also: Airtel Loses 1.8 Trillion in 3 Days
Airtel – October 18th, 2022
The following day, Tuesday came with another bad news for shareholders of Airtel Africa Plc as the stock maintained its lead on the loser’s chart with another massive loss of about N609 billion, bringing the cumulative losses to a whooping N1.285 trillion in just 2 days.
Again, the continued loss led to a high selling rate of the stock by investors.
By the end of Tuesday, the price per share of Airtel had dropped from N1,620, the opening figure at the beginning of Tuesday to N1,458.
Airtel – October 19th, 2022
In what seemed like a losing streak, Airtel Africa Plc again suffered another heavy blow on Wednesday. The stock’s share price fell again to N1,312.20 per share, bringing the cumulative loss to N1.833 trillion with a decline of 27.10%, the highest loss recorded in that week.
It was appalling as Airtel had begun October with a share price of N2,000 and that trading week with a share price of N1,800 and market capitalization of N6.764 trillion but as of Wednesday, had dropped to a market capitalization of N4.931 trillion after closing its last trading day following the seemingly incessant losses.
Since Monday, the market sentiment for Airtel Africa Plc remained unimpressive and low amid buy-interests and sell-offs.
In view of the 2023 general election, hike in the interest rate, and soaring inflation, things are not looking good for the stock as bears have dominated proceedings.
Impact on the stock market for Airtel
As expected, the staggering losses of Airtel Africa Plc stocks had a huge negative impact on the Nigerian Exchange Limited (NGX) stock market. The market capitalization of the Exchange dropped from N26.450 trillion at the opening of October trading to N24.182 trillion in the first three weeks of October.
Investors of Airtel Africa Plc, have also suffered great losses leading to some of them, dumping Airtel and selling off their stocks which also contributed to the dip in the market
The Chief Executive Office of Wyoming Capital and Partners, Mr. Tajudeen Olayinka spoke with THIS DAY and attributed the decline in the market performance so far in October 2022 to economic headwinds and Airtel Africa’s price correction.
“Economic headwinds and Airtel Africa Plc’s price correction are both responsible for the loss we have seen so far in October. Due to a diversity of factors, we are actually in a period of prolonged repricing of securities across markets and instruments. We expect recovery to begin to take place once the economy begins to look more prosperous or stable.
He also added,
“For those who may wish to invest on a long-term basis, the future starts today. Those who may wish to speculate for short-term benefits will need to exercise caution, as the downside risk is not completely out yet. On a balance of probability, however, prices appear good and reasonable for the long-term horizon.”
What analysts had to say
- Mr. David Adonri, the Executive Vice Chairman of Hicap Securities Limited spoke to Nairametrics about the situation. He stated that the Airtel stock was still very high and is currently adjusting to the bearish reality of the market. He also added,
- “Right from the penultimate year to the election, the socio-political atmosphere becomes charged. Politicians resort to violent rhetoric and divisive tactics, which deepens the country’s socio-political fault lines, to establish a competitive edge. During this period, the economy becomes overloaded with money from excessive election spending, which spikes inflation.
- “Historical antecedents indicate that on average, both equities and bonds show positive or negative performance in the penultimate year and immediately after the election. While the drama of general elections can make your imagination run wild, you need to watch out for how the unfolding scenario will affect the economy, the capital market, and your portfolio.”
- Cardinal Stone Partners Limited analysts also weighed in, saying that the build-up to the 2023 election will discourage foreign investors and raise more financial account-related concerns.
- They ascribed the sentiment to geopolitical unpredictabilities and the aggressive rendition from global central banks.
- In addition to these global factors, they pointed out that the lack of market-reflective FX rates, illiquidity, and a backlog of uncleared foreign exchange demand dampened investors’ sentiments.
Even though Airtel topped the loser’s chart, it was not the only company that suffered a loss. Other top losers in the first three weeks of October include NEM Insurance Plc, Beta Glass Plc, Royal Exchange, and MRS Oil and Gas all of which contributed to the drop in the market capitalization of the Nigerian Exchange Plc.
It’s been a bumpy ride in October for Airtel and the dwindling economy isn’t helping matters. Hopefully, they can bounce back soonest even as the economy stabilizes.
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