While the founder of Australia’s crown jewel of publicly listed tech companies – Wisetech (ASX:WTC) – has been hit by a widely publicised sex scandal, not all shareholders are selling.
As of early afternoon Monday, the company has seen a neat $25.00 wiped off its share price since close on Tuesday 15 October.
But has the scandal – that’s gone on for a week now – been oversold?
A scan of intraday trades on Monday morning could point to that. While the stock dropped 15% out the gate, it was down just 10% by 1pm Sydney time.
The intensity of bounceback has been notable – shares opened at $106.00 and were worth more than $109/sh 18 minutes later.
One month returns in Wisetech are currently down 17.25% but with a steep loss on Monday partially reversed, it’s possible the market could feel it’s already priced in the extent of damage the Wisetech founder’s alleged proclivities could produce.
After all – on the other side of the coin, Wisetech shares’ 1Y returns are up +81.7% and YTD performance remains robust at +44.65%. It’s a $36B market cap company and by far Australia’s most popular and impactful listed tech entity.
When Wisetech moves, it drags the entire ASX IT sector with it.
It’s undeniable tech – though, more so data centres these days over software – remains the new oil. Just look at Wall Street’s Magnificent 7 collective and the YTD rally those stocks continue to sustain.
So, what are the allegations Wisetech is facing? It all comes down to founder Richard White. National mastheads have been uncovering allegations from two women who have claimed the company’s top dog – fun fact, a former AC/DC roadie – has been exchanging business advice for sex.
On Monday, fresh allegations came out alleging Richard White made at least one payout to an individual presumably a victim of unwelcome advances.
But some are questioning whether or not White’s behaviour in his personal life is truly relevant to the overall fundamental value proposition of the company.
One thread on HotCopper started by a WTC shareholder when the shares were worth $130.00 posited that “Richard White’s private life is a distraction.” (In that user’s defence, they did suggest the tech CEO should, if the allegations are true, “keep it in his pants” – which is fair.)
“Yes – it is a distraction – and a very Sydney story,” user NajafVisitor wrote in response. “But there is also some other shift going on accompanying this. The share price seems to have peaked.”
Admittedly, here I feel obliged to point out the fact this scandal is public at all, in view of his role as a high impact CEO, does make one wonder if White is thinking strategically. And from that point of view, taking a risk-off stance is rational.
After all, were this scandal to end with a criminal conviction against the founder, then he wouldn’t be able to be a CEO under Australia’s Corporations Act.
But failing that, this wouldn’t be the first time we’d see shareholders in a big tech company shrug off allegations of sexual misconduct carried out by its founder.
Elon Musk’s alleged groping lawsuit wasn’t enough to shake the share price in Tesla more than a general lull in confidence around EV sales was – and arguably, his profile as a global household name could suggest you’d expect more reputational risk.
Then again, Richard White doesn’t have such an enthusiastic fan club.
WTC last traded at $106.99.
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