Shorts, page-74

A friend sent me a copy of the AFR article of the 20 Aug. This is the link. Nearmap excludes churn from its churn metric.pdf


Below is my response to him

NEA was heavilyshorted (7.8% of capital) prior to the release of its results. On the dayof its release (19 Aug) the short sellers hit NEA hard. They short soldaround 9m shares and the open short positions increased to 9.78% on 20 Aug. The share price initially opened higher at $2.75 and with the short attack itreached a low of $2.28 and closed at 2.35.

The next step inthe short sellers technique is to spook the market. So in my opinion –with no proof – they fed the AFR journalist with this misleading assessment ofthe false presentation of churn.

Fortunately, themarket was more aware of NEA customer churn and did not get spooked. Theshare price closed on Thurs 20 Aug – the day of the article – at $2.44. On Friday it closed at $2.69 and I suspect the short sellers had to closebecause yesterday it closed at $3.04. Currently it is $3.11.

By the way, NEAcorrectly reported its churn for the year at 9.9% but repeated the explanationprovided with the 1^st half results. See copied section below. So the AFR article was extremely misleading. Most NEA shareholderswould have been aware that in Feb it announced two large autonomous vehiclemanufacturers had cancelled their contracts because they were winding backtheir operations and one company had to cancel its contract because of a courtorder (it was violating another company’s patent). These three largecontracts were not lost to a competitor.